Principles, Rules and Definitions for Bookkeeping

This historic book may have numerous typos and missing text. Purchasers can download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated.1915 Excerpt: ... ance of this account, called the net income, would be closed into Profit and Loss, at the end of the accounting period. 59 B. Interest received is an income; interest paid is an expense. The former may be credited and the latter charged to a single Interest account, (which, when so treated, is really an income and expense account) and the balance of this account closed into Profit and Loss at the end of the accounting period. (See Form 12 U.) It is often better to divide the general interest account into two accounts entitled, Interest Paid and Interest Received. 60. Before closing nominal accounts into Profit and Loss, the Inventories account must be considered. (1). All resource or liability inventories, standing in the financial ledger since the close of the previous accounting period, should, when the ledger is again closed, be closed into the nominal accounts to which they belong. (2). All inventories taken at the closing time, should be entered in the nominal accounts, resource inventories on the credit side, and liability inventories on the debit side. The most common resource inventories are: (1). In Trading account, stock of merchandise on hand at closing. (2). In other revenue accounts, services rendered but not yet charged. (3). In Income accounts, interest or rents accrued but not collected. (4). In expense accounts, material or labor charged to the account but not yet consumed. The most common liability inventories are: (1). In Expense account, wages accrued or material consumed but not yet paid for. (2). In Interest account, interest payable accrued but not yet paid. After the entry of the inventories, the difference shown by a nominal, account is a profit or a loss pertaining to the accounting period under consideration. Recapitulation 51 to ...