Principles, Rules and Definitions: For Bookkeeping (Classic Reprint)

Excerpt from Principles, Rules and Definitions: For Bookkeeping

This little book was prepared to place at the disposal of students of bookkeeping, and business people generally, the principles and rules needed to make intelligible the bookkeeping work.

A set of books in any business should be planned for a purpose. Knowledge of the end sought is essential to a single-minded effort to attain that end. The business man views a set of books as so much machinery for the collection and classifying of the vital facts of his business, for his guidance. The accountant plans the books so as to meet the business mans requirements. It is hoped that reference to the following pages, during the students progress through the bookkeeping work, may enable him to take the attitude of the accountant, looking beyond the necessary details of entering, posting, and filing, to the general plan and purpose.

From the accounting standpoint, all sets of books have a likeness in certain particulars. In other particulars there is dissimilarity. We shall begin by referring to the matters which all ordinary bookkeeping systems have in common.

The first record which is similar in every business is the statement of assets and liabilities showing the items comprising the net worth. Such a statement is necessary before opening a set of books, in order that the standing or financial strength may be made a matter of record.

After the business operations are under way, at regular intervals of time similar statements are made showing the changed values of the items of assets and liabilities, and the resultant changes in the net worth. These financial statements thus afford a picture of the history and progress of the business through a period of years, with a definite analysis of the condition of the business at the close of any given accounting period.