on 3 occasions and pays twice-the difference is the goods will appear in the goods account.

Each cash

Cr.

PERSONAL ACCOUNT.

Frequently money is paid on account and thus there may be a balance in favour of the customer. Discount is reckoned or interest charged for the balance according as it is in favour of the debtor or creditor side.

It is customary among traders to charge the same rate of interest on both sides of the account.

195

The firm buys goods and, if possible, sells at a profit. Also the value of goods on hand must be inserted at a fair valuation to get the true profit or loss.

This account shows assets and liabilities and therefore the net capital of the Firm. A trial balance is frequently made to test the correct posting of the ledger.

This shows the balance of the Firm's capital on Jan. 31, i.e. the net value of the estate. There might of course have been a loss-this would have occurred on Dr. side and the balance would have been so much less.

This shows receipts and payments. All receipts at office must be entered in office columns, and all cheques paid in or drawn to bank columns. Any transfer from bank to office or from office to bank must be entered as a debit to one and a credit to the other, or vice versa.