proper so to do, or they may be kept, as is commonly the case, in a Private ledger. Partners never are in account with each other, but always with the Firm, and they are made Crs of the firm for all they bring in, and Drs to it for all they draw out. Each partner, therefore, has an account opened with the firm. If the partnership accounts are kept in the general books, then the Stock must be made D' to them for all that it receives of them, and C for all they draw out; and they are dealt with precisely as any other Drs or Crs of the firm. They are Crs to the firm for the profits which are divided in proper proportions, and carried to their respective credits; and they are Drs to it for all its losses, which they must make up. The more usual way, however, is never to make the division in the general books, and to take no notice of the partners in them, except to debit them with all the sums they draw out; and if they bring in any thing extra, or make any repayment, to credit them with such items, but not to notice their claim upon the capital in the general books. Their accounts, however, in that case, are not carried to the balance sheet, so as to leave them Drs to the firm for the new account; but either to the Profit or loss account, or to the Stock account, and so to close and balance the books.

The private ledger contains a Capital account, which represents the firm, and this is made D' to the partners for the capital, and for the profits, and Cr for all the sums they have drawn out. It is followed by the private account of each partner, who is credited with his capital, and with the proportion of the profits ascertained in the general books, and debited with the sums he has drawn upon the firm: and the balance gives the

sum due to him from the firm. Of this he may draw the profit then due, and the then balance is carried down as the capital he has remaining, which is commonly kept as it was at first. It may, however, be altered by the consent of the partners; and they may draw out, or leave in, as much as they think proper. For a form of a Private Ledger, see Appendix III.

D

CHAPTER III.

ITALIAN METHOD-PRESENT PRACTICE.

THE preceding chapter contains an account of the Italian method, or the method by double entry in its original form; which is, indeed, so simple, that it may, without much difficulty, be understood by any one. It is the natural form which accounts must take, if accurately kept; and it may be applied to any business whatsoever.

It is not, however, exactly in this form that accounts are always or usually kept; for where transactions are large and complicated, it is impossible, in the course of a day, to enter in a single waste-book all the transactions that occur, as several clerks must be employed to write at the same time. Again, if all accounts were kept fully, and at large, in the ledger, a book of the greatest size would be filled in a week. This renders it imperative upon the merchant to adopt subdivisions of these books, and to introduce a variety of subsidiary books, without which, no concern of any extent could be conducted. Again, in other lines of business, the dealings are so simple, that the journal, and even the waste-book, may be dispensed with; and perhaps the whole machinery may be reduced simply to a cash-book.

We shall first follow the system into that more com. plicated state, which may be said to constitute the present practice: and it may be done conveniently from this point without causing any confusion; as the previous accounts, given for the elucidation of the old Italian method, may advantageously be carried on, so as to exhibit the present practice; and having done this, so as to give the reader the fullest comprehension of the subject in all its parts, we may then return with greater advantage to those systems of accounts which are, in fact, but fragments of this extended practice.

Where the extent of the transactions requires subsidiary books, not only the waste-book is divided, but several accounts are also detached from the ledger ; and several of the ledger accounts are subdivided also. And it is a consequence of this breaking up of the waste-book and ledger into subsidiary books, that the journal becomes the only complete record, and is, in fact, the great chronicle of business, containing every thing within itself. And, in this case, the form of the journal is changed from a record of the transactions as they successively occur from day to day, to a monthly chronicle; in which, for the convenience of posting from several distinct books, the contents of each book are all journalized together, and thus become sorted in the journal under several distinct heads, as may be seen in the journal for February and March, Appendix I. The heads under which the journal entries are then made, are commonly

Cash Dr to Sundries.-Sundries Dr to Cash.

Bills receivable Dr to Sundries.-Sundries Dr to Bills payable. Merchandise Dr to Sundries.-Sundries Dr to Merchandise. Sundries Dr to Sundries.

Under which heads every item may be sorted; or if any thing cannot be conveniently placed under these heads, a separate head may be allotted to it, as is constantly the case with consignments, or the like.

The journal is posted under these items, because the waste-book is cut up into corresponding subsidiary books, which we shall now explain.

When the waste-book is divided, it is divided in such a manner as to simplify the transactions by allotting different books to different departments, or to different clerks. The waste-book is usually cut up into three principal subsidiary books: the cash-book, the bill-book, and the day-book, and these are also subdivided.

The CASH-BOOK includes all the cash transactions. It is kept in ledger fashion, with the receipts upon the debit, and payments upon the credit side; and as its results or sum totals only are transferred into the ledger, it is also a substitute for the ledger cash account, as it exhibits all the items, which, in the simple form of the Italian method, should be individually set forth in the ledger itself.

In extensive concerns the cash-book is often ruled in two columns, the outer column of which contains monies received and paid in actual cash to or by the merchant ; and the inner column contains the receipts and payments made at the bankers of the merchant. There is sometimes even a third column, when the merchant chooses, as is frequently the case, to have an account with the Bank of England, as well as with some private