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5. Journalizing is the determining and indicating of the debit and the credit items of a transaction for their respective ledger accounts. The book in which this is done is called the Journal.

  1. Example of Journal :

Dr. column

$   C.




O   V

A   A

TORONTO, January ", 19-.

John Sampson Dr.

:Mdse. Cr.


I Cash Dr.   -   -

John Simpson Cr.

7. Posting is transferring the debit and credit items from the Journal to their respective accounts in the Ledger. The Ledger is the book of accounts.

  1. Assets and Liabilities.

An Asset is anything belonging to the business, which has a money value. A Liability is any debt owing by the business.

  1. Losses and Gains.

A Loss is an excess of cost over proceeds. A Gain is an excess of proceeds over cost.

14. Classification of Accounts.

  1. All accounts are either personal accounts, as John Simpson, or impersonal accounts, as Cash, Merchandise, etc.

  2. All accounts are also either asset and liability accounts, as John Simpson, Cash, etc., or loss and gain accounts, as Merchandise, Expense, etc.

(c) Some asset and liability accounts are also personal asset and liability accounts, as John Simpson, while others are impersonal asset and liability accounts, as Cash, Bills Receivable, etc. All loss and gain accounts are impersonal accounts, as Merchandise.

- (d) All accounts may thus be divided into three classes :

.I. Personal Asset and Liability Accounts : as John Simpson, John Simpson & Co., The Imperial Bank, The Royal Fire Insurance Co., etc.

rII. Impersonal Asset and Liability Accounts : as Cash, Bills Receivable, Bills Payable, etc.

III. Loss and Gain Accounts : as Merchandise, Expense, Real Estate, Interest, Discount, Commission, etc.

The accounts of the first two classes show either values belonging to the business, or debts owing by the business, and are sometimes called Real Accounts. The accounts of the third class show either losses or gains in connection with the business and are sometimes called Representative Accounts.

Cr. column $   c.





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