CHAPTER I. INTERMEDIATE EXAMINATION, 1897. BOOK-KEEPING. Question 1.-What is the reason of the division of Accounts into Personal and Impersonal, and what are the two widely different characteristics of the latter? A. To enable the complete records of any business to be kept, this being one of the principles of Double Entry Book-keeping. The different characteristics are that personal accounts can only represent liabilities and assets, but that impersonal accounts may also represent, besides liabilities and assets, the profit and loss accounts. Question 2.-In the course of trading you make and receive certain charges or allowances for Bought and Sold Returns. How would you deal with these? A.-The best method of dealing with the Trading or Merchandise account is to open two separate accounts termed Purchases and Sales Accounts respectively. To these accounts all charges or allowances should be debited or credited, as follows: Purchased goods returned, or allowances, would be credited to "Purchases Account." Goods sold and returned, or allowances thereon, would be debited to " Sales Account." When the books are balanced, the charges or allowances would be deducted as a total from their respective accounts. Question 3.-Plan a simple but effective Cash Book (with Bank Columns) and evidence working by twelve entries each debit and credit and draw balance. Dr. CASH. CONTRA. Cr. MEMO.-The columns can be arranged to suit any business, and columns for Trade Discounts can often be added with great advantage. The Bank Account can be posted direct to the Ledger, or a Bank Reconciliation Account opened at foot of Cash Book, for form of which see answer to Question 4. |