made for compulsory winding up), the purpose of the account being to show how the estimated deficiency (or surplus) of the estate is arrived at. It is proposed to deal with bankruptcy procedure only, but virtually the same remarks apply to winding up.

The deficiency account possesses a similar relation to the summary statement of affairs (generally referred to as the "front sheet") as the ordinary profit and loss account does to the commercial balance sheet-that is to say, it forms a connecting link between the present position of affairs and that at some antecedent date, and serves to show how the difference in the state of affairs at the two dates respectively has arisen.

The form is an official one, and can readily be obtained at a law stationer's, but it is here reproduced for purposes of reference, and to illustrate the remarks made upon it. Where the accounts of the debtor have been kept on a proper double-entry system, the preparation of the deficiency account becomes to a considerable extent a matter of analysis, but the points mentioned below as to assets and expenditure outside the business must not be lost sight of.

In many cases, however, proper books of account have not been kept. The following suggestions will, no doubt, be found useful under such

circumstances:

(1.) Ascertain the position at the antecedent date fixed by the official receiver, by means of bank pass-book, invoices, debt-book, &c. (2.) If this is impracticable, sales-book or takings-book will generally be available; gross profit will be known, and expenses, such as rent, rates, wages, &c., can be calculated.

(3.) Working backwards from these figures the balance of profit or loss can be ascertained approximately, and after including the other items required in the deficiency account, the commencing "capital" or "deficiency" can be obtained.

Note. It is advisable to examine closely the debtor, in advance, as to his idea of the state of his affairs at the antecedent date fixed by the official receiver.

(4.) Bring into account at their then value such private assets now included on "front sheet" as were in existence at “commencing date,"―e.g., household furniture, life policies, and jewellery. (5.) Bring into account any private income of the debtor, such as dividends from investments, and satisfactorily explain on the opposite side of the account in what manner it has been disposed of.

(6.) The amount stated as "bad debts" should agree with the amount shown to have been lost under this head according to List of Book Debts, Schedule "I."

(7.) "Other losses and expenses," which are sometimes only elicited by examination of the debtor, are-(a) Interest on borrowed money; (b) Premiums on life policies; (c) Special travelling expenses; (d) Professional charges, &c.

(8.) It will be noticed that the form states that the "total amount to be accounted for" must agree with the "total amount accounted for." It is suggested that where the difference is trifling, it may be added to or deducted from one of the estimated items, so long as the narration of such item is prefixed by the word estimated," but where the difference is substantial, it should be set out as "balance unaccounted for."

66

£ s.

d.

£ s. d.

No. F. 46 K.
Statement of Affairs.

Form of Deficiency Account. (Official Letter, K.)

(5) These figures should agree.

Delivery Orders and Warrants

A DELIVERY ORDER is an order by an owner of goods to the custodier to deliver them to the holder of the order. A warrant is an acknowledgment by the custodier that he holds them for the person named in the order.

Delivery orders for goods of greater value than £2 should bear a stamp duty of 1d., and warrants of 3d.

A delivery order practically is with regard to goods what a cheque is with regard to cash, but in point of law there is this distinction, a cheque is for payment of a certain sum, but not of any particular notes or coins, whereas a delivery order is for certain parcels of goods specified in the order. The goods represented by the delivery order need only be delivered by the custodier on payment of any charges thereon in respect of which he may have a lien on the goods. The party named in the order as entitled to receive the goods would deliver up the order on receiving them, but if he sell them before taking delivery, then he merely endorses the order in favour of his customer, and the customer may then take delivery. The order may be drawn upon a warehouseman or other such party, or it may be drawn upon the firm who sold the goods to the person now issuing the order in the favour of some one else.

When a sale takes place, and the goods are to remain in the hands of the vendor, but at the order of the purchaser, the vendor issues a warrant in favour of the purchaser. If the purchaser intends immediately to dispose of the goods without himself taking delivery of them, he would leave this warrant in the hands of the vendor, and draw against it by means of delivery orders in favour of the parties purchasing from him (see The Merchant Banking Company, 1877, 5 Ch. D. 205).

No.

Form 1, Delivery Order or Warrant by Custodier

Warrant for 5 hhds. Whisky transferred in our books, of Messrs. A. B. & Co., or Assigns by endorsement hereon. Nos. 1/51 to 1/55.

(Place and Date.) and held to the Order Five hhds. Whisky. C. & D.

Form 2, Delivery Order by Owner of Goods

To Mr. J. A., Warehousekeeper,

(Address).

(Place and Date.)

Please deliver in bond to the order of Messrs. E. & F., the undernoted five (5) hhds. special Scotch whisky, and oblige,

Nos. 1/51 to 1/55.

A. B. & Co.

Form 3, Another Form of Delivery Order

To (Custodier's name, designation,

and address).

Please deliver to Messrs. E. & F. or [bearer] the undermentioned Goods, ex s.s.

(Place and Date.)

, on (date of entry).

A. B. & Co.

Marks.

No.

General Description.

Departmental Accounting

THE whole system of departmental account-keeping is a scheme of analysis and classification affording complete information of the transactions as affecting the divisions or departments of the business.

The simplest order of such accounting is the departmentalising of the goods entries only, and apportioning the expenses as a percentage on the turn-over or on the purchases of the departments. The nature of the business conducted may suggest some obvious inequality between the departments, on account of certain items of expense entering more largely into one department's transactions than another's than the apportionment on the basis of volume of the departmental trade provides for. It would be necessary to eliminate such special expense for separate allocation on a more correct basis. Certain other burdens may be found to be wholly chargeable to one department. All such items not conforming to a general standard of chargeability must be kept distinct from those which do; the classification of expenses is therefore made according to the ultimate allocation among the departments.

The yearly

Each department must have its own goods account. inventory of stock must keep the departments distinct by summing each class of goods separately. The purchases, sales, and returns (outwards and inwards) are classified by the use of analytical (or columnar) books of original record (see DAY BOOK and INVOICE BOOK). Some firms prefer to employ the simple rulings for these books and to analyse each month's transactions. A Dissection Book is then employed to aggregate the departmental transactions and thus simplify the goods accounts materially.

The variety of treatment is almost endless, but the forms shown infra are suggestive of the lines to adopt. The cash sales slips must bear the department number or name, or be of a distinctive colour, and when they are sent up to the desk with the cash they are filed until the end of the day. They are then classified according to departments and the departmental daily total entered in the Dissection Book, while the grand total for the day is entered in the Cash Book and posted thence to the Cr. total col. in the Dissection Book. The cross summation of the departmental cols. would, of course, agree with such posting. The cash purchases could be similarly treated if necessary, but they are commonly so few in number, that they can be individually passed to the Dissection Book from the Cash Book.