BOOK-KEEPING

book-keeping, a systematic record of business transactions, in a form conveniently available for reference, made by individuals or corporations engaged in commercial or financial operations with a view to enabling them with the minimum amount of trouble and of dislocation to the business itself to ascertain at any time (1) the detailed particulars of the transactions undertaken, and (2) the cumulative effect upon the business and its financial relations to others. book-keeping, sometimes described as a science and sometimes as an art, partakes of the nature of both. it is not so much a discovery as a growth, the crude methods of former days having been gradually improved to meet the changing requirements of business, and this process of evolution is still going on. the ideal of any system of book-keeping is the maximum of record combined with the minimum of labour, but as dishonesty has to be guarded against, no system of book-keeping can be regarded as adequate which does not enable the record to be readily verified as a true and complete statement of the transactions involved. such a verification is called an audit, and in the case of public and other large concerns is ordinarily undertaken by professional accountants (q.v.). where the book-keeping staff is large it is usually organized so that its members, to some extent at least, check each other's work, and to that extent an audit, known as a "staff audit" or "internal check," is frequently performed by the book-keeping staff itself. formerly, when credit was a considerably less important factor than now in commercial transactions, book-keeping was frequently limited to an account of receipts and payments of money; and in early times, before money was in use, to an account of the receipt and issue of goods of different kinds. even now what may be called the "cash system" of accounts is almost exclusively used by governments, local authorities, and charitable and other institutions; but in business it is equally necessary to record movements of credit, as a mere statement of receipts and payments of money would show only a part of the total number of transactions undertaken. as for practical purposes some limit must be placed upon the daily record of transactions, certain classes show only a record of cash receipts and payments, which must, when it is desired to ascertain the actual position of affairs, be adjusted by bringing into account those transactions which have not yet been completed by the receipt or payment of money. for instance, it is usual to charge customers with goods sold to them at the date when the sale takes place, and to give them credit for the amount received in payment upon the date of receipt (thus completely recording every phase of the transaction as and when it occurs); but in connexion (say) with wages it is not usual to give each workman credit for the services rendered by him from day to day, but merely to charge up the amounts, when paid, to a wages account, which thus at any date only shows the amounts which have actually been paid, and takes no cognisance of the sums accruing due. when, therefore, it is desired to ascertain the actual expenditure upon wages for any given period, it is necessary to allow for the payments made during that period in respect of work previously performed, and to add the value of work performed during the current period which remains unpaid. in the majority of businesses those accounts which deal with various forms of standing expenses are thus dealt with, and in consequence the record, as it appears from day to day, is _pro tanto_ incomplete. another very important series of transactions which is not included in the ordinary day-to-day record is that representing the loss gradually accruing by reason of waste, or depreciation, of assets or general equipment of the business; proper allowance for these losses must of course be made whenever it is desired to ascertain the true position of affairs. history. the origin of book-keeping is lost in obscurity, but recent researches would appear to show that some method of keeping accounts has existed from the remotest times. babylonian records have been found dating back as far as 2600 b.c., written with a stylus on small slabs of clay, and it is of interest to note (_records of the past_, xi. 89) that these slabs or tablets "usually contain impressions from cylinder seals, and nail marks, which were considered to be a man's natural seal," thus showing that the modern method of identifying criminals by finger prints had its counterpart in babylonia some 4500 years ago. egyptian records were commonly written on papyrus, and contemporary pictures show a scribe keeping account of the quantities of grain brought into and removed from the government store-houses. it will thus be seen that some form of book-keeping existed long before bound books were known, and therefore the more general term _accounting_ would seem to be preferable--the more so as the most modern developments are in the direction of again abandoning the bound book in favour of loose or easily detached sheets of paper or card, thus capable of being rearranged as circumstances or convenience may dictate. most of the earlier accounting records are in the nature of a mere narrative of events, which--however complete in itself--failed to fulfil the second requirement of an adequate system of book-keeping already referred to. prior to the use of money nothing in this direction could of course well be attempted; but for a long time after its employment became general money values were recorded in roman figures, which naturally did not lend themselves to ready calculation. at the present-time it may be generally stated that all book-keeping records are kept in three distinct columns, dealing respectively with the date of the transaction, its nature, and its money value. the earliest extant example of accounts so kept is probably a ledger in the advocates' library at edinburgh, dated 1697, which, it is of interest to note, is ruled by hand. prior to that time, however, double-entry book-keeping had been in general use. the exact date of its introduction is unknown; but it was certainly not, as has been frequently stated, the invention of lucas de bergo, in or about 1494. this, however, is the date of the first issue (at venice) of a printed book entitled _everything about arithmetic, geometry and proportion_, by luca paciolo, which contains _inter alia_ an explanation of book-keeping by double-entry as then understood; but in all probability, the system had then been in use for something like 200 years. it is perhaps unfortunate that from 1494 until comparatively recent times the literature of accounting has been provided by theorists and students, rather than by practical business men, and it may well be doubted, therefore, whether it accurately describes contemporary procedure. another illusion which it is necessary to expose in the interests of truth is the value attached to _jones's english system of book-keeping by single or double entry_, published at bristol in 1796. before publishing this book, e.t. jones issued a prospectus, stating that he had patented an entirely new and greatly improved system, and that subscribers (at a guinea a copy) would be entitled to a special licence empowering them to put the new invention into practice in their own book-keeping. with this bait he secured thousands of subscribers, but so far as can be gathered his system was entirely without merit, and it is chiefly of interest as indicating the value, even then, of advertising. modern methods. it is impossible here to describe fully all the improvements that have been made in methods of accounting during recent years, but it is proposed to deal with the more important of these improvements, after the general principles upon which all systems of book-keeping are based have been briefly described. the centre of all book-keeping systems is the _ledger_, and it may be said that all other books are only kept as a matter of practical convenience--hence the name "subsidiary books" that is frequently applied thereto. inasmuch, however, as the transactions are first recorded in these subsidiary books, and afterwards classified therefrom into the ledger, the names _books of entry_ or _books of first entry_ are often employed. subsidiary books which do not form the basis of subsequent entries into the ledger, but are merely used for statistical purposes, are known as _statistical_ or _auxiliary books_. in the early days of book-keeping the ledger comprised merely those accounts which it was thought desirable to keep accessible, and was not a complete record of all transactions. thus in many instances records were only kept of transactions with other business houses, known as _personal accounts_. in the earliest examples transactions tending to reduce indebtedness were recorded in order of date, as they occurred underneath transactions recording the creation of the indebtedness; and the amount of the reduction was subtracted from the sum of the indebtedness up to that date. this method was found to be inconvenient, and the next step was to keep one account of the transactions recording the creation of indebtedness and another account (called the _contra account_) of those transactions reducing or extinguishing it. for convenience these two accounts were kept on opposite sides of the ledger, and thus was evolved the _dr._ and _cr._ account as at present in general use:-- _dr._ a.b. contra. _cr._ -------+-------------+---------++-------+------------+--------- date. | narrative. | amount. || date. | narrative. | amount. -------+-------------+---------++-------+------------+--------- | | l s. d. || | | l s. d. | | || | | | | || | | | | || | | in this form of account all transactions creating indebtedness due from the person named therein to the business--that is to say, all benefits received by that person from the buisness--are recorded upon the left-hand, or _dr._ side, and _per contra_ all transactions representing benefits imparted by him, giving rise to a liability on the part of the business, are recorded upon the _cr._ side. the account may run on indefinitely, but as a matter of convenience is usually ruled off each time all indebtedness is extinguished, and also at certain periodical intervals, so that the state of the account may then be readily apparent. single-entry accounts. a mere collection of _personal accounts_ is, however, obviously a very incomplete record of the transactions of any business, and does not suffice to enable a statement of its financial position to be prepared. so at an early date other accounts were added to the ledger, recording the acquisition of and disposal of different classes of property, such accounts being generally known as _real accounts_. these accounts are kept upon the same principle as personal accounts, in that all expenditure upon the part of the business is recorded upon the _dr._ side, and all receipts upon the _cr._ side; the excess of the debit entries over the credit entries thus showing the value placed upon those assets that still remain the property of the business. with the aid of personal and real accounts properly written up to date, it is possible at any time to prepare a statement of assets and liabilities showing the financial position of a business, and the following is an example of such a statement, which shows also how the profit made by the business may be thus ascertained, assuming that the financial position at the commencement of the current financial period, and the movements of capital into and out of the business during the period, are capable of being ascertained. state of affairs as at 31st december 1906 +----+--------------------+----------------++------------------+--------------- | | _liabilities._ | || _assets._ | | | | || | | | trade creditors | l4,961 10 0 || fixtures, furni- | | | bills payable | 2,620 18 4 || ture, &c. | l1,269 4 3 | | balance, being ex- | || stock on hand | 5,751 3 10 | | cess of assets | || trade debtors | 3,842 7 9 | | over liabilities | || bills recievable | 7,468 14 3 | | (or "capital") | || cash at bank | 4,169 5 5 | | at this date | || | | | carried down | 14,918 7 4 || | | | +----------------++ +--------------- | | |l22,500 15 6 || |l22,500 15 6 | | +----------------++ +--------------- | | amount of capi- | || balance brought | | | tal on 1st jan. | || down |l14,918 7 2 | | 1906 |l15,010 1 7 || | | | balance, being net | || amount drawn | | | profit for the | || out of business| | | year ended this | || during year | | | date | 1,408 5 7 || ended this date| 1,500 0 0 | | +----------------++ +--------------- | | |l16,418 7 2 || |l16,418 7 2 +----+--------------------+----------------++------------------+--------------- the method of accounting hitherto described represents _single-entry_, which--albeit manifestly incomplete--is still very generally used by small business houses, and particularly by retail traders. its essential weakness is that it provides no automatic check upon the clerical accuracy of the record, and, should any mistake be made in the keeping of the books, or in the extraction therefrom of the lists of assets and liabilities, the statement of assets and liabilities and the profit or loss of the current financial period, will be incorrect to an equal extent. it was to avoid this obvious weakness of single-entry that the system of double-entry was evolved. double-entry. the essential principle of double-entry is that it constitutes a complete record of _every_ business transaction, and as these transactions are invariably cross-dealings--involving simultaneously the receipt of a benefit by some one and the imparting of a benefit by some one--a complete record of transactions from both points of view necessitates an entry of equal amount upon debit and credit sides of the ledger. hence it follows that, if the clerical work be correctly performed, the aggregate amount entered up upon the debit side of the ledger must at all times equal the aggregate amount entered up upon the credit side; and thus a complete list of all ledger balances will show an agreement of the total debit balances with the total credit balances. such a list is called a _trial balance_, an example of which is given below. it should be observed, however, that the test supplied by the _trial balance_ is a purely mechanical one, and does not prove the absolute accuracy of the ledger as a record of transactions. thus transactions which have actually taken place may have been omitted from the books altogether, or they may have been recorded to the wrong accounts, or the money values attached to them may be incorrect; or, yet again, fictitious records may be entered in the ledger of transactions which have never taken place. a _trial balance_ is thus no very adequate safeguard against fraud, nor does it bring to light mistakes in the monetary value attaching to the various transactions recorded. this last point is of especial importance, in that the monetary value of transactions may have been correctly recorded in the first instance, but owing to altered circumstances may have become inaccurate at a later date. this of course means that the altered circumstances constitute an additional "transaction" which has been omitted. trial balance, 31st december 1906 ----+-------------------------+---------------+-------------- | | _dr._ | _cr._ 1 | capital account | | l15,010 1 7 5 | drawings | 1,500 0 0 | 20 | trade creditors | | 4,961 10 0 24 | fixtures, furniture, &c.| 1,269 4 3 | 27 | bills payable | | 2,620 18 4 40 | bad debts | 71 4 2 | 44 | stock 1st jan. 1906 | 4,078 16 4 | 50 | discounts allowed | 975 3 3 | 53 | trade debtors | 3,842 7 9 | 60 | discounts received | | 1,117 17 8 65 | wages and salaries | 1,865 12 0 | 75 | depreciation | 141 0 5 | 78 | rent, rates and taxes | 1,242 13 8 | 82 | general expenses | 1,087 8 0 | 90 | bills receivable | 7,468 14 3 | 97 | purchases | 44,731 2 10 | 100 | sales | | 48,732 4 9 c56 | cash at bank | 4,169 5 5 | | +---------------+-------------- | | l72,442 12 4 | l72,442 12 4 ----+-------------------------+---------------+-------------- balance sheet. it will be observed, therefore, that in order to complete the record of the transactions by double-entry, it has become necessary to introduce into the ledger a third class of accounts, known as _impersonal_ or _nominal accounts_. these accounts record the transferences of money, or of money's worth, which, so far from representing a mere reshuffling of assets and liabilities, involve an increase in or a reduction of the amount invested in the business, i.e. a profit or a loss. transactions representing profits are recorded upon the _cr._ side of nominal accounts, and those representing losses (including expenses) upon the _dr._ side. this is consistent with the rules already laid down in connexion with real and nominal accounts, inasmuch as expenditure which does not result in the acquisition of an asset is a loss, whereas receipts which do not involve the creation of liabilities represent profits. all debit balances therefore that are not assets are losses, and _per contra_ all credit balances that are not liabilities are profits. so that, inasmuch as double-entry provides _inter alia_ a complete statement under suitable headings of all profits and all losses, it is possible by aggregating these results to deduce therefrom the net profit or loss of carrying on the business--and that by a method entirely distinct from that previously described in connexion with single-entry, thus constituting a valuable additional check. taking the trial balance shown above, the following represent the _trading account_, _profit and loss account_, and _balance sheet_ compiled therefrom. the trading account may be variously regarded as the account recording the movements of goods which represent the stock-in-trade, and as a preliminary to (or a subdivision of) the profit and loss account. the balance sheet is a statement of the assets and liabilities; but--inasmuch as, by transferring the balance of the profit and loss account to the capital account, it is possible to bring the latter account up to date and to show the credit balance representing the surplus of assets over liabilities to date--the balance sheet, instead of showing a difference, or a "balance," representing what is _assumed to be_ the amount of the capital to date, shows an absolute agreement of assets upon the one hand and of liabilities _plus_ capital upon the other. the two sides of the account thus balance--hence the name. _dr._ trading account for the year ended 31st december 1906 _cr._ ------+-------------------------------------+-------------++-------+-----------------------------+------------- | to stock on hand, 1st jan. 1906 | l4,078 16 4|| | by sales |l48,732 4 9 | " purchases | 44,731 2 10|| | " stock on hand 31st dec. | | " gross profit, transferred | || | 1906 | 5,751 3 10 | to profit and loss account | 5,673 9 5|| | | | |-------------++ | +------------- | |l54,483 8 7|| | |l54,483 8 7 ------+-------------------------------------+-------------++-------+-----------------------------+------------- _dr._ profit and loss account for the year ended 31st december 1906 _cr._ ------+-------------------------------------+-------------++-------+-----------------------------+------------- | to rent, rates and taxes l1,242 13 8| || | by gross profit as per | | " salaries and wages 1,865 12 0| || | trading account | l5,673 9 5 | " general expenses 1,087 8 0| || | " discount received | 1,117 17 8 | ----------+ l4,195 13 8|| | | | " discounts allowed | 975 3 3|| | | | " bad debts | 71 4 2|| | | | " deprecation | 141 0 5|| | | | " net profit for the year trans- | || | | | ferred to capital account | 1,408 5 7|| | | | +-------------++ | +------------- | | l6,791 7 1|| | | l6,791 7 1 ------+-------------------------------------+-------------++-------+-----------------------------+------------- _dr._ balance sheet as at 31st december 1906 _cr._ ------+-------------------------------------+-------------++-------+-----------------------------+------------- | to a.b., capital account |l14,918 7 2|| | by fixtures, furniture, &c. | l1,269 4 3 | " trade creditors | 4,961 10 0|| | " stock on hand | 5,751 3 10 | " bills payable | 2,620 18 4|| | " trade debtors | 3,842 7 9 | | || | " bills receivable | 7,468 14 3 | | || | " cash at bank | 4,169 5 5 | +-------------++ | +------------- | |l22,500 15 6|| | |l22,500 15 6 ------+-------------------------------------+-------------++-------+-----------------------------+------------- _dr._ a.b., capital account _cr._ ------+-------------------------------------+-------------++-------+-----------------------------+------------- | || 1906. | | 1906. | to drawings account | l1,500 0 0||jan. 1 | by balance from last account|l15,010 1 7 dec 31| " balance carried down | 14,918 7 2||dec. 31| " profit and loss account, | | | || | being net profit for the | | || | year ended this date | 1,408 5 7 | +-------------++ | +------------- | |l16,418 7 2|| | |l16,418 7 2 | +-------------++ | +------------- | | || 1907. | | | | ||jan. 1 | by balance brought down |l14,918 7 2 ------+-------------------------------------+-------------++-------+-----------------------------+------------- in the foregoing example the customary method has been followed of deducting withdrawals of capital from the capital account and of adding profits thereto. sometimes, however, the balance of the capital account remains constant, and the drawings and net profits are transferred to a separate account called _current account_. this plan is but rarely observed in the case of undertakings owned by individuals, or private firms, but is invariably adopted in connexion with joint-stock companies, although in such cases the name _appropriation of profit account_ is generally employed. journal. although it is now usual to employ several books of first-entry, in the case of comparatively small businesses one such book is sufficient for all purposes, in that it is practicable for one person to record all the transactions that take place as and when they occur. a book of this description is called the _journal_, and for many years represented the only book of first-entry employed in book-keeping. an example of the journal is given below. the entries appearing therein are such as would be necessary to prepare the trading and profit and loss accounts from the trial balance shown above, and to bring the capital account up to date. in modern times, however, with the growth of business, it was soon found impracticable to keep one book of first-entry for all transactions, and accordingly it became necessary either to treat the journal as an intermediate book, in which the transactions might be brought together and focused as a preliminary to being recorded in the ledger, or else to split up the journal into numerous books of first-entry, each of which might in that case be employed for the record of a particular class of transaction. the first method has been generally adopted in the continental countries of europe, as will be shown later on, whereas in great britain and in north america the latter method more generally obtains; that is, instead of having one journal in which all classes of transactions are recorded in the first instance, it is usual to employ several journals, as follows:--a _sales journal, sales book_ or _day book_, to record particulars of goods sold; a _bought journal, invoice book_ or _purchases book_, to record particulars of goods purchased; a _returns inwards book_, to record particulars of goods sold but subsequently returned by customers; a _returns outwards book_, to record the like particulars with regard to goods purchased and subsequently returned; a _bills receivable book_, to record particulars of bills of exchange received from debtors; and a _bills payable book_, to record particulars of bills of exchange given to creditors. journal 1906 -------+----------------------------+----+---------------+---------------+ | | | _dr._ | _cr._ | dec. 31|trading account |110 | l48,809 19 2 | | | to stock account | 44 | | l 4,078 16 4 | | " purchases account | 97 | | 44,731 2 10 | +----------------------------+ | | | " |sales account |100 | 48,732 4 9 | | |stock account | 44 | 5,751 3 10 | | | to trading account |110 | | 54,483 8 7 | +----------------------------+ | | | " |trading account |110 | 5,673 9 5 | | | to profit and loss | | | | | account |120 | | 5,673 9 5 | +----------------------------+ | | | " |profit and loss account |120 | 5,383 1 6 | | | to rent, rates and taxes | 78 | | 1,242 13 8 | | " salaries and wages | 65 | | 1,865 12 0 | | " general expenses | 82 | | 1,087 8 0 | | " discounts allowed | 50 | | 975 3 3 | | " bad debts | 40 | | 71 4 2 | | " depreciation | 75 | | 141 0 5 | +----------------------------+ | | | " |discounts received | 60 | 1,117 17 8 | | | to profit and loss account|120 | | 1,117 17 8 | +----------------------------+ | | | " |profit and loss account |120 | 1,408 5 7 | | | to a.b., capital account | 1 | | 1,408 5 7 | +----------------------------+ | | | |a.b., captial account | 1 | 1,500 0 0 | | | to drawings account | 5 | | 1,500 0 0 | | | +---------------+---------------+ | | |l118,376 1 11 |l118,376 1 11 | ------------------------------------+----+---------------+---------------+ day book 1906 -----+----------------------------------+---------+----------- | forward | |l3761 7 8 +--------- 27th december. ---------+ | | a. brown, | | | 492 new street, walworth-- | | 471 | 2 doz. v.c. port 31/- | l3 2 0 | | 1 " a.c. pale brandy 49/- | 2 9 0 | | | | -----+--------- 28th december. ---------+---------+ 5 11 0 | fredk. newton, | | | farleigh house, epsom-- | | 216 | 1 gall. e. pale sherry 13/6 | l0 13 6 | | 2 doz. o.b. heidsieck 1892 160/- | 16 0 0 | | 2 gall. p. scotch 21/- | 2 2 0 | -----+----------------------------------+---------+ 18 15 6 | robert french, | | | 214 high road, sutton-- | | 408 | 6 doz. f.d. pommard, 1899 30/- | l9 0 0 | | 1 " m.f. margaux, 1893 66/- | 3 6 0 | | 2 " a. niersteiner 24/- | 2 8 0 | | +---------+ 14 14 0 | | +----------- | | |l3800 8 2 | | +----------- | | | | | | 100 | | | -----+----------------------------------+---------+----------- with a view still further to split up the work, thus enabling a large staff to be simultaneously engaged, the ledger itself is now generally kept in sections. thus the cash account and the bank account are frequently bound together in one separate book called the _cash book_, showing in parallel columns the movements of office cash and of cash at the bank, and by the addition of a third column for discounts the necessity of keeping an additional book of first entry as a _discount journal_ may also be avoided. of late years, however, most businesses pay all moneys received into their bankers without deduction, and pay all accounts by cheque; the necessity of an account for office cash thus no longer exists, save in connexion with petty payments, which are recorded in a separate book called the _petty cash book_. with regard to the remaining ledger accounts, personal accounts--which are the most numerous--are frequently separated from the real and nominal accounts, and are further subdivided so that customers' accounts are kept separate from the accounts of trade creditors. the customers' accounts are kept in a ledger (or, if need be, in several ledgers) called _sales ledgers_, or _sold ledgers_; while the accounts of trade creditors are similarly kept in _purchases ledgers_ or _bought ledgers_. the nominal and real accounts, if together, are kept in what is called the _general ledger_; but this may be further subdivided into a _nominal ledger_ and a _private ledger_. this last subdivision is, however, rarely made upon a scientific basis, for such accounts as the profit and loss account and trading account are generally kept in the private ledger although strictly speaking nominal accounts; while the bills receivable account and the bills payable account are generally kept in the nominal ledger, so as to reduce to a minimum the amount of clerical work in connexion with the private ledger, which is kept either by the principal himself or by his confidential employee. by the employment of _adjustment accounts_, which complete the double-entry record in each ledger, these various ledgers may readily be made self-balancing, thus enabling clerical errors to be localized and responsibility enforced. tabular book-keeping. of recent years considerable attention has been devoted to further modifications of book-keeping methods with a view to reducing clerical work, increasing the speed with which results are available, and enabling them to be handled more quickly and with greater certainty. _tabular book-keeping_ is a device to achieve one or more of these ends by the substitution of books ruled with numerous columns for the more usual form. the system may be applied either to books of first entry or to ledgers. as applied to books of first-entry it enables the same book to deal conveniently with more than one class of transaction; thus if the trading of a business is divided into several departments, by providing a separate column for the sales of each department it is possible readily to arrive at separate totals for the aggregate sales of each, thus simplifying the preparation of departmental trading accounts. as applied to ledgers, the application of the system may be best described by the aid of the above example (the proceedings of the columns being given only), which shows how a very large number of personal accounts may be recorded upon a single opening of a ledger provided the number of entries to be made against each individual be few. -------+-------+-------+-------+-------+-------+-------+-------+-------+-------+-------+------- (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | (l) -------+-------+-------+-------+-------+-------+-------+-------+-------+-------+-------+------- | |l s. d.|l s. d.|l s. d.| |l s. d.|l s. d.|l s. d.|l s. d.|l s. d.| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (a) reference no. (b) name of debtor. (c) amount due on 1st oct. 1906 (d) charges for current quarter. (e) total debit. (f) date received. (g) amount received. (h) discounts. (i) allowances. (j) bad debts. {k} amount due on 31st dec. 1906 (l) remarks. [illustration: fig 1.--card-ledger tray (librry bureau system).] slip system. another important application of modern methods consists of what may be described as the _slip system_, which is in many respects a reversion to the method of keeping records upon movable slabs or tablets, as in the babylonian accounts referred to at the beginning of this article. this system may be applied to books of first-entry, or to ledgers, or to both. as applied to books of first-entry it aims at so modifying the original record of the transaction--whether it represents an invoice for goods sold or an acknowledgment given for money received--that a facsimile duplicate may be taken of the original entry by the aid of a carbon sheet, which instead of being immovably bound up in a book is capable of being handled separately and placed in any desired order or position, and thus more readily recorded in the ledger. postings are thus made direct from the original slips, which have been first sorted out into an order convenient for that purpose, and afterwards resorted so that the total sales of each department may be readily computed; after which they are filed away in a form convenient for reference. sometimes the process is carried a step further, and the original slips, filed away with suitable guide-cards indicating the nature of the account, themselves constitute the ledger record--which in such cases is to be found scattered over a number of sheets, one for each transaction, instead of, as in the case of the ordinary book ledger, a considerable number of transactions being recorded upon a single page. this adaptation of the slip system is impracticable except in cases where the transactions with each individual are few in number, and is not worth adoption unless the exceedingly large number of personal accounts makes it important as far as possible to avoid all duplication of clerical work. the more usual adaptation of the slip system to ledgers is to be found in the employment of _card ledgers_ or _loose-leaf ledgers_. with card ledgers (fig. 1) each ledger account is upon an independent sheet of cardboard suitably arranged in drawers or cabinets. the system is advantageous as allowing all dead matter to be eliminated from the record continuously in use, and as permitting the order in which the accounts stand to be varied from time to time as convenience dictates, thus (if necessary) enabling the accounts to be always kept in alphabetical order in spite of the addition of new accounts and the dropping out of old ones. an especial convenience of the card system is that in times of pressure any desired number of book-keepers may be simultaneously employed, whereas the maximum number that can be usefully employed upon any bound book is two. the loose-leaf ledger (fig. 2) may be described as midway between card and bound ledgers. it consists of a number of sheets in book form, so bound as to be capable of being readily separated when desired. the loose-leaf ledger thus embraces most of the advantages of the card ledger, while remaining sufficiently like the more old-fashioned book ledger as to enable it to be readily handled by those whose previous experience has been confined to the latter. both the card and loose-leaf systems will be frequently found of value for records in connexion with cost and stores accounts, quite irrespective of their advantages in connexion with the book-keeping records pure and simple of certain businesses. [illustration: fig. 2.--loose-leaf ledger (library bureau system.)] legislative requirements. all book-keeping methods rest upon the same fundamental principles, but their development in practice in different countries is to some extent influenced by the manner in which business is there conducted, and by the legislative requirements imposed by the several states. in france traders are required by the code of commerce to keep three books--a journal, an inventory and a letter book, somewhat elaborate provisions being made to identify these books, and to prevent substitution. the compulsory journal makes the employment of numerous books of first-entry impossible without an undesirable amount of duplication, and wherever this provision obtains the book-keeping methods are in an accordingly comparatively backward state. the inventory book comprises periodical lists of ledger balances and the balance sheet, records which are invariably kept under every adequate system, although not always in a book specially set aside for that purpose. in germany the statutory requirements are similar to those in france, save that the journal is not compulsory; but there is an additional provision that the accounts are to be kept in _bound_ books with the pages numbered consecutively--a requirement which makes the introduction of card or loose-leaf ledgers of doubtful legality. a balance sheet must be drawn up every year; but where a stock-in-trade is from its nature or its size difficult to take, it is sufficient for an inventory to be taken every two years. in belgium the law requires every merchant to keep a journal recording his transactions from day to day, which (with the balance book) must be initialled by a prescribed officer. all letters and telegrams received, and copies of all such sent, must be preserved for ten years. the commercial code of spain requires an inventory, journal, ledger, letter book and invoice book to be kept; while that of portugal prescribes the use of a balance book, journal, ledger and copy-letter book. the law of holland requires business men to keep books in which are correctly recorded their commercial transactions, letters received and copies of letters sent. it also provides for the preparation of an annual balance sheet. the law of rumania makes the employment of journal, inventory book and ledger compulsory, a small tax per page being charged on the two first named. there are no special provisions as to book-keeping contained in the russian law, nor in the united states law, but in russia public companies have to supply the government with copies of their annual accounts, which are published in a state newspaper, and in the united states certain classes of companies have to submit their accounts to an official audit. in general terms it may be stated that at the present time the employment of card and loose-leaf ledger systems is more general in the united states than in great britain. education. apart from the organizations of professional accountants, there is none of note devoted to the scientific study of book-keeping other than purely educational institutions. among the universities those in the united states were the first to include accounting as part of their curriculum; while in great britain the london school of economics (university of london), the university of birmingham, and the victoria university of manchester have, so far, alone treated the subject seriously and upon adequate lines. quite recently japan has been making a movement in the same direction, and other countries will doubtless follow suit. in england there have for a number of years past been various bodies--such for instance as the society of arts, the london chamber of commerce and owens college, manchester--which hold examinations in book-keeping and grant diplomas to successful candidates, while most of the polytechnics and technical schools give instruction in book-keeping; these latter, however, for the most part regard it as a "craft" merely. authorities.--those interested in the bibliography of book-keeping are referred to the catalogue of the library of the institute of chartered accountants in england and wales, which probably contains the most complete collection in existence of ancient and modern works on accounting, both british and foreign. the following short list comprises those most likely to be found of general interest: g. van de linde, _book-keeping_ (1898); l.r. dicksee, _book-keeping_ (5th ed., 1906) and _advanced accounting_ (2nd ed., 1905); _encyclopaedia of accounting_, ed. by g. lisle (1903); _accountants' library_, ed. by the editor of _the accountant_ (1901); j.w. heaps, _the antiquity of book-keeping_ (1898); _history of accounting and accountants_, ed. by r. brown (1905). (l. r. d.) book-plates. the book-plate, or _ex-libris_, a printed label intended to indicate ownership in individual volumes, is nearly as old as the printed book itself. it bears very much the same relation to the hand-painted armorial or otherwise symbolical personal device found in medieval manuscripts that the printed page does to the scribe's work. the earliest known examples of book-plates are german. according to friedrich warnecke, of berlin (one of the best authorities on the subject), the oldest movable _ex-libris_ are certain woodcuts representing a shield of arms supported by an angel (fig. 1), which were pasted in books presented to the carthusian monastery of buxheim by brother hildebrand brandenburg of biberach, about the year 1480--the date being fixed by that of the recorded gift. the woodcut, in imitation of similar devices in old mss., is hand-painted. in france the most ancient _ex-libris_ as yet discovered is that of one jean bertaud de la tour-blanche, the date of which is 1529; and in england that of sir nicholas bacon, a gift-plate for the books he presented to the university of cambridge (fig. 2). holland comes next with the plate of a certain anna van der aa, in 1597; then italy with one attributed to the year 1622. the earliest known american example is the plain printed label of one john williams, 1679. [illustration: fig. 1.--gift-plate of hildebrand brandenburg of biberach to the monastery of buxheim (c. 1480).] [illustration: fig. 2.--book-plate of sir nicholas bacon (slightly reduced).] a sketch of the history of the book-plate, either as a minor work of symbolical and decorative art, or as an accessory to the binding of books, must obviously begin in germany, not only because the earliest examples known are german, but also because they are found in great numbers long before the fashion spread to other countries, and are often of the highest artistic interest. albrecht durer is known to have actually engraved at least six plates (some of very important size) between 1503 and 1516 (fig. 3), and to have supplied designs for many others. several notable plates are ascribed to lucas cranach and to hans holbein, and to that bevy of so-called little masters, the behams, virgil solis, matthias zundt, jost amman, saldorfer, georg hupschmann and others. the influence of these draughtsmen over the decorative styles of germany has been felt through subsequent centuries down to the present day, notwithstanding the invasion of successive italian and french fashions during the 17th and 18th centuries, and the marked effort at originality of composition observable among modern designers. the heavy, over-elaborated german style never seems to have affected neighbouring countries; but since it was undoubtedly from germany that was spread the fashion of ornamental book-plates as marks of possession, the history of german _ex-libris_ remains on that account one of high interest to all those who are curious in the matter. [illustration: fig. 3.--book-plate of lazarus spengler, by albrecht durer, 1515 (reduced).] it was not before the 17th century that the _movable ex-libris_ became tolerably common in france. up to that time the more luxurious habit of stamping the cover with a personal device had been in such general favour with book-owners as to render the use of labels superfluous. from the middle of the century, however, the _ex-libris_ proper became quite naturalized; examples of that period are very numerous, and, as a rule, are very handsome. it may be here pointed out that the expression _ex-libris_, used as a substantive, which is now the recognized term for book-plate everywhere on the continent, found its origin in france. the words only occur in the personal tokens of other nationalities long after they had become a recognized inscription on french labels. in many ways the consideration of the english book-plate, in its numerous styles, from the late elizabethan to the late victorian period, is peculiarly interesting. in all its varieties it reflects with great fidelity the prevailing taste in decorative art at different epochs. of english examples, none thus far seems to have been discovered of older date than the gift-plate of sir nicholas bacon; for the celebrated, gorgeous, hand-painted armorial device attached to a folio that once belonged to henry viii., and now reposes in the king's library, british museum, does not come under the head of book-plate in its modern sense. the next is that of sir thomas tresham, dated 1585. until the last quarter of the 17th century the number of authentic english plates is very limited. their composition is always remarkably simple, and displays nothing of the german elaborateness. they are as a rule very plainly armorial, and the decoration is usually limited to a symmetrical arrangement of mantling, with an occasional display of palms or wreaths. soon after the restoration, however, a book-plate seems to have suddenly become an established accessory to most well-ordered libraries. book-plates of that period offer very distinctive characteristics. in the simplicity of their heraldic arrangements they recall those of the previous age; but their physiognomy is totally different. in the first place, they invariably display the tincture lines and dots, after the method originally devised in the middle of the century by petra sancta, the author of _tesserae gentilitiae_, which by this time had become adopted throughout europe. in the second, the mantling assumes a much more elaborate appearance--one that irresistibly recalls that of the periwig of the period--surrounding the face of the shield. this style was undoubtedly imported from france, but it assumed a character of its own in england. as a matter of fact, thenceforth until the dawn of the french revolution, english modes of decoration in book-plates, as in most other chattels, follow at some years' distance the ruling french taste. the main characteristics of the style which prevailed during the queen anne and early georgian periods are:--ornamental frames suggestive of carved oak, a frequent use of fish-scales, trellis or diapered patterns, for the decoration of plain surfaces; and, in the armorial display, a marked reduction in the importance of the mantling. the introduction of the scallop-shell as an almost constant element of ornamentation gives already a foretaste of the _rocaille-coquille_, the so-called chippendale fashions of the next reign. as a matter of fact, during the middle third of the century this rococo style (of which the convers plate [fig. 4] gives a tolerably typical sample) affects the book-plate as universally as all other decorative objects. its chief element is a fanciful arrangement of scroll and shell work with curveting acanthus-like sprays--an arrangement which in the examples of the best period is generally made asymmetrical in order to give freer scope for a variety of countercurves. straight or concentric lines and all appearances of flat surface are studiously avoided; the helmet and its symmetrical mantling tends to disappear, and is replaced by the plain crest on a fillet. the earlier examples of this manner are tolerably ponderous and simple. later, however, the composition becomes exceedingly light and complicated; every conceivable and often incongruous element of decoration is introduced, from cupids to dragons, from flowerets to chinese pagodas. during the early part of george iii.'s reign there is a return to greater sobriety of ornamentation, and a style more truly national, which may be called _the urn style_, makes its appearance. book-plates of this period have invariably a physiognomy which at once recalls the decorative manner made popular by architects and designers such as chambers, the adams, josiah wedgwood, hepplewhite and sheraton. the shield shows a plain spade-like outline, manifestly based upon that of the pseudo-classic urn then so much to the fore. the ornamental accessories are symmetrical palms and sprays, wreaths and ribands. the architectural boss is also an important factor. in many plates, indeed, the shield of arms takes quite a subsidiary position by the side of the predominantly architectural urn. from the beginning of the 19th century, until comparatively recent days, no special style of decoration seems to have established itself. the immense majority of examples display a plain shield of arms with motto on a scroll below, and crest on a fillet above. of late years, however, a rapid impetus appears to have been given to the designing of _ex-libris_; a new era, in fact, has begun for the book-plate, one of great interest. [illustration: fig. 4.--book-plate of p.a. convers, 1762.] [illustration: fig. 5.--book-plate of francis gwyn of lansanor, 1698.] the main styles of decoration (and these, other data being absent, must always in the case of old examples remain the criteria of date) have already been noticed. it is, however, necessary to point out that certain styles of composition were also prevalent at certain periods. many of the older plates (like the majority of the most modern ones) were essentially pictorial. of this kind the best-defined english genus may be recalled: _the library interior_--a term which explains itself--and _book-piles_, exemplified by the _ex-libris_ (fig. 6) of w. hewer, samuel pepys's secretary. we have also many _portrait-plates_, of which, perhaps, the most notable are those of samuel pepys himself and of john gibbs, the architect; _allegories_, such as were engraved by hogarth, bartolozzi, john pine and george vertue; _landscape-plates_, by wood engravers of the bewick school (see plate), &c. in most of these the armorial element plays but a secondary part. [illustration: fig. 6.--book-plate of william hewer, 1699.] the value attached to book-plates, otherwise than as an object of purely personal interest, is comparatively modern. the study of and the taste for collecting these private tokens of book-ownership hardly date farther back than the year 1875. the first real impetus was given by the appearance of the _guide to the study of book-plates_, by lord de tabley (then the hon. leicester warren) in 1880. this work, highly interesting from many points of view, established what is now accepted as the general classification of styles: _early armorial_ (i.e. previous to restoration, exemplified by the nicholas bacon plate); _jacobean_, a somewhat misleading term, but distinctly understood to include the heavy decorative manner of the restoration, queen anne and early georgian days (the lansanor plate, fig. 5, is typically jacobean); _chippendale_ (the style above described as _rococo_, tolerably well represented by the french plate of convers); _wreath and ribbon_, belonging to the period described as that of the urn, &c. since then the literature on the subject has grown considerably. societies of collectors have been founded, first in england, then in germany and france, and in the united states, most of them issuing a journal or archives: _the journal of the ex-libris society_ (london), the _archives de la societe francaise de collectionneurs d'ex-libris_ (paris), both of these monthlies; the _ex-libris zeitschrift_ (berlin), a quarterly. much has been written for and against book-plate collecting. if, on the one hand, the more enthusiastic ex-librists (for such a word has actually been coined) have made the somewhat ridiculous claim of science for "ex-librisme," the bitter animadversion, on the other, of a certain class of intolerant bibliophiles upon the vandalism of removing book-plates from old books has at times been rather extravagant. book-plates are undoubtedly very often of high interest (and of a value often far greater than the odd volume in which they are found affixed), either as specimens of bygone decorative fashion or as personal relics of well-known personages. there can be no question, for instance, that engravings or designs by artists such as holbein and durer and the little masters of germany, by charles eisen, hubert francois bourguignon, _dit_ gravelot, d.n. chodowiecki or simon gribelin; by w. marshall, w. faithorne, david loggan, sir robert strange, francesco piranesi; by hogarth, cipriani, bartolozzi, john keyse sherwin, william henshaw, hewitt or bewick and his imitators; or, to come to modern times, that the occasional examples traced to the handicraft of thomas stothard, thackeray, millais, maclise, bell scott, t.g. jackson, walter crane, caldecott, stacy marks, edwin abbey, kate greenaway, gordon browne, herbert railton, aubrey beardsley, alfred parsons, d.y. cameron, paul avril--are worth collecting. [illustration: plate. book-plate of robert pinkney. by thoma bewick. book-plate of freiherr v. lipperheide. by karl rickelt. book-plate of charles dexter allen. by e.d. french. book-plate of sir arthur vicars. by c.w. sherborn.] until the advent of the new taste the devising of book-plates was almost invariably left to the routine skill of the heraldic stationer. of late years the composition of personal book-tokens has become recognized as a minor branch of a higher art, and there has come into fashion an entirely new class of designs which, for all their wonderful variety, bear as unmistakable a character as that of the most definite styles of bygone days. broadly speaking, it may be said that the purely heraldic element tends to become subsidiary and the allegorical or symbolic to assert itself more strongly. among modern english artists who have more specially paid attention to the devising of book-plates, and have produced admirable designs, may be mentioned c.w. sherborn, g.w. eve, robert anning bell, j.d. batten, erat harrison, j. forbes nixon, charles ricketts, john vinycomb, john leighton and warrington hogg. the development in various directions of process work, by facilitating and cheapening the reproduction of beautiful and elaborate designs, has no doubt helped much to popularize the book-plate--a thing which in older days was almost invariably restricted to ancestral libraries or to collections otherwise important. thus the great majority of modern plates are reproduced by process. there are, however, a few artists left who devote to book-plates their skill with the graver. some of the work they produce challenges comparison with the finest productions of bygone engravers. of these the best-known are c.w. sherborn (see plate) and g.w. eve in england, and in america j.w. spenceley of boston, mass., k.w.f. hopson of new haven, conn., and e.d. french of new york city (see plate). authorities.--the curious in the matter of book-plate composition will find it treated in the various volumes of the ex-libris series (london). see also a. poulet-malassis, _les ex-libris francais_ (1875); hon. j. leicester warren (lord de tabley), _a guide to the study of book-plates_ (1880); sir a.w. franks, _notes on book-plates_, 1574-1800 (private, 1887); friedrich warnecke, _die deutschen bucherzeichen_ (1890); henri bouchot, _les ex-libris et les marques de possession du livre_ (1891); egerton castle, _english book-plates_ (1892); walter hamilton, _french book-plates_ (1892), _dated book-plates_ (1895); h.w. fincham, _artists and engravers of british and american book-plates_ (1897); _german book-plates_, by count k.e. zu leiningen-westerburg, translated by g.r. denis (1901). (e. ca.)