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Extracts from the history of theteaching of book-keepingJ.G.C. Jackson aa London County CouncilPublished online: 30 Jul 2007.

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E X T R A C T S F R O M T H E H I S T O R Y O F T H E T E A C H I N G O F B O O K - K E E P I N G

By J . G. C. J A C K S O N

Inspector of Commercial Education, London County Council

The personification of accounts Until almost the beginning of the present century the fundamental problem

of teaching book-keeping was to explain to students how to find which account to debit and which to credit. In the technical sense this remains the problem to this very day. By far the most popular method of explanation and one which, in a modified form, holds the field to-day in this country is that of personification of the account.

The attribution of a living, independent personality to accounts is so wide- spreadIa) that it must have had its roots in the very earliest forms of book- keeping. The theory m a y have had two sources. On the one hand there is little doubt that the first ledger accounts were those showing personal debt relationships of merchants with one another. 1 With the development of the double-entry system, the terms 'debtor' and 'creditor' were extended firstly to accounts of things (real accounts) and later to abstract classifications (nominal accounts). It therefore became the practice to extend the meanings of the terms 'debit ' and 'credit' beyond their original personal connotation and to apply them to inanimate objects and abstract conceptions and by that very process a ready-made teaching device was forged.

The other source from which the conception of personification probably arose is from the practice of recording the relationship between the owner of an estate and his bailiff o r ' accountant ' in the form of an account of 'charge and discharge'. The bailiff 'charged' himself with that portion of the estate entrusted to him, including all receipts accepted on behalf of the lord, and 'discharged' himself with all expenditure made on his master's behalf and money paid over to the estate owner, s The use of the term 'charge' was extended from its personal application to that of 'charging' accounts, i.e. debiting them. Whatever its origin the practice of explaining the two entries to be made in the ledger by means of personifying the accounts is found in the very earliest texts.

Three main forms of personification theory can be traced. In the first the account is thought of as an independent, living entity. In its second form the account is conceived as representing the owner of the business. Finally there is a combination of these two forms in which the account is imagined to be an individual apart from the owner, yet accountable to him. These three forms are

(a) It is found, at any rate until about zgoo, in all European and North American countries where double-entry book-keeping was practised.

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j . G. C. JACKSON 43

often inextricably interwoven in any one book and historically they developed and expanded contemporaneously with one another, each borrowing a little from the others.

The original Venetian form of journal entry was to preface the account to be debited by 'per' and the creditor account by 'a', s these words being purely technical terms which had lost their grammatical significance. On translation however authors found no corresponding existing English terms and were apparently loathe to coin them. T h e y therefore fell back on a more general translation of the old Italian 'debito' and 'credo' as 'oweth' and 'trusts'; terms of relationship which, of course, are applicable only to persons. Entries which in Pacioli's treatise were in the form 'Per Cash. A Capital . . ?4 after trans- lation took the form of 'Money oweth to Thomas Lee . . . . ,5 'Money' was given a theoretically independent personal existence. The door to personifica- tion was opened wide.

James Peele (i569) followed a similar sequence of words ~ whereas Tapp 7 when in x6i 3 he reprinted The P a t h w a y to K n o w l e d g e . . . by W. p.s made his ledger entries in the form 'Peter Garetson ought to give to m o n e y . . . ' g when debiting the personal account. He used the words 'ought to have of ' when crediting accounts. These phrases clearly indicate the personification of the cash account and other real accounts.

By the beginning of the seventeenth century the journal entry had assumed a close approximation to its modern form o f ' X Debtor to Y'. The ledger account titles had become boldly written and separated from the body of the account and the individual items were prefaced by 'to' and 'by' on the debit and credit sides respectively, a practice which continues to the present day in school text- books. The use of the words 'to' and 'by' is, of course, merely the remains of the 'prose' or 'narrative' book-keeping of the pre-double-entry period. Q.uin's lay- out of the opening entry on the debit side of his cash account leads the eye to 'read' the account as a complete grammatical sentence. 1°

'I776 t ! Jan Cash Dr . . . . . £ s. d. i

I I To Stock-having now in Hand 4 5oo ~ o o'

From the form of the entry came the explanation. In Dafforne's dialogue u between 'Philo-Mathy' the teacher and 'School-Partner' the pupil, the question is asked why cash in hand is journalised as 'Cash Debitor to Stock 'm and the teacher's reply is, 'Because Cash (having received my mony into it) is obliged to restore it again at my pleasure ' : s The cash account, which Pacioli called 'cassa' and which was at first translated as 'chest', 14 was the account easiest to personify since the receptacle for the storage of coin could be visualised mentally and could be thought of as 'receiving' and 'paying'. Even six years before the beginning of the present century we can still read: 'You receive money; what do you do with it? You put it into your purse, or into a cash box, or pay it to your Bankers: in these several cases, your purse, or the cash box, or your Bankers become debtor for the amount. The purse or the cash box will pay it back to

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44 Extracts from the History o]'the Teaching of Book-keeping

you when you require it, and in the last case the Bankers are without metaphor debtor to you for the amount. Without distinguishing the several cases, we (so to speak) personify "Cash" regarding it as a debtor for the amount received. 'x6

The personification concept was extended to apply to inanimate objects (real accotlnts) in what Alexander Malcolm calls an 'artificial and improper sense', le 'When any Thing becomes mine', he wrote in 173 I, ' I consider it as a Subject which owes, or is accountable to me.' Peele's 'scholemaster', was more explicit. 'Marke me well', he said, 'and I will declare the same to you in fewe wordes. Where as I saide before, that the thinges receaued must owe, I meane therby that the goodes bought, or monie receaued of anye man, muste in all percelles be made debetour, (that is to saye) to owe vnto the parties of whom it is receaued or bought. As far example, Imagine that you haue bought clothes of William Jones, then to observe the rule, you must enter the percell in your Journall sayinge, Clothes oweth to William Jones etc. 'iv

An explanation or rationalisation of this method of exposition is given by Benjamin Donn in The accountant and Geometrician . . . . 'As I may expect to make of [i.e. sell] my Goods as much as they cost me, they are in Effect the same to me as if their Value was due to me from some person; and as, in such Case, that Person would be Debtor, so I may make the Goods in my Possession Debtor for their first Cost/Is This type of personification is by no means dead. ' I f I buy a ton of coal from a man', wrote Callaway only forty years ago, 'one effect of the transaction is to make the man my creditor; the other is to make my coal cellar, or coal account my debtor, because I look to the coal cellar to yield to me that ton of coal as and when I require it. 'x9

Another development of the personification principle was the evolution of the idea that accounts (other than personal accounts) represented the owner him- self. D6grange senior was amongst the first to put it into words. 'D6biter l 'un de ces comptes, c'est d6biter le n6gociant lui-m6me sous le nora de ce compte en particulier',~° he wrote. The basic idea, however, as Dr. Littleton has shown, ~1 may be derived from the form of the earliest known examples of double-entry book-keeping. The proprietor was conceived as entering twice into each transaction. For example if goods were bought on credit from Z the analysis would be, 'Goods shall give to proprietor, Z shall have or receive from proprietor'. ~ An extension of this conception made by the younger D6grange ~a was that the proprietor whom he calls 'x', enters into each and every transaction and to avoid overcrowding a single proprietor's account with an entry for every transaction he proposed his famous 'cinq comptes g6n6raux' (i.e. marchandises, caisse, effets tt recevoir, effets ~ payer, pertes et profits) all of which 'repr6sentent le n~gociant'. ~

The principle that the accounts represented the proprietor soon gained ground in Great Britain and by the middle of the nineteenth century James Henry Lewis was able to explain that this 'ingenious and useful fiction', which had 'long been employed in book-keeping' by which the article received was

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J. o . o . JACKSON 45

always made Dr. to the person from whom it was received meant that, 'instead of the merchant's name standing as Debtor or Creditor in his own books, he is personated by the goods'. ~s An excerpt from Crellin's book shows the direction of the development of this idea. ' I t is', he says, ' the trader himself who is the owner of this property, it is he who receives and parts with it, and it is he who, it may be thought, should be debited and credited rather than "Goods". But the trader, it must be remembered, has several kinds of goods, has cash, and bills, and fixtures, and leases etc. ; and ifaU the transactions occurring in these various forms of property were brought together into one account and entered under his name, it is evident that it would be very voluminous, and that it would be impossible without great waste of time to ascertain particulars regarding any one of them. Hence the advantage of sorting these several items, bringing together all that relate to the same thing, naming the accounts correspondingly, and treating them in the way of debiting and crediting as if they were living persons having charge of, and responsible for, the property to which they refer. '~° For the origin of this most extreme form of personification we must retrace our steps a little.

The most complete theory of personification arises when the accounts are given a personal identity and living form which is 'accountable' or responsible to the proprietor yet completely independent of him materially. A short appendix which first appeared in the fifth edition of the famous Augustus de Morgan's 'Arithmetic' entitled On the main principle o f Book-keeping ~ was, in its effect on the teaching of book-keeping, probably the most influential piece of writing to be found during the nineteenth century. In personification it made explicit and expanded to its logical conclusion what had previously been implicit in teaching methods and it initiated the movement which finally resulted in the abolition of the Journal as the stumbling block to the learning of the subject.

Traces of de Morgan's idea of 'clerks' representing accounts can be found as eaTly as 173 I. 'Now observe', wrote Richard Hayes, ' that each of those Parti- culars your Inventory does consist of, are therefore made Debtor to Stock [i.e. Capital] in your Leger, because they are in Effect so many Stewards to whom you intrust your Estate, and each of them are accountable to you for their several Parts of it. '~s In the following year, in a book no copies of which now appear to exist, the complete personification theory was expressed in these words: 'Let it be supposed that the account of Stock [i.e. Capital] is a real person employed to take care of my estate and to render an account of the improvement he has made of it. In a like manner, Cash, and all other accounts which I may have occasion to keep, may be considered as persons employed by Stock to take care of that part of my estate with which they are en- trusted.'29

De Morgan's brief appendix on book-keeping which proposed the complete personification of every account in the person of a 'clerk' was not, therefore, entirely a pioneer work. I t was, however, expounded at a time which was

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46 Extracts from the History of the Teaching of Book-keeping

ripe for the embracing of new methods of teaching and de Morgan's eminence in related fields undoubtedly did much to encourage the acceptance and develop- ment of the idea. 'The accounts', he wrote, 'are kept as if every different sort of account belonged to a separate person, and had an interest of its own, which every transaction either promotes or injures. I f the student find that it helps him, he may imagine a clerk to every account: one to take charge of, and regulate, the actual cash; another for the bills which the house is to receive when due • , . and so on.

'All these clerks (or accounts) belonging to one merchant, must account to him in the end--must either produce all they have taken in charge, or relieve themselves by shewing to whom it went. For all that they have received, for every responsibility they have undertaken to the concern itself, they are bound, or are debtors: for everything which has passed out of charge, or about which they are relieved from answering to the concern, they are unbound, or are creditors . . . . To whom are all these parties, or accounts, bound, and from whom are they released? Undoubtedly the merchant himself, or, more properly, the balatwe- clerk. '8o

Both Collier (in I884) and Dyer (in I897 ) appropriated the notion utterly and completely, the latter acknowledging his debt to de Morgan. 'We have appealed strongly to the imagination to create an array of clerks', wrote Collier, 'who must be anything but dummies, and we have reasoned out everything from the principles enounced. 'sl The principles were that ' the whole business is supposed to be carried on by clerks. There is supposed to be a clerk called Capital or Stock who represents the owner of the business (or the Firm). There is supposed to be a clerk called Goods who takes charge of the merchandise. There is sup- posed to be a clerk called Cash who takes charge of the money. There is supposed to be a clerk called Bank who represents the firm's banker. There is supposed to be a clerk called Bills Receivable who takes charge of all "Bills" payable to the Firm . . . . There is supposed to be a separate clerk for each and every person or firm with whom the Firm has credit transactions . . . . There is supposed to be a clerk called Profit and Loss . . . .

'N.B.--These clerks mind their own business and do not interfere in another's department. Thus, if perchance, "Goods" receives some money he instantly hands it over to "Cash" became he himself has no business with money. 's2

All transactions were analysed in terms of movements of value between the 'clerks'. For example his first rule was: ' In every transaction there is a clerk (A) who getssomething of a certain value from another clerk (B). Then Ais Debtor to B and B is Creditor by A for that amount. 'ss As a method of exposition which he had used for twenty-five years, Collier had 'found it to be the "enlightening fact" to the learner, and the progress has commonly been in proportion to the learner's grasp of this notion', a4 Dyer, using exactly the same method, cal]ed it the 'Com- mon Sense Method of Double Entry' . 3s The acceptance of outright personifica- tion was in accord with the general revolt against rote teaching which took place in the latter half of the nineteenth century.

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j . o. c . JACKSON 47

Such complete personification is by no means dead in the present century. Lawrence Dicksee the eminent accountant writing his primer at the beginning of the century thought of the receipt of cash from a debtor as a transfer of indebtedness from the customer to the cashier and called it a mere 'reshuffling of responsibilities', s8 He found it a 'somewhat startling' proposition but it was the same basic personification theory.

By explaining the structure of accounts in the form ofrelatlonships of indebted- ness, teachers were indicating their inability to present book-keeping practices in impersonal terms. Although somewhat inadequate even for the explanation of the entries to be made in personal accounts, the meanings of the terms 'debtor ' and 'creditor' have to be stretched to absurdity when dealing with real and nominal accounts. Edward Thomas Jones the first accountant to make a head- on attack upon the established system of double-entry book-keeping m naturally poked fun at these methods of exposition. Of the current method ofjournalising a credit sale to A.B. as 'A.B. Dr. to Wine', he asks, 'Now, if A.B. owes wine money, why not let Wine call for payment? But ifA.B, do not owe Wine money, why make the entry in such way as only tends to confuse the mind of a person. • . ?,a0 B. F. Foster, who was anxious to advertise the advantages not only of his text-books but of his method, taught exclusively at his 'establishment' I6Ia, Strand, London, disdainfully reproduced such confusing examples as that of Daniel Sheriff's 'elucidations'. ~9

'Robert Henderson Dr. to Bills Payable . . . . £337. io . Elucidat ion-- Henderson is debtor because he owes us, we having paid him the amount that we owed him. Bills payable are creditor, because the note to which that title is given has paid Henderson for us; therefore we owe it. '4°

Similar examples can be culled without end from contemporary text-books. Even when using de Morgan's complete personification Collier is forced to explain that 'when we write "Cash debtor to Goods £ 5 ° " it does not neces- sarily mean that the cash-clerk owes the goods-clerk £50; nor does it mean that the goods-clerk (the creditor) has discharged a debt of £50 owing by him to the cash-clerk. I t means that the cash-clerk has got (or received) £50 from the goods- clerk and of course that the latter hasparted with £5 ° (or its value) to the former. ' In other words the accepted meanings of 'debtor ' and 'creditor' are not really satisfactory even in this context.

I t was, of course, very easy to ridicule the personification method of exposi- tion. Charles Sprague, in America, could write a pointed skit on balancing the ledger with a dramatis personae, including 'Stock, a merchant; Balance, his accountant; Cash, keeper of the money chest; William Receivable, protector of the portfolio ''~ and others. This piece of fooling was not so far from the truth when compared with the text-book. 48

The explanation of nominal accounts is, however, the Mte noire of the personi- fication approach, for these accounts are pure abstractions. Th e problem of their explanation did not arise as a matter of urgency until the middle of the nineteenth century, for up to that date trading was treated, in text-books at any

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4 8 Extracts from the History of the Teaching of Book-keeping

rate, as a series of 'ventures' each with their respective expenses 'charged' to them. Implicitly appeal was made to the 'charge' and 'discharge' technique which had arisen in the financial relationships of principal and agent or lord and servant. The conception of a charge in an impersonal sense is apparent even at the beginning of the eighteenth century in David Black's Essay upon Industry and Trade where, when dealing with the losses sustained by British fisher- men he says: 'First consider how either the Charge may be retrinched, or the Fish better Cured. '~ It is, however, impossible to explain profits and losses in terms of personal debt relationships and after much abortive discussion they were finally explained in terms of parts of the capital account. An account of the evolution of this principle is now considered.

The' ownership theory' of accounts The chief intellectual justification of book-keeping entries up to the nine-

teenth century was, as has been shown, that of account personification. Within the last half century there has been a modified depersonalisation in the direction of explaining accounts in the form of values 'received' or 'parted with' by either the account or the proprietor. In this country, however, there is still no complete, self-consistent and rational theory by which the double entry in accounts can be explained.

Personification is but one theory of accounts and the aim of this section is to present an alternative theory which might be called the 'ownership theory' of accounts. This theory is concerned with the meaning of accounts from the owner's point of view and is the method of exposition used by the majority of American text-booksA s

Technically, the ?ownership theory' of accounts is a Balance Sheet or 'Balance Sheet Equation' approach because the centre of discussion and the point of origin from which the teaching starts and finishes is the Balance Sheet. This is a radical departure from the debt relationship concept of accounts in which the Balance Sheet is the final result of account entries. In the case of the 'ownership theory', on the contrary, the Balance Sheet is conceived rather as the activating mechanism than the final repository. It is a logical extension and development of the idea of tracing through a transaction 'cycle'. The Balance Sheet is thought of as the crystallisation of the financial position of the business. Instead of tracing all transactions through to their effects on the Balance Sheet as in the 'cycle' method, the transaction is analysed in order to determine the changes in the financial structure which it will entail, i.e. what the new Balance Sheet will be, and the account entries are formulated as a result of this analysis. I t is a com- plete reversal of approach to the subject. Attention is focused not on 'ex- change' between accounts but on the transformations of each side of the Balance Sheet. Transactions are analysed in terms ofmutatlons of assets and liabilities of the firm and their effect on the profit aspect of ownership. Discussion is in terms of conversions rather than debt relationships; of impersonal statistical relationships rather than personal relationships; of analysis rather than rule and

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j . o . c. JACKSON 49

rote. Accounts are 'increased' or 'decreased' rather than 'debited' or 'credited'. Emphasis is transferred from book-keeping fictions to book-keeping realities.

There are two forms of the Balance Sheet approach which use the 'ownership theory' as its rationalisation. The first is the Balance Sheet approach tout simple, the second is the 'Balance Sheet Equation' approach. The former begins with a simple Balance Sheet and shows by analysis of a transaction what its effect on the Balance Sheet will be, thereby deducing the account entries required. The latter starts from the economic fact that the value of the property owned equals the 'value of the ownership', or in other words, the Balance Sheet shows on the one side the forms of property and on the other the sources of the property or the ownership rights in the property. Faced with this basic equation the account is developed as a book-keeping device used to indicate addition and subtraction by position, i.e. by contra position. The equation approach is probably the simpler of the two since it allows the final accounts to be developed at the same time as other accounts but many American text-books use a combina- tion of both the straightforward Balance Sheet approach and the Balance Sheet Equation approach.

The evolution of the 'ownership theory'

The first and fundamental principle of the 'ownership theory' which must be accepted by the student is the complete independence of the firm from the owner. It was from the confusion of these two distinct concepts that the conflicting and confusing personification theories arose. The firm is conceived as an abstract entity quite separate from the owner. The book-keeping problem is thought of in terms of changes in the form of the firm's assets and liabilities, v/s d v~ the pro- prietor or other persons with ownership rights. All British text-books pay lip service to this conception of the separation of the owner from the business because, for example, it enables the credit balance of capital to be explained as an amount 'owed' by the business to the owner, but it is not pursued when its use would result in illogicalities as it does in the case of nominal accounts.

This distinction between the business and the owner is often a difficult teaching point and the concept has itself been one of slow growth. It takes its most difficult form when dealing with a one-man business. When, however, numerous shareholders exist and management and ownership are divorced the reality of this procedure becomes clearer.

An extension of this basic conception is the recognition that book-keeping records have a dual function. On the one hand they must indicate changes in the form of the assets and liabilities of the business and on the other they must classify these changes so far as they effect on the capital position of the firm. I t is the fact that there is this duality of function that requires that there should be at least two entries for each transaction. Systems of entry which show one aspect only (generally the first) are single-entry systems.

Although Baker appears to suggest 4e that the 'ownership theory' with its D

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5 ° Extracts from the History of the Teaching of Book-keeping

consequent Balance Sheet approach is a result of the evolution of recent American teaching techniques, its origin can in fact be found much earlier than the present century and makes fascinating reading. In essence the com- plete theory with its resultant teaching techniques can be found as long ago as I735, expounded by a teacher of book-keeping who made up 'all kinds of intricate and confus'd accounts'. His name deserves to figure much more prominently than is now the case. He was called Hustcraft Stephens. His con- tribution to both the theory and the modern teaching of the subject has been greatly underrated.

Hustcraft Stephens succeeded in extricating himself from the quagmire of personification at a time when no alternative was known or contemplated. His approach was so novel that he was forced to coin new words to express his ideas and from the point of view of teaching his method of exposition was quite a century before its time in its emancipation from rules. His design was 'to offer no Rules, until he has shown them to be Consequences of Conclusions, plainly drawn from Self-evident Principles'. 47

In his Introduction he lays the foundation for his theory of the mutations of the assets and liabilities by defining capital as an abstraction separate from the business. 'That Portion of Things which a Man possesses, or has otherways belonging to him, as a Security, taken all together, I call the Estate, and the Worth of a Man's Estate, consider'd abstractly from the Things which are valued, I call the computed Value or Extent of a Man's Estate. '4s In general he uses the term 'Condition' for what to-day would be called 'assets', and 'Extent ' for 'liabilities'. Both are words of specialised reference because of lack of suitable existing terms.

The emphasis on the ownership aspect of book-keeping is remarkable consid- ering the time at which the book was written. The aim of book-keeping, he says, quite simply is to find the 'Condition and Extent of a Man's Estate'.4~

His next step is to classify transactions into three categories according to the way in which they effect assets and liabilities: (I) those that alter assets only, e.g. exchange of goods for goods of equal value; (~) those that effect liabilities only, e.g. when liability to one person becomes a liability, of the same amount to another, or in Stephens' words 'when one proprietor 5° comes in place of an°ther'51; (3) those that alter both assets and liabilities, e.g. credit purchases which increase assets and add to 'proprietors' (liabilities).

His explanation of the function of accounts is so simple and complete in its understanding of their use as an arithmetical device for showing variations of individual assets or liabilities that I show it in some detail.

' I say, the various Securities [debit balances] must be so divided, that when by any Transaction it becomes necessary to add to, or take from them respec- tively any Quantity, Number, or Sum, we may do it so, that the remaining Quantity, Number, or Sum, with the Alterations that produce~k them, may appear.'5~ He then gives a set of accounts:

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j . o . c . J A C K S O N 5 I

' F i r s t Accoun t

A.B. bears Pa r t of the Condi t ion of my Estate. l s . d . H e owes me . . . . . . . . . loo o o

Second Account

Sugar bears Pa r t of the Condi t ion of m y Estate. I have . . . . . . Iooo lb. for Ioo o o

T h i r d Account

Money bears Pa r t of the Condi t ion of my Estate. I have . . . . . . . . . . 2oo o o

Four th Account

C.D. bears Par t of the Ex ten t I o w e h i m . . . . . . . . . . . 4o o o

Fifth Account

E.F. bears Pa r t of the Ex ten t I owe h im . . . . . . . . . . 3 ° o o

Sixth Account

M y own clear Share of the Ex ten t I have clearly my own . . . . . . 33 ° o o '

T h i s is c l e a r l y a B a l a n c e S h e e t a p p r o a c h b u t no t , so far , v e r y [ i f ferent f r o m

t h e ' I n v e n t o r i e s ' w h i c h m o s t o f t h e e a r l i e r t e x t - b o o k s u s e d as t h e i r m e t h o d o f

i n t r o d u c i n g t h e sub j ec t . I t is, h o w e v e r , a t th i s s t age t h a t h e i n t r o d u c e s t h e i dea ,

q u i t e n o v e l for t h a t p e r i o d , o f t h e o w n e r b e i n g a c r e d i t o r . ' T h e s e [i.e.C.D. a n d E . F . ] b e i n g a l l t h e P r o p r i e t o r s [i.e. c r e d i t o r s ] t h e E x t e n t h a t h , e x c e p t i n g

mysel f . 'ss T h e n h e s h o w s t h e e f fec t o f a c a s h sa le ( w i t h o u t p ro f i t ) a n d a c a s h

p u r c h a s e o n t h e f i n a n c i a l p o s i t i o n o f t h e b u s i n e s s : 500 lb . o f s u g a r is so ld fo r

£ 5 o a n d 3 ,ooo lb . o f s u g a r is b o u g h t fo r £ 1 5 o a n d t h e s u g a r a n d c a s h a c c o u n t

c h a n g e s a r e s h o w n : 'Second Account

Sugar bears Par t of the Condi t ion of m y Estate l s . d . I have . . . . . . i o o o l b , for Ioo o o Alter. t. Sold out . . . . 5oo lb. for 5o o o

First Remains - - 5oo lb. for 5 ° o o Alter. 2. Bought . . . . . 3ooo lb. for 15o o o

Second Remains - - 35oo lb. for 2oo o o

T h i r d Account

Money bears Par t of the Condi t ion of m y Estate I have . . . . . . . . . . 2oo o o Alter. I Rece iv 'd for Sugar . . . . . . . 5 ° o o

First Remains - - - 2 5 o o o

Alter: 2 Bought Sugar ; for which I pa id . . . . 15o o o

Second Remains - - ioo o o '

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52 Extracts from the History of the Teaching of Book-keeping

After showing a cash sale a t a profit , wh ich he records mere ly by sub t rac t ing f rom the sugar account the m o n e y received a n d a d d i n g a s imi lar sum to" the m o n e y account , thus concea l ing his prof i t in the sugar accoun t b y unde r - va lua t ion , he goes on to show in a s imi lar w a y the rece ip t a n d p a y m e n t of money . T h e next s tep is to po in t out t ha t the cont inuous add i t i on a n d sub t rac - t ion is tedious 'whereas were al l these Al te ra t ions which cause an Increase o f the Condi t ion , a n d those which likewise bea r a P a r t o f the Extent , respect ive ly g a t h e r ' d together , they m i g h t a t Pleasure be c o m p a r ' d b y one Sub t r ac t i on af ter thei r Sums were several ly a d d e d up ' , n* a n d so we a r r ive a t the n o r m a l form of the two-s ided account .

I t will have been not iced t ha t the ent i re a p p r o a c h is t h r o u g h the Balance Sheet and L e d g e r Accounts , the terms ' d eb i t ' a n d ' c r ed i t ' have no t so far been used, aaor ' to ' and ' by ' . Rules such as ' eve ry deb i t mus t have a c red i t ' do no t arise. T h e entries r equ i r ed a re r a t iona l ly deduced f rom basic premises f rom the po in t of v iew of changes in ownership rights.

Hus tc ra f t Stephens cont inues b y exp la in ing how profits a re r eco rded as increases in the owner ' s accoun t a n d his p resen ta t ion is b y means o f w h a t mus t be one of the very first comple te l i t t le ' cyc le ' o f accounts . ' I have 2ool. in r e a d y Money ' , he says, 'wh ich be ing the whole Estate, the S ta te of it wou ld s t and as thus:

First Account Per Contra Cr. l s. d.

'First Account Cash Dr. l s. d.

I have at first - 2oo o o Second Account

My own clear share Dr. l s. d.

Second Account Per Contra Cr. l s . d . I have clearly my

o w n - - - - - 0 0 0 O O '

Teachers of book-keep ing will recognise this as the 'cash cap i t a l ' doub l e - e n t ry so c o m m o n as an open ing g a m b i t to -day . T h e n a loan of £ 5 ° is m a d e to A.B. p a y a b l e six mon ths l a te r wi th £ 5 in teres t and he credi ts cash accoun t wi th the p a y m e n t o f £ 5 o a n d debi ts A.B. £55 , po in t ing out t ha t his ' own clear Share of the Exten t [has] rece iv 'd an A d d i t i o n to i t o f £ 5 ' , as follows:

'First Account Cash Dr. l s. d.

I have at f i rs t - - 20o o o Second Account

My own clear share Dr. l s. d.

Third Account A.B. Dr. l s. d.

He owes me 6 Months hence - 55 o o

First Account Per Contra Cr. l s. d. Lent A.B. - - 50 o o

Second Account Per Contra Cr. l s. d. I have clearly my

own - - - 20o o o Allow'd me Interest

hyA.B. - - 5 o o' Third Account

Per Contra Cr.

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j . G. C. JACKSON 53

Stephcns' book marks a revolutionary departure from the welter of personi- fication with which he was surrounded. Although no reference is made to his book by later authors, and his underlying ideas wcrc not developed for nearly one hundred years, the framework for an impersonal approach to the subject with a complete exposition of the arithmetical function of the account had been provided. It is in the latter direction that Stcphcns' contribution to teaching method is so outstanding. He rccognised that the two sides of thc Ledger wcrc means of showing increases and decreases in account values. The two- sided account is merely an unusual rncthod of demonstrating continuous addi- tion and subtraction.

Nearly a century was to elapse before a development in the theory of nominal accounts was to allow the cornplction of the 'ownership theory' as wc know it to-day. In F. W. Cronhclm wc have the precursor of all later expansions of this theory. Cronhelm's contribution lay in his enunciation of the abstract nature of capital as a 'wholc', its differentiation from its constituent 'parts' and the inevitability of the 'equilibrium' of the 'whole' with the 'parts'. Apart from occasional lapses into personification his, also, is an impersonal mathematical approach.

From thc very beginning Cronhclm, likc Hustcraft Stcphcns, looked upon book-keeping as a method of recording property and changes in property rather than debt relationships. 'The purpose of Book-keeping as a record of property', he says, 'is to' shew the owner at all times the value of his whole capital, and of every part of it. The component parts of property in trade, are in a state of continual transformation and change; but, whatever variations they undergo, and whether the whole capital increase, diminish, or remain stationary, it is evident that it must constantly be equal to the sum of all its parts. This Equality is the great essential principle ofBook-keeplng. 's5 Stemming from this approach no account could be regarded as 'fictitious' or ' imaginary', all were equally 'real', and a source of great confusion which had arisen from the personification theory was abolished.

Having abandoned personification the way was open for an impersonal mathematical approach to the subject. 'The introduction of Credit and Bills into commerce', he goes on, 'produced two kinds of property directly contrary in their natures:

'Ist. Positive Property, consisting of Goods, Cash, Bills Receivable and Debts Receivable.

2d. Negative Property, consisting of Bills Payable, and Debts Payable.

'And as these two kinds of property mutually destroy each other, it is evident that the Stock or entire Capital, must always be equal to the difference between them. '~e From the idea of capital as a mathematical equilibrating device foUows logically that it must be a credit item. 'Should it be inquired why the Stock [capital] appears to be negative when the property is positive, and positive when the property is negative, this seeming contradiction will be removed by the following consideration. In these general relations of Debtors and Creditors,

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54 Extracts f rom the History o f the Teaching o f Book-keeping

the estate or concern itself is abstracted from its proprietor and becomes a whole, of which the Stock or Proprietor's Account is now also one of the com- ponent p a r t s . . , and he [the proprietor] classes among its other Creditors." Not only capital, however, but all accounts can be thought of as equilibrating factors. 'When we thus abstract a Concern from its Proprietor, and place the account of Stock or entire capital among the component parts, the Concern itself is con- stantly neutral, consisting of a mass of relations between Debtors and Creditors, in perpetual and necessary equilibrium. The Concern thus abstracted is always a cypher; and all its component parts are equally and mutually dependent upon each other, and upon the whole. It is no longer merely the Stock which is the result of all the other Accounts collected together: every Account has the same property, and may be found or proved in the same manner. ' In Gronhelm's algebraic form, we can say that if a, b, c . . . are 'positive parts' and l, m, n • . . are 'negative parts' and s is capital or proprietor's real worth then

a + b + c . . . - - l - - m - - n . . . . ~ s

By transposition he reaches the general equation of the abstract concern:

a + b + c . . . - - l - - m - - n . . . T s - = o

Here, he observes that ' the transposition of s changing its sign, explains the reason why the Stock, when positive in itself, becomes negative or creditor as a component part of the estate'.

By transposing any of the terms it can be shown to equal the remainder, e.g.

b + c . . . - - l - - m - - n . . . ~ s = - - a 5~

That is to say 'any debtor or creditor in the books is equal to the collective result of the other debtors and creditors, an affection which has been commonly supposed peculiar to the stock [capital] account' , n8

This general equation, however, is a static conception and when transactions take place a dynamic exposition is required. The component parts are continu- ally changing. At this point Cronhelm develops an 'ownership theory' of transformations of property from one form into another. ' In purchases', he says, 'cash is converted into goods; and in sales, goods are re-converted into cash . . . [credit] purchases create personal creditors and goods, sales convert goods into personal debtors; receipts convert personal debtors into cash; whilst payments destroy cash and personal creditors.' He goes on to apply this system to profits and losses, viewing them as increases or decreases of capital, their object being to prevent the overburdening of that account. The function of the profit and loss account was therefore seen as a method of collecting together the individual augmentations and diminutions of capital so that the general result might be transferred to the capital account in one sum.

The basic principles of the 'ownership theory' were therefore expounded clearly and simply by I818. These were, the complete separation of the owner from the business, the fundamental equation of ownership and the conception of transactions affecting this equation by increasing or decreasing assets, liabili-

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j . o. c . JACKSON 55

ties or capital. This method of explaining and teaching book-keeping then almost completely disappears from view in this country and it requires diligent research to find even a passing reference to this way of looking at the accounting problem.

In I828 a Spaniard with a poor command of the English language wrote a book filled with typographical errors which a t tempted to put one of the funda- mental conceptions of the 'ownership theory' into a practical teaching situation. 'We are' , he wrote, ' led to admit of but two General Accounts; namely: ISt, that which is the object of the change of values . . . and 2nd, that which serves to denote the change of values in Profit and Loss. 's~ Tha t is to say transactions may affect either assets and liabilities, or profits and losses. Every transaction may be analysed in this way and to show the necessary book-keeping entry only four columns are needed. Two columns to show the increase or decrease respectively of capital, and two columns to show the. increase or decrease respectively of the other accounts, or in Cronhelm's terms changes in the 'whole ' and changes in the 'parts ' . Vautro 's 'Balance Journa l ' was therefore set out in t h e following fashion:

Dis .

Stock or General Capital Accounts

2xo 5 4

Sundries-- Dis. to Bills

Receivable, No. 163 Cash Interest o 8

Crs .

Stock or I General" Capital I Accounts

2 x 2 6 o

I t was another twenty-one years before the complete and rational basis of this approach to book-keeping was expounded. In a pamphle t which consisted of only eight pages, J . H. Chauvier, about whom I can find nothing more than that he was an 'Accountant and Professor of Mathematics ' , presented the com- plete analysis Of all transactions as increases or decreases in the various con- stituents of property. He analyses transactions as producing:

'on the Asset:

The increasing [ of the cash, or of the goods, or

or 1 of the debts receivable, or the decreasing of the bills receivable.

or, on the Liabilities:

The increasing / of the debts payable, or o r

the decreasing of the bills payable

or, on the Real Worth [i.¢. capital]

The increasing ] of the profits, or or

the decreasing of the losses. 'e°

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56 Extracts from the History of the Teaching of Book-keeping

The astonishing feature of this depersonalised, mathemat ical approach to book-keeping is that although it is now the chief method of teaching the subject in the United States of America nx and several European countries yet it is almost unknown in this country.

After Chauvier 's little book, which was published almost exactly half-way through the nineteenth century, it is extremely difficult to find it even mentioned in English text-books. Rober t Yallowley Barnes, a public accountant, wrote in x867 a short book of forty-six pages which was in effect a Balance Sheet approach to the subject. The very simple Balance Account with which he begins is expanded to indicate the effect of transactions on it in the following way :ez

' I have £ ioo in my possession Dr. I Cr. To Cash . . . . £1oo i By Capital . . . . £1oo

I buy goods on credit from, say, six persons, amounting in all to a total o f £ x 5 ° . . . . The Total of my entries will then be--

Dr. To Cash . . . . £ Ioo To Goods Account - - £x5o

£250

C r °

By Capital - - By owing to six persons w

£ I 0 0

£I5o

£25o'

Barnes was followed by Percy Child, a chartered accountant, who gave a complete exposition of the 'ownership theory' approach in x89I ( ' the words "debi t " and "credi t" are understood in all cases to mean either addition or sub- traction'), e3 and Thornton, in his Primer of Book-keeping, published in I9o6 , included a single chapter, quite unrelated to the remainder of the book, in which a brief explanation of this approach was included.e4

Finally, C. W. Westron in I924 published his Bedrock of Double Entry Book- keeping e5 which is again a complete exposition of the view that transactions can be viewed as resulting in mutations of forms of property shown in the Balance Sheet by additions or subtractions to the various items. Unfortunately this book is so abbreviated that it is quite unsuitable either as a vehicle for the conversion of the 'rule and personification' school or as a class text-book. I t is interesting to note that this author is again a practitioner and not a teacher. In fact it is probably true to say that no suitable English school text-book using this approach has ever been written for this country.

This is not to say, of course, that the importance of the concept of transforma- tions of ownership rights as a result of transactions has been completely neglected. Several books show a partial appreciation of this point of view particularly so far as real and personal accounts are concerned. Findlater, for example, writing in x868, realised that 'every transaction of a Merchant has a two-fold effect on his assets or his liabilities 'nn and goes on to use transformation as the method of explanation. Pixley, in the '9o's, uses Cronhelm's concepts of 'whole ' and 'parts ' , and, following the best modern teaching practice, shows the effect of

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J . G. G, JACKSON 57

every transaction on the Balance Sheet but continues to think in terms of a personified 'receiving account' and 'expending account'.sT Benjamin Seerbohm, writing in the same year, developed a theory of book-keeping based on personal legal relationships, yet saw that 'a Balance Sheet is . . . a sort of equation' , ss Similarly here and there a glimpse of the fundamental ideas of the 'ownership theory' can be found up to the present day.

To get a complete exposition of the theory, however, we must go to America or the Continent. Perhaps it is best summed up in Kessler's work which is a standard text in the German-speaking parts of Europe :s9

Soil Vermtgenskonten Haben

+ I - Soil Kapitalkonten Haben

- [ +

Here in a nutshell is the essence of book-keeping from the point of view of the 'ownership theory'. Increasesin property are recorded on the left-hand side of the property account, increases in ownership rights are recorded on the fight-hand side of the liability or the owner's accounts and the reverse for reductions. The terms 'debit ' and 'credit' merelyindicate the left- or fight-hand side of the Ledger, they have no relationship to indebtedness and would in fact be best omitted.

The evolution of the balance sheet

One may ask why the Balance Sheet approach using the 'ownership theory' or a modification of it has not been accepted in the British Isles. Apart from the inherent conservatism of teachers and the comparative lack of interest shown by high authority in commercial education generally there is a technical difficulty. This is the historical accident that the British Balance Sheet is different from Balance Sheets prepared in every other country using double-entry book- keeping.

The British Balance Sheet, though in account form like the majority of foreign Balance Sheets, presents its sides reversed. In England, assets are shown on the fight with liabilities and capital on the left, in all other countries the assets are shown on the left-hand side and liabilities and capital on the right. From the point of view of the Balance Sheet Equation it is supremely logical that the first Balance Sheet should be in the continental or American form since assets are debit balances and should therefore be shown on the left-hand side of the Balance Sheet and changes in the left-hand side of the Balance Sheet should be reflected in changes in the left-hand side of the Ledger Account. A teacher starting with a British Balance Sheet therefore starts with an initial problem which does not confront his American or Continental colleagues. I t is therefore worth enquiring how the British form of Balance Sheet evolved.

From the very beginning of the publication of double-entry book-keeping, lists of debit and credit account balances were drawn up, mainly as an arith-

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5 8 Extracts from the History of the Teaching of Book-keeping

tactical check of the records. T0 Although the function of this list was therefore similar to that of the modern trial balance it had one important difference, it was made after adjustments had been made and the net profit transferred to the capital account. In many respects it was therefore comparable to a modern British Balance Sheet except that the sides were reversed. This 'Balance Account ' as it was called had its debit balances on the left. For example, J a n Ympyn Christoffel's translation of Bianchi contains in Chapter 28 ~x ' a declara- cion of certain thynges whiche are specially to benoted' which contained the instruction that the 'baullaunce of the boke must firste bee made on a leafe of paper folded in twoo, and on the right hande must be written all the creditors, and on the left hande all the debitors'.

In addition to its function as an arithmetical check the balance account was regarded 'as a medium for effecting the neat and concise dosing of one ledger and the opening of its successor'.73 I t was prepared when the Ledger was full or in some cases annually. Its function in closing the Ledger probably became apparent before its value as an arithmetical check, Ta although f rom the point of view of teaching the latter function still receives undue emphasis. ~4

By the seventeenth century the distinction between the trial balance and the balance account had become more dear ly defined 75 and in the succeeding centuries the balance account was slowly transformed into the Balance Sheet. This change in form was two-dimensionaL In the first place the sides of the balance account were reversed and in the second place it changed from an 'account ' to a 'list'. The more important alteration from the point of view of teaching was the reversal of the sides which preceded its transformation from an account to a list by half a century.

The reversal of the sides of the balance account can be traced directly to the influence of the Companies Act of 1862. This was the first companies consolidat- ing Act and was especially concerned with the protection of a company 's creditors as a result of the introduction of limited liability seven years previously. In its 'Tab le A' was set out the recommended form of Balance Sheet with reversed sides.

George Lisle, as a Scot, objected strongly to the imposition of this new form of Balance Sheet, pointing out that the 'Scotch' or 'Continental ' form was still largely used in Scotland even in 19oo and he could only suggest that the reason for the reversal was that the Act 'must have been prepared by those unacquainted with the theory of accounts'. ~e He lists a number of authors who wrote book- keeping texts before i862 and finds only one (Inglis) who reversed the sides of the Balance Sheet. His list, however, is not comprehensive. Malcolm (I 73 I), Goodacre (1818), Papps (1818), Cronhelm (i818), Hut ton (I852), Percival (i857) and Boulter (1859) all presented Balance Sheets whose sides were in the modern British form. I t is, however, true that the vast majori ty of the writers up to I862 listed balances in the old balance account form.

The reason why the sides should have been reversed is not easy to discover. A possible explanation is that the prevailing personification method of explana-

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j . o . c . JACKSON 59

tion of accounts resulted in confusion between the owner and the business and that since one of the aims of the x862 Act was to protect creditors' interests the Balance Sheet was looked upon as the owner's account as viewed by the credi- tors. 'The Balance Sheet represents the merchant himself as regards his debts and his property, and he is properly made Dr. for what he owes, and Cr. for what he possesses', wrote Dr. J . J . Doherty of the Training Depar tment of the Commissioners of National Education, Ireland. ~7 I t betrays the old confusion between the owner and the business which is perhaps an inevitable concomitant of the personification approach. The Balance Sheet was thought to show the owner's account (capital account) in a reversed form.

Another possible factor was the effect of single-entry book-keeping. The bringing down of a balance in the Balance Sheet was, of course, common in single-entry book-keeping. I t represented the new value of the owner's interest in the business. In such cases this balance had to be on the credit side and the only way in which this could be obtained was by reversing the sides of the old balance account2 a

A third factor was the evolution of the idea that the Balance Sheet represented the firm in account with the trade creditors rather than the proprietor. A company 's books were required to be inspected in the event of bankruptcy and from the point of view of the creditors the modern Balance Sheet did represent the owner's account. Fox's Maxims published soon after the 1862 Act put this view: 'When a Trader has "s topped" [i.e. become bankrupt] , the Estate is taken by the trade creditors, who debit it with the Income received and credit it with the properties etc. answering to it. 'To

Whatever the cause, the reversed form of Balance Sheet is now the one en- couraged by law and recognised by custom in this country. At the beginning of this century the 'Dr . ' and 'Cr . ' with their ~To' and 'By' were dropped and the balance account had achieved its present form of a reversed list of balances remaining in the Ledger after various transfers between accounts have taken place.

I f therefore a teacher wishes to use a Balance Sheet approach this pr imary and illogical hurdle of the technical form of the British Balance Sheet must first be overcome. There appear to be two alternatives open to him. One is to take the bull by the horns and teach the American form of Balance Sheet and later to explain the British form as an historical accident. The support of a celebrated accountant for the presentation of a simple statement in the American form gives some added weight to this as a teaching technique, s° I t does, of course, mean unlearning at some point, m

The alternative method is to use the 's tatement ' or ' repor t ' form of Balance Sheet when introducing the subject. In this case the assets and liabilities are tabulated one below the other. 'As a result of its origin in the double-entry ledger, the balance sheet has two sides.. There is no intrinsic reason why the balance sheet should have two sides, and a balance sheet in statement form (with one side only) could be prepared with perfect propriety 's2 is George

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60 Extracts f rom the History o f the Teaching o f Book-keeping

T o u c h e ' s o p i n i o n . I n fac t this f o r m is b e c o m i n g i nc r ea s ing ly p o p u l a r in p u b -

l i shed B a l a n c e Sheets . As a m e t h o d o f t e a c h i n g i t has t he a d v a n t a g e t h a t i t

w o u l d n o t r e q u i r e a n y u n l e a r n i n g .

R E F E R E N C E S

I. PERAGALLO, E. (t938). Origin and Evolution of Double-entry Book-keeping, p. I. American Imtitute Publishing Co., U.S.A.

2. This form appears to have been very common in Scotland. V. BROWN, R. (Ed.) (19o5). History of Accounting and Accountants, p. 58. Edinburgh: Jack.

3. PACIOLI, L. An Original Translation of the Treatise of Double-entry Book-keeping, p. 26. Tram. by CRIVELLI, P. Institute of Book-keepers. London, 1939 edition.

4. Ibid., p. 26. 5- OLDGASTLE, H. A briefe instruction and maner how to keepe bookes of Aecompts after the order of

Debitor and Creditor . . . . London, t588. The first edition was published in I543 but no original copy is known to exist and a reprint was edited by John Mellis. This is Mellis' example at the end of the book.

6. PEELE, J . (1569). The Pathewaye to perfectnes, in th' accomptes of Debitour and Creditour . . . . London. Journal entry example (unnumbered).

7. TAPP, J. (1613). The Pathwayto Knowledge. London. 8. W. P. (t596). The Pathway to Knowledge. London. 9- V. 7 above. Ledger entry (unnumbered).

lo. QUIN, MATTHEW (x776). Rudiments of Book.keeping. London. Cash account (un- numbered).

ix. DAFFORNE, R. (I6367. The Merchant's Mirrour incorporated in MALYNES, G., Con- suetudo, Vel lex mercatorta. London.

x 2. The use of the word 'stock' for what to-day would be termed 'capital' is usual until the middle of the nineteenth century.

13. V. I x above, p. 9. 14. V. 5 above, an example (unnumbered) in Chapter 13. 15. CAYLEY, A. 0894)- The Principles of Book-keeping by Double Entry, p. io. Cambridge. 16. MALCOLM, A. (x731). A Treatise of Book-keeping, p. 1o. London. 17. IT. 6 above. Introduction (unnumbered). 18. DONN, B. (x765). The accountant and Geometrician, p. 5. London. x 9. GALLAWAY, W. D. (191o). From School to Counting House. Nelson. 00. D0.GRANGE, E. (x8oo). La Tenue des Livres rendue facile, p. 6. Paris. o I. LITTLETON, A. C. (x 933). Accounting Evolution to 19oo. New York. 22. Ibid., p. 46. 03. DEGRANGE, E. (185o), Elements de la Tenue des Livres. Paris. 24. Ibid., p. 4. 05. LEWIS,J. H. (c. i86o). The Quick and Easy Method of Teaching Book-keeping, p. 4 x, z4th edition. 06. CRELLIN, P. (x892). Book-keeping for Teachers and Pupils, p. 26. London. 27. DE MORGAN, A. (I846). Elements of Arithmetic. London, 5th edition. All references are

to the sixth edition, 1876 , Appendix VII. 28. HAYES, R. (173 I). Modern book-keeping . . . . London. The book was 'written originally

for the use of his own Pupils'. 09. CLARK, J. (x732). Lectures on Accompts. London (?), quoted in FOSTER, B. F. (I852).

The Origin and Progress of Book-keeping. London. 3o. V. 07 above, p. i81. 3x. COLLIER, J. (I884). Book-keeping by Double Entry. (Preface.) Relfe. 32. Ibid., p. 18x. 33. Ibid., p. Io. 34. Ibid., Preface. 35. DYER, S. (I897). A Common Sense Method of Double Entry Book-keeping. Philip. 36. DICKSEE, L. R. (x9o8). The A.B.C. of Bookkeeping. Longmans. 37. For an account of E. T. Jones' most interesting career in attempting to introduce his new

'English' system of book-keeping see ELDRIDGE, H. J. (I93I). The Evolution of the Science of Book-keeping, pp. 43-5- London: Institute of Book-keepers.

38. JONES, E. T. (1796). jTones' English System of Book-keeping, p. 24. Bristol. 39. SHERIFF, D. 085o), The Whole Science of Double Entry Book-keeping..., p. 24. London. 40. V. 09 above, p. 3 I. 4 I. V. 31 above, p. Io.

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42. SPRAGUE, C. E. (1882). The Bookkeeper. New York. December 5th, isme quoted in LITTLETON, A. C., v. 2t above, pp. 59-6i.

43- It may profitably be compared with Cotlier's version, v. 31 above, p. 2t . 44- BLACK, D. (i7o6). Essay upon Industry and Trade, p. 15. Edinburgh. 45. PAYNE, C. H. (I937). Trends in Book-keeping as Evidenced in Recent Textbooks. M.A. Thesis,

University of S. California, quoted HAYNES, B. R. and HUMPHREY, C. W. (I939). Research Applied to Business Education, p. 39. U.S.A.: Gregg. An analysis of thirty first-year book-keeping text-books.

46. BAKER, J . W. (:935)- A History of Book-keeplng Instruction in the United States, p. 19. South-Western Publishing Co., Monograph, No. 28.

47. STEPHENS, H. (t735). Italian Book.keeping Reduced into an Art, p. vi (Preface). London. 48. 1bid., p. 2. 49. Ibid., p. 6. 5 ° . I t is interesting to note that he uses the word 'proprietor' for what to-day would be called

'creditor', showing how he conceived of the liabilities side of the Balance Sheet as being in the nature of'sources' rather than a debt relationship. He included the owner within the class of creditors, although he did not give him a special position.

5 x. V. 47 above, p. 6. 52. V. 47 above, p. 9. 53. V. 47 above, p. 9. 54. IT. 47 above, p. :3. 55. CRONHELM, F. W. (t818). Double-entry by Single, p. vi. London. 56. Ibid., p. 5. 57. I t is a matter of some surprise that this idea of a fundamental equation was not followed up

and developed by mathematicians. Pierre Jocet wrote his TMorie algdbriqae et iddologique de la tenue des livres in 1898 and developed a superstructure of equations from his 'tcluation fondamentale' which was similar to Cronhelm's. This book is little known, however.

58. V. 55 above, pp. 7-8. 59. VAUTRO, P. C. L. (:828). A New System of Book-keeping, p. :7. London. 6o. CHAUVIER, J. H. (:849). The Perfect Bookkeeper, p. i. London. 6:. The first book to use the Balance Sheet approach in America was apparently JAMES

McKINSEY'S of I918. V. 46 above, p. 19. 62. BARNES, R. Y. (1867). A Treatise on Book-keeping..., p. 28. London. 63. CHILD, P. (:89:). Bookkeeping and Accounts, p. 5. London: Thomas. 64. THORNTON, J. (:9o6 edition). Primer of Book-keeping, pp. 8o-I . Macmillan. 65. WESTRON, C. W. (:924). Bedrock of Double-entry Book-keeping. London: Pitman. 66. FINDLATER, J. (x868). Book-keeping by Double Entry Explained, p. 6. London: Simpkin. 67. PIXLEY, F. W. and WILSON, J. (1892). Book-keeping. London: Swan, Sonneschein. 68. SEERBOHM, B. (x892). The Theory of Book-keeping, p. 28. London: Effingham, Wilson. 69. KESSLER, A. (:944). Einfuhrung in die Doppelte Buchhaltung, p. :2. Zurich: Schulthess. 7o. V. 3 above, p. : oo. 7 :- See CHRISTOFFELS, J. I. (t 547)- A notable and very excellente worke, expressyng and dedaryng

the manner and forme how to kepe a boke of accomptes or reconynges. London. 72. YAMEY, B. S. (:949). 'Scientific Book-keeping and the Rise of Capitalism.' Economic

History Review, Second Series, Vol. I, Nos. 2 and 3, P. Io6. 73. YAMEY, B. S. (x94o). 'The Functional Development of Double-entry Book-keeping.' The

Accountant, Vol. IO3, p. 333. 74. BAYLISS, W. J. (1936). Introduction to Book-keeping, p. 33. London: Macmillan. The

Balance Sheet is a 'way in which he can check the accuracy of his books'. 75. V. i i above, p. 46, where Dafforne speaks of a 'First Tryall-balance', a 'Second Tryall-

balance' and a 'True-Ballance'. 76. LISLE, G. (Ed.) (t 9o3-7). Encyclopaedia of Accounting, Vol. I, p. 2o 5. Edinburgh: Green. 77- DOHERTY, J. J . (1885 edition). A Text-book of Book-keeping, p. 95. Dublin. 78. E.g. PERCIVAL, R. (I857). Profit and Loss, p. 36. London. 79. FOX, J. (I869). One Hundred Dr. and Cr. Maxims of Account-Keeping. Maxim No. 79.

London: Wilson. 8o. V. 67 above, p. 72. 8 I. One Scottish text-book does in fact use the American form of Balance Sheet as a teaching

device. MACARA, D. Elementary Book-keeping, p. 3 o. Edinburgh: Chambers. 82. TOUCHE, G. (:933). The Form of the Balance Sheet, p. 2. London: Gee.

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