Below is a set of transactions made slightly more complicated by the
inclusion of “bank”, “stock”(inventory), and “accounts receivable” to the ASSET
category and “loan”, “accounts payable”, “sales”, and “costs” to the LIABILITY
category. Using chargesrather simplifies things.

figure 7

ASSETS

LIABILITIES
REVENUE
equitysalescosts

date

description

bank

stock

a/r

loan

a/p

trial

1/1/97
1/2/97
1/3/97

set up company
buy new stock
credit sale to XYZ
reduce stock
1/4/97XYZ paid bill
1/5/97buy new stock
1/6/97cash sale to ABC
reduce stock
1/7/97credit sale to JKL
reduce stock
1/8/97bank loan
1/9/97buy new stock
1/9/97credit sale XYZ
reduce stock
1/10/97cash sale to ABC
reduce stock
1/12/97XYZ paid bill
1/14/97loan payment
totals or balances

100
-50

-100

0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0

50

100

-100

-50

50

100
-100
100

-100

100

-100

-50

50

50

-50

-25

25

500
-400

-500

400

200

-200

-100

100

200

-200

-100

100

200
-300
350

-200
0
50

0
225

300
-200

0
0

0
-100

0
-650

0
325

(profit) loss

-325

total ASSETS and LIABILITIES

625

-625

0

So there we have it:The foundation upon which all accounting is erected and
a way every child can be taught to understand it. It must be conceded however
that not every tot will have an interest in totting tots and more will have even less
interest in doing the everyday task of record keeping that accounting requires.
Some have more apptitude for certain things than do others; others can paint or
write music or play football and would be better at these tasks.

7