ACCOUNTING
THEORY AND PRACTICE
A TEXT-BOOK FOR COLLEGES AND
SCHOOLS OF BUSINESS ADMINISTRATION
BY
ROY B. KESTER, Ph.D.
CERTIFIED PUBLIC ACCOUNTANT;PROFESSOR OF ACCOUNTING,
SCHOOL OF BUSINESS,COLUMBIA UNIVERSITY
VOLUME I
(FIRST YEAR)
SECOND EDITION
Third Printing
NEW YORK
THE RONALD PRESS COMPANY
1922
Copyright, 1917, by
The Ronald Press Company
Copyright, 1922, by
The Ronald Press Company
All Rights Reserved
To My Father and Mother
An Appreciation of Their Steadfast
Interest in My Work[Pg v]
PREFACE
The basic soundness of the method of instruction in Accountingdeveloped in this book has received substantial demonstrationthroughout five years of test. The Introduction to the first editioncontained the following statement regarding the development of thesubject:
“The method of approach as given in this volume is perhapsnot orthodox but it has seemed that the student, given an understandingof the purpose which the accounting records are to serve,will be able to make that record with real intelligence instead ofby rule-of-thumb. Accordingly, the balance sheet and the profitand loss statement are presented first, as the goal towards whichall record-keeping looks. The student is taught to analyzebusiness facts and conditions from the very beginning. He isthen led, step by step, through the use of non-technical terms,into the ledger, where he sees the way in which the data whichhe has been using are summarized. The books of original entryare next explained, and the method by which the information isclassified as it is brought onto the books. Finally, the businesspapers and documents which constitute the source of all entriesare described.”
To quote again from the original Introduction: “The subjectis developed in such a way that the student knowing somethingof bookkeeping has little or no advantage over the one withoutsuch knowledge. This book has been written for the use ofstudents in our colleges and universities desiring a first course inaccounting. It gives the scope of the work in accounting offeredin the first year of the School of Business of Columbia University.”
The method then advocated and used in a few institutionshas become quite generally accepted. It has justified itself by[Pg vi]the ease and extent to which students without any previous training inaccounting have grasped the essentials of the subject. Experience withthe book in the classroom, however, and changing ideas with regardto manner of presentation and sequence of material, have shown asdesirable a rearrangement of some parts and an addition of new materialin places. Accordingly, a systematic revision has been made.
The arrangement of the subject matter of the first portion of the bookhas been altered but slightly. The use and function of the balancesheet and profit and loss s