The accounts to an English merchant are usually kept either on the single or on the double entry system of book-keeping, the latter being also known in England as the Italian method, on account of its having been invented and first introduced by Italian merchants.

The difference in the mechanical arrangement of the two systems, as shown by their names, consists in the single or double record of each transaction in the books where the ac­counts of the house are kept. These titles are some­what misleading as, in the single entry system, trans­actions are frequently recorded twice; in the double entry, always.

The purpose of the single entry system is merely to ascertain the personal debit and credit of every indi­vidual trading on credit with the firm, and the varia­tions which take place in the stock and cash on hand, the debit or credit balance of every correspondent, and also the assets and liabilities of the house.

But by the double entry system, the profit or loss derived from the business, and the causes which have produced it, are ascertained in addition.


The books used in single entry are: waste book (or subsidiary books equivalent to it), the cash book, bought day book, sold day book, and ledger.

The simplicity of this method of book-keeping ren­ders it more suitable to retail business ; but the advan­tages afforded by double entry are such that the system is almost generally adopted by wholesale trading houses, and proves, therefore, much more interesting for the student.

The ruling principle of double entry is, that to every debit or credit entry in one account, there should cor­respond an entry for the same amount in the opposite column of another.

To this end, there are accounts not only for buyers and sellers, but accounts for the capital of the busi­ness, as represented by the various property accounts, and, more especially, the profit and loss account, with its subdivisions.


Thus we have the capital accounts for various partners, cash goods, accounts for special classes of goods or consignment of goods upon which it is desirable separately to ascertain the profit or loss, the profit and loss account, interest, discount, bills payable and bills receivable, trade expenses, etc., etc.

The principal books in double entry are the cash book, the day or waste book (including subsidiary books), the journal, and ledger, in which latter every transaction appears twice.

Now, as any operation carried out by the house is actually transacted between two concerns, the same amount will be charged to one account and credited to another, the two entries thus balancing each other and rendering easy both the control of the arithmetical accu­racy of the postings, and the mode of ascertaining at any moment the financial situation of the house, and the causes which may have effected any change in the same.