ABSTRACT
The Balance Sheet of a business expresses the status of that business at a certain point of time. It normally contains three classes of values: assets, liabilities and proprietorship, and expresses an equation between one of the classes, the assets, and the two others. The balance sheet presents the status at some certain point of time. We need also some means for recording what occurs, for the changes which take place between the balance sheets. A single account might have been opened for “Personal Debtors,” but in that case it would have to be expanded into subordinate accounts, so as to give information as to each debtor. The increase and decrease of proprietorship is called Profit and Loss. As it is of the utmost importance to study the causes of Profit and Loss, certain subsidiary accounts are opened for the sole purpose of classifying profits and losses according to their sources.
