subjects, Fremont High School, Oakland, Cal. A second paper on the same topic was given by C. A. Bernhard, Commercial Department, High School, Ukiah, Cal.

The last paper was on "The Essentials of the Ideal Commercial Teacher," by P. M. Fisher, principal, Manual Training and Commercial High School, Oakland, Cal.

Secretary Cody then introduced the following resolution, which was unanimously adopted:

Resolved, That the three officers of the department be constituted a committee to arrange the program for next year, and they shall increase this committee to five by appointing two additional members, at least one of whom shall be a resident of the city in which the next convention is to be held. It is directed by the Department of Business Education that work shall be begun at once on next year's program, in order that those who shall take part may have ample time in which to prepare worthy papers. Also, if possible, a longer program should be arranged.

The report of the Committee on Nominations was then given, as follows:

For President-WINFIELD S. MCKINNEY, Englewood High School, Chicago, Ill.

* For Vice-President-GEORGE E. MYERS, principal, McKinley Manual Training School, Washington, D.C.

For Secretary-THOMAS L. BRECHEEN, Fremont High School, Oakland, Cal.

It was moved and carried that the report be adopted and that the secretary be directed to cast a unanimous ballot for the officers nominated.

Mr. Cody moved the adoption of the following resolution, supplementary to the resolutions passed on the previous day:

Resolved, That the committee of five provided for in the resolutions passed on July 12 by the Department of Business Education be amended so as to make it a committee of seven, to include the vice-president and secretary of the department as members ex officio, and they and the president shall continue as members during their terms of office only, unless reappointed.

The motion to amend was duly seconded and unanimously adopted.

It was requested that the complete resolutions be read as amended, and they were so read by the secretary. At the conclusion of the reading, Mr. L. D. Inskeep, viceprincipal, Commercial High School, Oakland, Cal., offered the following amendment:

That the committee of seven consist of the president, vice-president, and secretary of the Department of Business Education, and four others appointed by the president, striking out the part of the original resolution specifying how this part of the committee shall be made up.

The motion to amend was duly seconded and adopted.
The meeting then adjourned.

SHERWIN CODY, Secretary

*Since the Convention Principal Myers has resigned and Charles Hart, head of Department of Practice, Business High School, Washington, D.C., has been appointed to fill the vacancy on authority of the Executive Committee of the Association.

PAPERS AND DISCUSSIONS

BOOKKEEPING FUNDAMENTALS

WINFIELD S. MCKINNEY, COMMERCIAL DEPARTMENT, ENGLEWOOD HIGH SCHOOL, CHICAGO, ILL.

It may be worth while to note some differences between the essentials of accounting, which has to do with the construction of the balance sheet and a loss-and-gain statement, and bookkeeping fundamentals, which are concerned more specifically with the forms of record and the principles

underlying the rules for determining the proper entries to be made in the various accounts. The former places emphasis upon the "why" rather than the "how," while the latter, not neglecting the "why," gives more consideration to the details of technique, or the "how"; but so interwoven are the two that it would be impracticable to draw a strict line of demarkation between them.

An adequate record of the vital facts of a business should be regarded as fundamental. Such a record should be brief, clear, and unequivocal, affording the requisite data from which might be constructed a complete narrative or story of the business.

The next fundamental in the order of development is the classification of business facts into appropriate accounts. (The record and classification of these business facts, or transactions, are frequently combined, as in the journal, cashbook, etc., preparatory to transferring to the ledger.)

But at this stage of progress much difficulty is encountered because of lack of standardization in terminology, which extends to the function of accountancy in even a greater degree, perhaps, than to bookkeeping. Faulty classification in bookkeeping results in grouping miscellaneous items into accounts which must be analyzed and redistributed in order to obtain intelligible results. A standardized terminology is, then, a fundamental need of both bookkeeping and accountancy.

The most serious hindrance, however, to the mastery of the technique of bookkeeping is due to a lack of a clear understanding of the reasons for the rules for debit and credit.

Some years ago, I had a personal experience in night school with a boy sixteen or seventeen years old, who was just beginning the study of bookkeeping by journalizing exercises in accordance with the rule-ofthumb method of arbitrarily using rules.

Among other exercises given in the text was one as follows: "Received a telegram advising of the destruction by fire of merchandise valued at $250.00, shipped to John Doe to be sold on commission." When called upon to tell what disposition he had made of the matter, he replied that he did not know what to credit, but that he had debited the telegram. in accordance with the rule that says, "Debit what is received,” etc.

This same difficulty is more fully set forth in a footnote in Packard & Bryant's Counting-House Bookkeeping (ed. 1878, p. 42), as follows:

Bookkeeping is usually presented as the "Science of Debit and Credit," and in order to give force to this short and easy definition, authors deem it necessary at the outset to establish fixed "rules for journalizing," or rules for deciding the debits and credits growing out of the transactions. These rules are placed at the very threshold of the subject, and the student is expected to apply them as a sovereign remedy in all his troubles.

Undoubtedly these obtrusive little recipes are good for something. Like all empirical remedies, they may do in the absence of a knowledge of the difficulty, or "until the doctor comes," but they are, after all, very weak props to lean on, and are liable to break and pierce one through. It is better, in the long run, to look at matters as they

are. There is no "infallible rule for journalizing,” no single formula that will apply ogically and with equal force to the record of all transactions, and the attempt to simplify the work of journalizing by a rule without reason is not only a weak device, but works njury in the end.

Their method, however, of obviating the difficulty by providing a brief treatise on political economy, as an introduction to elementary bookkeeping, hardly improves the situation for the usual student of bookkeeping.

Professor Hatfield, altho he states in his preface to Modern Accounting that he purposely omits, or treats with scant mention, these important details of technique, makes some pertinent criticisms upon the use of the terms "debit" and "credit" which serve to throw light upon the subject. He says, that

the original meaning of debit and credit is still preserved in personal accounts. But the application of debit and credit to other classes of accounts is more difficult of explanation.

He further states that

. .

by a forced system of personification [most writers] have assumed that debit and credit in all accounts ... show a relationship of debtor and creditor. . . . . The better theory rejects all of this personification and treats the two sets of accounts as representing two sets of value and meaning, in which debit and credit are used conventionally with differing signification; while it is true that most of the intervening authors present unquestioningly the naïve personalistic theory, it is interesting to note that Jones, who was the first, and Sprague, the latest and most penetrating, American theoretical writer, are thus in accord. And on their side are found many of the leading European authorities.

Debit and credit may each properly be said to have a primary, or literal, and a secondary, or extended, meaning. Their primary meanings have reference only to personal accounts. A person is a debtor when he owes for something which he has received on account; that is, without at the same time giving in return something of equivalent value. A person is a creditor when he is owed for something which he has given on account, without at the same time receiving in return something of equivalent value.

(NOTE. A person receiving or giving something on account is, however, understood to give or receive in return a promise of payment implied or expressed, but not a note, or negotiable instrument.)

This has no reference to the side of the account upon which an item is to be recorded.

The secondary, or extended, meanings of debit and credit apply to personal and all other accounts alike and are properly used to designate merely the side of the account upon which a particular item should be entered. In the secondary sense, then, debit means left-hand side and credit means right-hand side, or briefly "left" and "right."

It does not scem advisable to try to revolutionize this conventional secondary use of debit and credit, but if due consideration be given the matter and a practical application of this idea be made by a temporary

use of the terms "left" and "right" it will be seen how much baffling confusion will be dispelled and the whole situation greatly clarified.

It must be borne in mind, therefore, that with reference to personal accounts these terms have both a primary and a secondary meaning. The primary meaning is inherent, the secondary meaning is adventitious and conventional, and might just as well have been reversed so far as practical results are concerned, provided the reversal had extended to all accounts. But the form of the personal account, the first established in the evolution of accounts, having become fixed by usage, conditions and determines the debits (or lefts) and the credits (or rights) of all other accounts. This is because of the correlation of all accounts when conforming to good technique by having their debits (or lefts) and their credits (or rights) correctly designated.

Every account may have two classes of items directly opposite in character; for example, a personal account may have a primary debit which is also a secondary debit (or left) by convention, and a primary credit, which is also a secondary credit (or right) by convention; cash account, an item of cash received which is a debit (or left) by virtue of its sustaining the same relation to its transaction as the debit (or left) of the personal account to its transaction, or an opposite relation to that of a credit (or right) item of a personal account; merchandise account, having for its opposing classes of items purchases and sales, should be similarly disposed of with reference to its debits (or lefts) and credits (or rights), and so with all other accounts.

The reference of debits (or lefts) and credits (or rights) to accounts is properly made to single entry in its cruder beginnings, as well as in its more elaborate forms. And since business transaction and quasi-transaction, or business fact, requiring representation in accounts, is dual in character, having its two phases or sides, opposite and equal, the complete and full representation of both sides of such transaction or fact by accounts marks the transition from single-entry to that of double-entry bookkeeping.

This determination of debits (or lefts) and credits (or rights) of the account fully representing both sides of every transaction, or quasi-transaction, is the very essence of so-called journalizing, and constitutes one of the most important of bookkeeping fundamentals. If this be thoroly and intelligently mastered by the learner, it will place him upon solid ground and assure his easy and rapid mastery of the details of bookkeeping technique, thus fitting him for the important work of constructing a correct balance sheet and loss-and-gain statement, which is an essential function of accounting.

That the reasons for debit and credit are not as fully understood and appreciated as they should be, seems to be borne out by what occurred at a meeting of the National Business Teachers' Association at Indianapolis,

Ind., December, 1908. A paper entitled "Bookkeeping for Beginners" had been read and was being discussed by a prominent teacher. At the close of his remarks, in which he had enumerated some very interesting methods used by himself, he was asked what reply he would make to a student who should ask: "Why debit cash when it is received ?"

The several dubious replies given in response to a continued pressing of this question developed unusual interest; but the answer finally volunteered by a person in the audience and acquiesced in by the speaker, seemed not to be entirely satisfactory to all, judging from the many-sided discussions heard afterward.

At the annual meeting of this same body a year later, in Louisville, Ky., a more general discussion upon this same point disclosed a very great diversity of opinion. Possibly much of this diversity was due to the lack of a standardized terminology. Any essential diversity upon such an elementary point, in a body of teachers, coming together from more than two-thirds of all the states of the Union, is an impressive fact and seems to justify the criticism made in a publication referring to the discussion, that "evidently there is need among teachers for some instruction on the fundamentals of bookkeeping."

Since many controversies have been settled thru the disputants being led to agree upon definitions of terms, a plea is hereby entered that this, with other elementary points upon which there is essential disagreement, be critically examined and reported upon by a representative committee. Such committee should report its conclusions to a future meeting of this body for adoption, with or without revision, as may seem necessary. If practical agreement be not reached, let the report be again referred to the old or a new committee, until practical agreement is reached.

This is desirable not merely to facilitate the work of the student, but also to impress more fully upon the educational public the general training value of bookkeeping and accounting, in systemization, clearness of statement, mathematical exactness, and logical sequence of ideas.

Upon the other hand, they are vital to industrial and commercial progress. Even their temporary disuse would throw the business world into confusion. These, together with the other commercial subjects, including industrial history, not only do not totally displace the cultural subjects, but serve to give greater efficiency to business and commerce, "making possible all the marvelous products of master minds."

It has been truthfully said that "It is a fact that all of our modern history of culture is being written from an economic standpoint. Twenty years ago the Italian Renaissance was looked upon as a period of glory hardly likely ever to be reproduced in the history of mankind and impossible to be explained. Some of the best studies made of it since have shown that it was the outcome of the commercial position of Italy at that time."