Debit

“ In a column to the left of the number and name of each bank there was a list of debit items, each item indicating that the sum stated was owing from the bank opposite to which it was placed for checks and drafts and duebills which had been presented against that bank by other banks in the association. The banks which had presented these checks, drafts, and duebills were given credit therefor on the credit side of the sheet, in a column to the right of the name of each bank, as being claims in their favor against the debit items due from other banks. ”

“ The excess of deposits for unascertained duties was paid to the merchant by the cashier for the collector, and was not charged on the cash-book. And by the circular from the comptroller's office he was directed to enter upon the debit side of his accounts the whole deposit made by the importer, which would be balanced by the ascertained duty, and the excess paid back to the importer. ”

“ The offsetting debit is to Bad Debts, an expense account. It represents an expense which the current period has to bear, and is closed into Profit and Loss with other expense accounts.
Handling Prepaid and Accrued Expenses and Income.—The method of handling the estimates or inventories of prepaid and accrued expenses and income is very similar to that shown for handling the mixed Merchandise account. Illustrations follow:
The first account, Insurance, shows the method of handling a deferred or prepaid expense. ”

“ With the exception of the items transferred to the analysis sheet from the Cash account—where a Cash account is carried in the ledger—all items in the cash debit column of the analysis sheet represent, in the cash book, credits to certain accounts, and those in its credit column represent debits to certain accounts. The entries to the cash analysis column from the ledger Cash account, showing on its debit cash receipts and on its credit cash disbursements, must bring about the equilibrium. ”

“ The Cash Receipts Journal—Analysis of a Cash Receipt.—If $100 cash is received on account from John Doe, a customer, an analysis of the transaction shows “Cash” debit and “John Doe” credit.
Cash100.00 John Doe100.00
So with all receipts of cash; the “cash” element is a debit. The record of cash receipts being made in a journal devoted exclusively to receipts of cash, the “Cash, Dr.” element of the entry may be omitted and only the “credit” element need be shown; the very fact that the entry is made in the cash receipts journal is sufficient to indicate that “Cash” is a debit. ”

“ If a payment appears directly opposite the corresponding charge, with no other credits intervening, lines are ruled underneath both the debit and the credit items to show that down to that point the account balances. The record of dealings with each customer should be as full as possible in order to furnish an accurate basis for credit rating. ”

“ For the first advance is usually followed by a second, and sometimes by a third, and to this debit column are added the charges made for food, for medical attendance, for opium, and for purchases made at the plantation store, so that, upon the expiration of his three-hundred-day contract, the laborer almost invariably owes his employer a debt which he is quite unable to pay. ”

“ In the same way a statement with reference to the remaining balance retains its validity without regard to these repayments or debit entries, until in its place comes another acknowledgment of receipt in consequence of a new deposit, or a new statement with reference to the balance of the account in consequence of a new payment made without delay.
It is evident of itself that a higher sum than the balance remaining at the depositor's disposal after deduction of the last repayment and entered in the book cannot at any time be paid. ”

“ But in connection with banking and in ordinary commercial parlance it means money taken to a bank, left there, and understood to be subject to check or draft. [2] Money thus deposited and drawn on enters largely into the commerce of the country: checks and drafts are mercantile instruments, part of the machinery of trade, having commercial value and bearing no resemblance to the 'pass-book' held by the poor seamstress, or washerwoman, or cook, who can go but four times a year and after notice to have a debit entered in it. ”

“ They must have four or five dollar handkerchiefs, as fine things for their wives and children, and as much in quantity as any other man has. At the end of the year there are two or three hundred dollars on the debit side of their accounts. ”

“ Here the system presents to us its highest degree of interest: the possessors of account books, adherents of the clearing service, can discharge their debts one to the other by the transfer of accounts. It is sufficient to write at the back of the cheque: to be carried to the credit of account No ..., with the name of the holder of the account and his address. In this case the amount of the cheque is placed to the debit of the person who issued it and to the credit of the person in whose favour it is drawn. ”

“ I could have been paid in gold had I wished, but I had preferred a weekly cheque, and I took care never to cash this cheque at our own offices in Waterloo Place. I did not wish it to be known that I had no banking account. As a matter of fact, I now had one, though I should not have [Pg 10] liked to disclose it to the Income Tax Commissioners. The reason for this reticence lay in the smallness, not in the largeness, of my balance. I had learned that in certain circumstances it pays you to appear better off than you are. ”

“ The column of debits and credits of itself forms one amount; the column for the debits produces a second amount; and the column of credits a third amount; which second and third amounts, added together, must exactly agree with the first amount, or the work is not done right. By this means, the man of business may obtain monthly such a statement of his affairs, as will shew how much he owes for that month, and how much is owing to him ”

“ Resolving that our engagement should be a short one, and knowing that those who have little either of money or time have, in furnishing as in everything else, to pay through the nose for their purchases, we had started at once. What had remained of a sum of money Evie's aunt had long had in trust for her against her one day setting up housekeeping on her own account had enabled us to do this. At first the sum had been one hundred and fifty pounds ”

“ I had now, for example, a banking account; and though I seldom risked drawing a cheque for more than two pounds without first performing quite an intricate little sum, the data for which were furnished by my cheque, pass and paying-in books respectively, still—I had a banking account. I had also good boots, two fairish suits of clothes (though no evening clothes) , an umbrella, a watch, and other possessions that, three or four years before, had seemed beyond dreams unattainable. ”

“ A dealer who has sold goods, for which he is to be paid in six months, but who desires to receive payment sooner, draws a bill on his debtor payable in six months, and gets the bill discounted by a banker or other money-lender, that is, transfers the bill to him, receiving the amount, minus interest for the time it has still to run. It has become one of the chief functions of bills of exchange to serve as a means by which a debt due from one person can thus be made available for obtaining credit from another. ”

“ Banks supply two kinds of currency, viz. bank notes—which are money; and bank deposits (or rights to draw) —which are not money. (2) A bank check is merely a certificate of a right to draw. (3) Behind the claims of depositors and note holders stand, not simply the cash reserve, but all the assets of the bank. (4) Deposit banking is a device by which wealth, incapable of direct circulation, may be made the basis of the circulation of rights to draw. ”

“ To make a note solvent, and suitable for circulation as money, it is only necessary that it should be made payable in coin on demand, and be issued by a person, or persons, who are known to have in their hands abundant material property, that can be taken by law, and applied to the payment of the note, with all costs and damages for non-payment on demand.
Theoretically, I repeat, all the material property in the country, that can be taken by law, and applied to the payment of debt can be used as banking capital; and be represented by promissory notes, made payable in coin on demand. ”

“ And be it further enacted, That there shall be retained from every deposit in the mint, of gold or silver bullion below the standard of the United States, such sum as shall be equivalent to the expense incurred in refining the same, and an accurate account of such expense on every such deposit shall be kept, and of the sums retained on account of the same, which shall be accounted for by the treasurer of the mint, with the treasury of the United States. ”

“ The debts of A to B may be paid without the intervention of money, even though there be no reciprocal debts of B to A. A may satisfy B by making over to him a debt due to himself from a third person, C. This is conveniently done by means of a written instrument, called a bill of exchange, which is, in fact, a transferable order by a creditor upon his debtor, and when accepted by the debtor, that is, authenticated by his signature, becomes an acknowledgment of debt. ”

“ Economy of Redemption Money.—It is thus evident that the employment of $200,000 cash as a banking reserve has made possible the existence of a more than sixfold volume of circulating medium—currency. Against each $1,000 of deposit liability there need be only $150 of actual cash. The bank customer, however, thinks of his deposit claim as money, and it really serves him all the purposes of money. The right to have the money when desired is as good as the actual money, is more convenient, and is as readily and as serviceably transferred. ”

“ As we have seen, a deposit of money to one's credit in a bank does not operate to diminish the estate of the depositor, for when he parts with the money he creates at the same time, on the part of the bank, an obligation to pay the amount of the deposit as soon as the depositor may see fit to draw a check against it. ”

“ All deposits made with bankers may be divided into two classes, namely, those in which the bank becomes bailee of the depositor, the title to the thing deposited remaining with the latter; and that other kind of deposit of money peculiar to banking business, in which the depositor, for his own convenience, parts with the title to his money, and loans it to the banker, and the latter, in consideration of the loan of the money, and the right to use it for his own profit, agrees to refund the same amount, or any part thereof, on demand. ”

“ Where the deposit is general and there is no special agreement proved, it is doubtless true that the title of the money deposited in a bank passes to the bank, and the bank becomes liable to the depositor for the amount as a debt. ”

“ Instead of running the risk of paying bills with money carried about on his person, the business man, and every man with ready money should follow his example, deposits his money in a convenient bank, for which he receives a proper voucher in the shape of a credit in a deposit book.
When he pays a bill, he draws a check for the amount, payable to the order of his creditor. This check, when endorsed by the receiver and paid by the bank, is in itself a receipt for the money. ”

“ When no rate is fixed by the laws of the state, territory, or district, the bank may take, receive, reserve, or charge a rate not exceeding 7 per cent., and such interest may be taken in advance, reckoning the days for which the note, bill, or other evidence of debt has to run. ”

“ Money against deposits, (5) Money against goods, (6) Deposits against goods. For our purpose, only the last two types of exchange are important, for these constitute the circulation of currency. As regards the other four, the first and third have been previously explained as "money changing" and "barter" respectively. The second and fourth are banking transactions: the second being such as the selling of drafts for checks, or the mutual cancellation of bank clearings; and the fourth being such operations as the depositing or the withdrawing of money, by depositing cash or cashing checks. ”

“ Paper currency, it may be said, was authorized by that act, which is undoubtedly true; and it is also true that the bills or notes of the bank were made receivable in all payments to the United States, if the same were at the time payable on demand, but the act provided that the corporation should not refuse, under a heavy penalty, the payment in gold and silver, of any of its notes, bills, or obligations, nor of any moneys received upon deposit in the bank or in any of its offices of discount and deposit. ”

“ But let us look for a moment at the equity of defendant's position. It receives this money when it is worth ninety cents on the dollar. It places it with its other money; and, perhaps, in the course of a week, all the specific bank bills it then had on hand are paid out by it. It uses it in paying the checks of its depositors, in other words, its debts at par. It buys with it bills on New York, which it converts into exchange worth a premium. ”

“ The distribution between the currency and deposit components of money depends largely on the preferences of the public. When a depositor cashes a check or makes a cash withdrawal through an automatic teller machine, he or she reduces the amount of deposits and increases the amount of currency held by the public. Conversely, when people have more currency than is needed, some is returned to banks in exchange for deposits. ”