Sec. 9] INCOME SUMMATION 161
income is credited (B). In like manner all the transactions
involving a payment or receipt of cash are entered on one
side with respect to the cash, and on the opposite side with
respect to some other capital source. The category of the
capital source called “rights to and obligations from
employees ”’ yields a certain amount of clerical work and
other services appraised at $1500. This item credited (H)
to the above-named source is here debited (h) to the stock
of goods, to sell which requires the services of these
employees. It may be that it should be debited to
the store which they clean, or to some other article of
capital on which they do work; but in any case it must
be debited under some head or heads.
It will be seen that among the other items of capital
which are sources of income or outgo are the bonds and
stocks of the company. The bonds absorb $800 of in-
terest, and the capital-stock, which is a residual claim on
the company, absorbs any surplus of cash which it is
decided to distribute in dividends.
The two sides of the account of such a fictitious person
necessarily balance. It cannot be otherwise, even if the
company accumulates its profit instead of paying it to
the shareholders; for, as has been seen, the money thus
received is debited to the cash account.
In practical accounting, the items would usually be sim-
plified somewhat. It would not ordinarily be worth while
to make an appraisement of the value of the use of the ware-
house for storage as distinct from the storage charge, nor of
the value of the work performed by the employees as distinct
from the wages paid them. In the above accounts we have
purposely distinguished these magnitudes, estimating the
storage benefit as $1000 though the rent paid for it is $1200,
and estimating the work done by employees as worth $1500
though their wages were $1600. If, instead, we estimate
the storage benefit at the rent figure and the employees’
work at the wages figure, our accounts would contain four
M
