§ 579. Summary It is believed that enough has been said above to explain the general theory of the use of all the accounts necessary in estate books. These accounts are designed to record the fulfilment of the functions of an administrator, which have been analyzed as follows: " This analysis is suggested by Charles E. Sprague, in The Philosophy of Accounts, but is changed here to agree with the names of accounts used in this work, whereas Sprague uses only schedule numbers. 1. What determines the accounts to be used for an estate? What does the word "schedule" mean in this connection? 2. Into what two divisions are probate accounts divided? What. are the accounts under each head? 3. Why is the separation of corpus from income always desirable? 4. What account in probate work answers to the proprietorship accounts in ordinary accounting? What is the balance of this account? 5. Why are liabilities not entered on estate records? the books show the net worth of the estate? Why do not Why is real 6. What accounts are used and with what is each account debited and credited? 7. What are the initial debits and credits? How are cash receipt items treated? How are cash payment items treated? 8. What are the successive steps in closing the books? 9. How far should the Inventory account be subdivided in probate work? On what does reasonable subdivision depend? Why does a trustee have fewer accounts than an executor or administrator? 10. Is there any difference in the forms of entries given for estate accounting and the usual double-entry system? CHAPTER LXVIII BOOKS TO BE KEPT BY ADMINISTRATORS § 580. Form Not the Most Important Thing The form of the books in which the financial records of the estate are kept is not so material as is the correct use of the accounts. Probate accountancy presents to the commercial bookkeeper a new nomenclature for the nominal accounts, and some new practices in such matters as the handling of liabilities, etc., but so long as these are understood and properly handled, the merely mechanical vehicles used for the recording of the transactions are a matter of personal preference. No objection can be raised to the forms used in any system if through them one may accomplish the desired result, but it is believed that the greatest efficiency will be found in the forms suggested and consequently a certain emphasis is laid upon them. § 581. Single Entry Not Suitable If the estate is small and the provisions of the will are not complicated by the establishment of any trusts of unusual difficulty in handling, the opinion has been prevalent that the accounts may be kept by single entry with entire satisfaction. There is, however, no case so simple that a properly adapted form of double-entry bookkeeping cannot be used more easily in the long run and to greater advantage than single entry. The requirements of the income tax laws can be met more readily by double entry, which has therefore become more important within recent years. Double entry has the further advantage that it recognizes, while single entry ignores, the dual nature of all transactions, i.e., the fact that if money comes in there must be a source; if it goes out there must be a destina tion-if any change occurs there must be an equal "change from" and "change to." The purpose of the nominal accounts which distinguish double entry from single entry is to collect under distinct classifications assets of certain natures, liabilities of particular kinds, income from certain sources, and expenses for different things. Pure single entry is limited to personal accounts, but in its practical application a Cash account is usually kept. There may be other impersonal accounts of a memorandum nature, such as Sales and Expense; but, when any impersonal accounts are introduced the system is no longer pure single entry. Single entry, therefore, does not record equal debits and credits for each transaction, it does not provide for a trial balance, it does not furnish adequate checks on the accuracy of the work on the books of account, and it gives no organized information of the elements of operation.' In fact it may be said that a single-entry system is no system at all, but merely a makeshift. § 582. The Self-Posting Ledger, Journal Ledger, or Synoptic There is a form of account book which has won much favor in England and Canada and in some parts of the United States (especially in Ohio), and which is especially adapted to the accounts of administrators and trustees. This form (see Form 26) has all the ease of single entry with none of its disadvantages. It will be seen that this consists of a many-column journal having one or two columns devoted to each account, so that the book becomes a cash journal of such complete distribution that all the ledger accounts are represented therein. Any 24-column double-page columnar sheet, fitting an II x 17 binder, will provide ample space for all contingencies.2 In the case presented here only 21 columns are used. 1 Walton, Advanced Accounting. 2 Some states forbid the use of loose-leaf books by fiduciaries. A 20-column bound cash journal will serve fully as well. Such a book is called a "self-posting ledger," a "journal ledger," and various other names, but of all which have been suggested, "synoptic" is probably the best, being short as well as descriptive. The word is derived from the same Greek root as is "synopsis" and is a substantive use of the adjective "synoptic," which Webster defines as: "Affording a general view of the whole, or of the principal parts of a thing." The accounts of trust companies are coming to be generally carried on such a form as this. § 583. Principle of the Synoptic The synoptic is essentially a double-entry book. Each line must contain equal debits and credits if the record is to be true. Entry No. 1, for example (Form 26), shows a debit of $2,100 to Cash and a credit of the same amount to Inventory. Expressed in journal form this entry would be: Cash, Dr.... Inventory, Cr. $2,100.00 $2,100.00 Entry No. 26 shows a debit to Cash of $9,500, a credit to Inventory of $9,000, and a credit to Gain on Realization of $500. In journal form it would be: Since in every entry we have equal debits and credits, on each page we will have a total of debits equal to the total of the credits, because of the algebraic theorem that, if equals are added to equals, the sum will be equal. Therefore the sum of the page totals of all the debit columns must equal the sum of the page totals of all the credit columns, with the result that the sum of all the debit balances in the book must equal the sum of |