Induction, Part 5
Double Entry Book-keeping
In the introduction to this course we noted that:
“Double-entry book-keeping
was developed during the Italian Renaissance, in Florence and in Genoa, and was
for the first time described as a system by Luca Pacioli, a Franciscan Friar
and friend of Leonardo da Vinci’s, in Milan.”
Historically, double-entry book-keeping coincided with the
rise of the bourgeois class over the last 500 years. It is one of the better
products of bourgeois development.
Double-entry book-keeping enables individuals and corporations
to maintain a constant, detailed record of all their claims and obligations,
the consequences of all of the transactions that they perform.
The beneficial owner of any business possesses the assets,
minus the liabilities. Taking the owner into account, all of the balances on
the books, positive and negative, should cancel out.
Put in another way, if all the “debits” are added up, they
should total the same as all of the “credits”. The “mobile sculpture” in the
image above illustrates this idea quite well.
Cash Book
Small businesses, and entities such as political parties and
their branches, do not usually maintain a full “ledger” of accounts all the
time, but they record their transactions in a “Cash Book”.
A Cash Book is the minimum form of continuous record that
can be sufficient to reconstruct a full record or “ledger”, expressed as a
Balance Sheet and an Income and Expenditure (or Profit and Loss) Account.
A Cash Book can be summarised as a Receipts and Payments
Account, for reporting purposes.
Branches, as well as all higher structures of the SACP, ANC
and trade unions, must be able to account for funds given to them, kept by
them, and used by them.
At the very least, each structure must keep a Cash Book.
- The above is to
introduce an original reading-text: Keeping a Cash Book and other accounts, Tweedie, 2004.
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