A TREATISE ON BOOK-KEEPING.

SECTION I.

EXPLANATION OF TERMS.

1. A Bill is a written obligation whereby one person is bound to pay another a certain sum of money, at a specified time.

Bills for all sums above £2 must be written on stamped paper of a certain legal value. If the stamp be of less than the legal value, the bill is not valid in law; but if it be greater than the legal value the bill is valid. Thus, the price of a stamp which carries a bill of £200 is 2s.; this stamp will also carry any sum under £200, but not any sum above it. The amount of the bill is expressed in figures at the upper corner towards the left; and in the body of the bill is expressed in words. Sometimes the pounds only are expressed in words, the shillings and pence being set down in figures. For examples of bills, see the Engraved Forms.

2. A Promissory-Note is a bill expressed in the form of a promise from one person to pay another.-See Engraved Form No. 1.

3. A Draft is a bill expressed in the form of an order, signed by one person, and addressed to another; requiring the latter to pay the specified sum to the former, or to some third person.-See Engraved Forms Nos. 2 and 3.

4. The person who signs the draft is called the Drawer; the person to whom it is addressed is called the Drawee; and the person to whom payment is to be made is called the Payee.

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In the case in which the drawer directs payment to be made to himself, it is plain that the drawer and payee are the same person. In the case of a promissory-note the drawer and drawee are plainly the same person.

5. The Drawee binds himself to pay the bill by writing his name within it; after which he is called the Acceptor.

The acceptor's name is written either across the bill, or under that of the drawer; the former mode being most commonly practised. In accepting, a place of payment is sometimes specified.-See Forms Nos. 2 and 4. If no place is specified, the bill is understood to be payable at the office or residence of the acceptor. The fixing of the place of payment is called domiciling the bill.

6. The bill is said to be drawn by the Drawer; drawn upon the Drawee or Acceptor; and drawn in favour of the Payee.

7. A person transfers his right in a bill to another, or becomes security for its payment, by writing his name on the back of it he is then said to indorse the bill, and, he is called the Indorser.

-first the payee, and then each successive HOLDER,

The indorsers are-f

8. When the Indorser, besides writing his own name, specifies the person to whom he transfers his right, the bill is said to be specially indorsed: when he writes his own name only, the indorsement is called blank or general.

Bills having a blank or general indorsation may pass from hand to hand without bearing the names of the successive holders, just as banknotes do which are, in fact, the banker's promissory-note, or "promise to pay on demand." And any one of these, who holds the bill at the expiry of the term, may require payment to be made to him. But when a bill is specially indorsed, it is of course only payable to the person named, or to his order.

9. The term of a bill is the space of time at the end of which it is to be paid.

10. The term of a bill is sometimes a specified time after date, that is, after drawing; sometimes it is a specified time after sight, that is, after acceptance.

11. Bills to be paid in the same country in which they are drawn, are called inland bills; and bills to be paid in a different country from that in which they are drawn, are called foreign bills.

Inland bills are commonly drawn to be paid a certain time after date; and foreign bills, after sight. In Great Britain and Ireland, three days, called Days of Grace, are allowed after the term expressed in the bill has expired; and payment cannot be demanded till the last of these three days. In some countries of the Continent the lengths of the terms of different kinds of bills have been established by custom, and do not need to be specified; this is called Usance.

When the term of a bill is expressed in months, calendar months are understood. Thus, a bill dated 23d May, at three months, would fall due, not reckoning days of grace, on the 23d August; and one dated 29th, 30th, or 31st January, at one month, would become due, not counting days of grace, on the 28th February in common years, and on the 29th in leap years. Bills which fall due on the Sabbath, or on a holiday, must be paid on the day preceding.

It is usual to discount a bill soon after acceptance, either at a bank, or with some private discounter; the person who receives the money paying discount-that is, the interest of the amount of the bill for the unexpired part of the term. On the last of the "three days of grace," the amount of the bill is paid to the bank, or private discounter, by the Drawee-who, in exchange for the cash paid, receives the bill, to be retained by him. It is not unusual for the Drawer of a bill to get it discounted before acceptance. When a bill is made payable in London, the amount may be paid into a local bank, which advises its London correspondent of the payment, and charges the Drawee a-quarter per cent for its trouble. This is called Retiring the bill in London. The London Banks will not take letters of credit in payment of bills.

12. The Drawer of a foreign bill makes out several copies of it, usually three, which together are called a Set of Exchange, and remits them by different ships or posts, to guard against loss or miscarriage. In this case, acceptance and payment of each bill of a set are required only on condition that the others have not been accepted or paid; and a clause to this effect is always inserted in such bills; therefore, when one bill of the

set is accepted, the duplicates are of no further use.-See Engraved Form No. 4.

13. When a bill is not paid at the proper time, the holder of it puts it into the hands of a Notary, who demands payment from the Acceptor; in default of which he marks the bill with his initials. This is called noting. Before proceedings can be taken, the noting must be followed by a formal Protest.

non-acceptance.

In certain cases, a bill may be protested for

14. A bill of which a person has to receive the amount, is called, to that person, a Bill Receivable; and one of which a person has to pay the amount, is called to him a Bill Payable.

Thus bill No. 3 is a bill receivable to Alexander Bannatyne, and a bill payable to William Johnson.

15. When one merchant sends goods to another, he transmits to the person to whom they are sent, a paper called an Invoice, containing a list of the various articles forwarded, with a statement of their quantities, qualities, and prices, and the charges incurred in sending them off. At the head of the invoice, it is usual to specify the channel through which the goods are sent; and to write at the foot, the words "Errors excepted."

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16. An account of goods sold on commission, furnished by an agent to his employer, is called an Account-Sales. specifies the goods sold, the prices obtained for them, the charges attending them, the commission of the agent, and other particulars.