are selling in another Exchange at 3, the price at home being 3, instructs a member of the other Exchange (with whom arrangements have been previously made for arbitrage dealings) to sell on joint account 200 and then proceeds to buy that quantity. Note.--In a low-priced active share it is probably never possible to get a turn of th; it is assumed for convenience of calculation. The difference obtained is generally about 14d. per share. The broker buys to take up 500 English Sewing Cotton Company, Limited, ordinary shares as follows: It may be remarked that on a sale, purchase, or carry over being executed, a contract or continuation note is issued. In the foregoing case the contract note will be made out thus : : 22nd... .190 . To "C." We beg to advise having bought on your account, subject to the rules of the Stock Exchange. For settlement 30th..... 190 . 23rd.-Client "F" goes a bear of £1000 Trunk Thirds. This being executed at 55, a contract note is issued thus: : As these are sold through broker "E," a member of another Exchange, the commission would be shared, say one-half each. The share falling to "E" appears in the Dr. commission column of the Day Book. On carry-over day the broker arranges himself to contango for client "C" the shares bought by him, viz. 100 Henderson's Transvaal Estates and 100 Barnatos. To provide the funds to do this and meet the settlement, the securities held in the investment account are supposed to be "pawned" to the bank, and an advance of £700 obtained thereon. The M/U prices for these being respectively 1 and 31, and the contango rates being 2d. and 3d. per share, the following is the form of continuation note issued: To "C." 28th.... .190 . We beg to advise having continued on your account, subject, etc. The £1:10:23 is made up thus: M/U price £1: 10s.; contango 2d.; commission, one-quarter the usual buying or selling rate, d. It is also necessary to have the 1000 Trunk Thirds sold by "F" carried over to next account, and it is arranged with broker "E" to do this; the M/U price being 54, contango rate 2s. 6d., and commission 1s. 4d. The continuation note is issued as follows:— To "F." 28th... .190.. We beg to advise having continued on your account, subject, etc. The items on the open account, viz. 100 Chartereds, 100 Randfonteins, 50 Goldfields, are carried over by broker "M," the prices being All the above transactions having been entered into the Clean Exchange Book, it becomes necessary to write up the Day Book. Taking the first item, sale of £330 Edinburgh Corporation Stock: Broker "G" is debited with the price of the £330 Edinburgh Corporation. Stock at 100, viz. £331:13s.; client "A" being credited with the amount £331: 13s., less stamp and commission 17s. 6d = £330:15:6; 1s. for stamp being entered in the stamp column, and the commission charged (16s. 6d.) going in the commission column. The calculations are done at the time the Day Book is written up. In a similar way the other buying and selling transactions are also entered. The individual items in the Dr. and Cr. columns are posted to the proper accounts, and the totals for each "settlement" of the stamp, fee, and commission columns are posted to the commission account in the Private Ledger. It may be remarked that stockbrokers do not generally charge commission on their own private purchases and sales. On contango day the entries in the Clean Exchange Book referring to continuation bargains are written up into the carry-over Day Book, in the case of a "bull” crediting him with the amount and debiting the broker contangoing. The contango, commission, and stamps are charged in the following "settlement." Simultaneous with the Day Book the Total Book is extended as previously explained, and the example before us shows that broker "G" requires to be handed a transfer for £330 Edinburgh Corporation Stock; broker "H" has to give a transfer for £383:9:4 Midland Railway 2 Debenture Stock; also that a transfer for 100 Chartereds has to be given, and 100 Hendersons and 100 Barnatos received, the other entries crossing out. When transfers are received an entry is made, thus squaring. The following is a form of account issued on account day to clients, showing them their position: This balance of £2: 9s. agrees with that shown in the Clients' Ledger, and would be squared by remitting "C" £2: 9s. The following, and the forms and books shown on pp. 148-160, are required to register the transactions given : Introductory.-The taking and valuing of stock is one of the most important duties which arise in drawing up the periodical accounts of a business. The books may be drawn up in the most approved form for the particular kind of undertaking, the staff of clerks may be everything that the most exacting critic can desire, the books may be kept in the most careful manner, the Balance Sheet may be otherwise correct, and yet a little looseness in the stocktaking will upset all. In a model system of books provision is sometimes made for a Stock Book, which is an excellent check on the stock as disclosed at the periodical stocktaking. But there are several businesses in which Stock Books are out of the question, either the nature of the transactions making it absolutely impossible to keep such records, or else the difficulties met with make it practically impossible. Thus an error in the stock-be it in casting, calculating, mode of valuing, or in any other of the many ways in which a slip may arise, accidental or intentional-may place an entirely different aspect on the accounts of a concern, and completely distort the results of the transactions of a period. Different Purposes for which Stock is taken.-In stocktaking regard must be had to the particular object in view. Thus stock may be taken with the intention of drawing up a Balance Sheet or compiling a Statement of Affairs. The former may be the usual periodical Balance Sheet of the concern, showing the result of the transactions during the past year or other period, or it may be drawn up for the purpose of selling the business, or for the admission of a new partner or other reason. A Statement of Affairs is prepared in cases of insolvency. It will thus be seen that the position is slightly different in these two instances, for while in the case of the Balance Sheet it is assumed that the business will be continued and the stock disposed of at ordinary selling prices, in the case of insolvency it may happen that it will be necessary to dispose of the stock at a sacrifice in order to realise the whole quickly and close up the estate in an expeditious manner. Hence in the one case the assets, including stock, will be valued on the basis of the business being a going concern, while in the other the mode of assessment will be the break-up values. Even in this latter case, however, the stock should be shown at its value as a going concern, the reduced valuation included among the assets. and Basis on which Stock should be taken.-The usual method of taking stock is to make an inventory of all the goods on hand on the particular day, price each lot out, and show the total. The various processes should be performed by different persons. Thus one man, or set of men, should make the inventory, another price out the goods, another make the calculations and additions, a fourth check the clerical accuracy of the work, while a principal or responsible official should supervise the whole stocktaking generally. The general rule for valuing stock is to take cost or market price, whichever is lower. Speaking generally, on no account must a value in excess of the cost price be taken. The reason for this is, that profits must not be anticipated. A profit is not made until the goods are actually sold, or in other words stock can never show an actual realised profit. A profit may be shown on paper, but before that profit can be taken into account the nature of the asset must be changed. Various Methods of taking Stock.-Though the market price should generally be taken when it is below cost price, yet there are exceptions to this rule. Thus, if the goods have been sold for future delivery under good contracts, to financially sound people, it would be permissible to value the stock at cost price, or even at selling price, less a rebate for delivery, etc., expenses, discounts, and other abatements and charges. A good example of such a case would be a firm of oil merchants, who unloaded a cargo of petroleum just before stocktaking. The price of the oil has dropped, but they have already disposed of the whole cargo for delivery over the next |