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If goodwill represents an asset it surely cannot show legitimately. greater value than the figure placed on a proportionate share at this time. We have on this point a legal opinion in the English case of Stuart v. Gladstone, in 1879, in which the presiding justice remarked :

Then is it fair construction of these articles to assume that in taking the annual accounts of the profits of the concern, the partners were going to put a value upon the Goodwill, so as to allow each partner to take year by year out of the partnership the amount of his share of the increase in the value of the goodwill? Now one cannot help feeling that no mercantile man ever dreamt of such a thing. The goodwill is not an available asset in the sense that you can draw upon it, or that you can turn it into money, or pay it out to the partners, and I should say with some confidence, not only relying upon my own experience, but having appealed to the bar in this case, that no one ever saw such a thing in a merchant's accounts.

Having arrived at the total to which X.'s administrator is entitled, we desire to find the sum due this representative yearly. In doing this we must take into consideration that each unpaid balance is to bear 6 per cent. interest. This will be best shown by a continuation of X.'s Capital Account, but changed from proprietorship to that of one representing a true liability of the firm of Y. and Z., as shown on the preceding page.

If the surviving partners should on February 28, 1908, decide to deal with the period's transactions on the double entry princpile, and in consequence thereof furnish the administrator with a Profit and Loss Account and a Balance Sheet, it would be desirable to express such a change in the books of the concern.

We have then to take into consideration all the facts that occurred during the period from December 31, 1907, to and including February 28, 1908. The procedure in such a case would be as follows:

Incorporate by means of journal entries the facts disclosed by the Statement of Assets and Liabilities and which are not contained in the ledger. Journalize the subsequent transactions in a journal, (there being no necessity, for our purpose at least, to open the various books incidental to an ordinary mercantile concern); raise the necessary ledger accounts, and make closing entries for the yarious nominal accounts; prepare a Profit and Loss Account, and the Balance Sheet.

If the firm followed this method the Profit & Loss Account and the Balance Sheet would appear as follows:


By Sales 6,986.50

To Inventory





Inventory o/h.




Gross Profit


By Gross Profit.


To Rent (January-February).

Ordinary Profit for this broken period.


400.00 1,477.40

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$580.16 By Net Profits.. 507.64 362.60

To X., 2/5 of net profits.

Y., 7/20 of net profits.
Z., 14 of net profits.



$1,450.40 BALANCE SHEET OF THE FIRM OF X., Y., & N., AS AT FEBRUARY 28, 1908.

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The Advantages of Organization

to the Accountant.*


As it is always a good plan to know exactly what we are talking about, I would quote to you the definition, given in my office dictionary, of the word Organization. It reads: “The systematic union of individuals in one body, whose officers and members work together for a common end." Now, please mark those words:

"a body whose officers and members work together for a common end." That means simply this: Just as long as you continue to work together (officers and members), you are an organization, and when you cease to work together, you cease to be an organization.

In certain important ways an organization is like a government. The organization you have formed is in fact a democratic government. Laws are now being made for the purpose of maintaining discipline, and certain of your number will be chosen by you to govern the Institute and administer its laws. This democratic government, which you have created, will, like all good governments, “ derive its just powers from the consent of the governed."

In passing hastily by, please just give a fleeting thought to the United States Navy; to the Army; to the Census Bureau; to any branch of the Federal Government. What would these amount to without organization ?

It is quite worth while to devote a few minutes here to-night, when we are inaugurating a new society, to look at the name you have chosen, “The Philadelphia Institute of Accounts.” Here we have three principal words, and the meaning of each word is most fully applicable to the purpose:

Philadelphia—The City of Brotherly Love.
Institute-An established society pledged to some special work.

Accounts—The written history of financial transactions. *A Lecture delivered to The Philadelphia Institute of Accounts, Friday Evening, April 24, 1908.

It is quite clear, then, even if no declaration to this effect were contained in the constitution of the Institute, that you have formed a fraternal society, pledged to the study of the work you have chosen for a livelihood.

It seems to me that you could not have chosen a better thing to do—nor a better name to do it under. The thing itself is well worth while—the name exactly fits.

Under the old order of things, before the advent of organized movements, such as this, the motto used to be: "Keep It to Yourself." The bookkeeper, who thought he had a good idea, would hold on to it, and if it had to come to light, he would have it copyrighted. He would say, “What's the use of giving away your ideas? Let the other fellow find it out for himself; nobody ever taught me for nothing."

Under the new order of things, when the Philadelphia Institute of Accounts shall have got into good working order, we shall live in an atmosphere of mutual helpfulness. The motto will be: “Let your light shine before men !” We shall be glad to tell our brethren our ideas, and, in return, we shall be glad to listen to their ideas. This is the difference between barbarism and civilization, between old-fashioned selfishness and modern enlightenment.

Standing as we do at the threshold of an unknown future, we may do well to look around for what may be helpful to us in the history of other similar organizations; history written for our guidance, if we are but willing to accept it.

In this connection, I may name to you three other societies somewhat similar to your own: (1) “ The Institute of Chartered Accountants in England and Wales,” (2) “The Pennsylvania Institute of Certified Public Accountants," (3) " The Institute of Accounts," of New York City.

Now mark the use of the term Institute in the name of each of these organizations, and the important significance it has

for us.

First, The Institute of Chartered Accountants. This society was formed in May, 1882, to associate in one body all the professional accountants practicing in England and Wales. As its name indicates, this Institute was organized under a special charter received from the British Crown. Through the medium of the Institute, the practice of public accountancy has maintained

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