Efficient bookkeeping in trade

Chapter XIII Efficient bookkeeping in trade The pen is a wonderful and noble tool, much needed not only in trade but in every art, be it liberal or mechanical. If a trader finds the pen to be a mere nuisance or he is not very adept at using it, he cannot be considered a trader. In addition to being skilled at using a pen, the trader must also have adequate knowledge of well organized bookkeeping. The trader must never run his business relying solely on his memory unless he has the capacity of King Kyr who knew each of his soldiers by name. The same ability was an asset of the Romans Lucius Scipio and Kineus, an adviser to Pyrrhus, who knew each senator by name the second day of his stay in Rome. As such natural talent is not very common, it is fortunate that the art of writing is available to the rest of us. The benefit of writing is not only preserving and recording what has been discussed and agreed upon, but it is also an effective way of avoiding arguments, disputes and unnecessary discussions. Moreover, if it were not for the pen, famous authors and their works would not have lived to this day and age since the memory of them is preserved through written documents. Oh, how beholden we are to Carmela, the mother of Euandrus, who was the first to discover an appropriate use for the quill. W e continually strive to reap all the benefits writing offers us, even if it is only the possibility of writing letters or reporting news from one country to another.

T o avoid digressing any further, let us move on to our intended point, which is efficient bookkeeping in trade. Books are the record of every venture the trader undertook, of all his creditors and debtors, of prices, profits and losses and anything else that might prove relevant for the trader’s business depending on circumstances. Good and orderly bookkeeping is fundamental for successful negotiating, trading and generating profit. The trader must never have faith in his memory, because this faith is the source of many erroneous assumptions. Averroes comments on this in his criticism of Avicen who was too confident of his own mind: “T wo things are the usual culprits for the mistakes a man makes: relying on one’s memory and ignorance of basic logic.” The trader should keep a minimum of three books: a reminder, log and the main book. T o proceed in an orderly fashion, we will begin with the main book, which needs to have an alphabetically ordered list of contents so that any record can easily be traced. The main book, first of all, must be labeled. The first one is commonly labeled with letter A, and when all the pages have been filled, the next book is started and labeled B, and so on and so forth in the order of the alphabet. The same letter as on the book must be indicated also on the corresponding log, reminder and alphabetically ordered list of contents. W rite the title on the first page and then, while invoking the name of our Lord, write the name of the owner and partners and indicate the manner in which the bookkeeping is conducted, the number of pages it has, etc. The following step is to assess one’s estate and list all possessions and assets. This content is to be organized as follows: under

the heading “debtor” list all the goods you own, and under “creditor” indicate the capital at your disposal. For example, you have one hundred bulks of cloth for which you paid one thousand gold coins. This is to be entered in the records as follows: the capital has outstanding debt amounting to one thousand gold coins and it is to be settled on the day of the month as specified. This amount is equal to the value of the cloth I have in my possession, assuming the cloth is estimated at this value. The same record must be re-entered, but with a different emphasis: the cloth is in debt amounting to one thousand gold coins for the one hundred bulks I own. It is assumed that the capital has an outstanding debt equivalent to this amount and with the same due date. Therefore, a record of each item must be made twice; once to enter as the debtor the party owing something, and the second time to enter as the creditor the party who has the outstanding debt. Example: I sold a bulk of cloth for X amount of gold coins which I received as ready money and I put it in the purse. How is this to be entered in the book? As follows: the purse is X amount of gold coins in debt for a bulk of cloth sold to a certain person (on a certain date) and the supply of cloth then has an outstanding debt. On the other hand, the cloth has the outstanding debt of X gold coins for a bulk (on a certain date) (sold) for ready money, assuming it is entered at another point that the purse is in debt. Thus, the purse is the debtor because it receives money, whereas the cloth is the creditor because it brings money in. In addition, each entry must be made on both pages, i.e. the right page is to be used for entering the data referring to the debtor, and the left for the data that refers to the creditor. The information on when,

to whom and how much must also be provided for each entry; in order to indicate the date, the quantity and who the debtor and the creditor are. Furthermore, first the entry must be made and then issued, and before the receipt of something is recorded, it first must be indeed received. As cloth is entered, so must be any other commodity. If you state on the first page of the book that your assets are valued at one thousand gold coins, the purse must be signified as the debtor and the capital as the creditor (and thus the capital is established in full). The relation between the debtors and the merchandise is that of debt and outstanding debt, and this is in fact the foundation of all business. Under the cloth item, i.e. what you expend, outstanding debts of the cloth are to be entered,