An apt, if homely, illustration of the way these accounts are worked is afforded by the process usually undergone in one's garden to obtain a continuous crop of strawberries. At any given time there will be three separate beds in production, the first containing plants one year old; the second, plants two years old; and the third, plants three years old. At the end of each season the bed containing the three year old plants is uprooted, and new runners planted; so, year by year, the process goes

on.

It will be observed that the Claims and Re-insurances on the debit side, and the Premiums and Salvages on the credit, are set out in detail, showing the monthly totals, and, although this practice is not always followed, it is convenient and advisable.

An alternative method to that of keeping the accounts open for a period of three years is sometimes adopted, which consists of closing them at the end of two years, and creating a reserve against all claims that may arise relating to the year closed, such claims when brought into account being debited to this reserve. This course, however, is not to be recommended, owing to the difficulty that is experienced in sufficiently exactly estimating the amount of reserve requisite.

The 1901 Underwriting Account starts with the balance brought forward from its first stage at the end of 1901, and will contain Claims, Re-insurances, Salvages, Refunds, and Recoveries brought into account during 1902, and relating back to insurances effected in 1901. The balance on this account will be carried forward to 1903.

Similarly, the 1900 account starts with the balance brought forward from its second stage, and will contain items relating to transactions originating in 1900. As at the end of 1902, at

which date the accounts are taken, this account reaches its third and final stage, it will be seen that the balances of profit are brought down, and after deducting the commission thereon due to the agent, and taking a suitable amount to Reserve, are transferred to the Capital Accounts of the respective names.

In the event of Bad Debts or other losses arising relating back to past years which still remain open, the same will be debited to the Underwriting Account of the year in question, and not to that of the current year. An instance of this is afforded when it is found necessary, owing to causes explained in the remarks on the Discount Reserve Account, to provide a small additional percentage of reserve against discount over and above the usual 10 per cent. In such a case, the additional amount should be spread over the three years remaining open.

The Balance Sheet.

As will be seen from the specimen adjoining, the Balance Sheet is not a very elaborate document, the various items of assets and liabilities not usually being numerous. It is drawn up in columnar form, with two columns for each name, but with no Total column, the association of names in no way forming a partnership.

The sundry creditors on open account will be composed of brokers' balances standing in credit, and the agent's Personal Account will represent undrawn salary or commission, if any.

The General Reserve Account will represent reserves made out of the ascertained profits of closed years. Although such a reserve is not always created, many names drawing the whole of their profits when ascertained, nevertheless, it is very advisable to form one, in order that the accumulated funds in the shape of cash and investments may represent to some extent