=80. Transfer of Gross Profit.= The gross profit from trading is now transferred to the credit of profit and loss account, and this account is debited with the balances of all revenue expenditure accounts. Continuing the illustration from Article 78, we have: [Illustration] =81. Transfer of Net Profit.= The net gain is transferred to the credit of proprietor's account in a single proprietorship. [Illustration] MERCHANDISE INVENTORY ACCOUNT =82.= The accounts now open in the ledger, other than proprietor's account, exhibit all assets and liabilities of the business with the exception of the present inventory, which is included in the trading account. The amount of the inventory is transferred to the debit of a merchandise inventory account. [Illustration] The books are now said to be _closed_, there being no open accounts except those representing assets or liabilities of the business. BALANCE SHEET =83.= A statement of the assets and liabilities of a business is called a _balance sheet_. If the assets exceed the liabilities, the difference is the _present worth_. If the liabilities exceed the assets, the business is _insolvent_, and the difference or balance shows the amount of insolvency. The balance sheet is prepared from the ledger balances after the books have been closed. In arranging the accounts on a balance sheet, the assets should be listed first, followed by the liabilities. The balance will agree with the balance shown in the proprietor's or investment account. For the business of a single proprietor, it is customary to list the accounts in the following general order: _First_--Cash in bank and office. _Second_--Open accounts and bills receivable. _Third_--Merchandise per inventory, store fixtures, etc. _Fourth_--Real estate. The first two classes are termed _active_ or _quick_ assets, as they can be most readily converted into cash. The liabilities represented by credit balances, are listed in the order of their urgency: _First_--Open accounts due others. _Second_--Bills payable. _Third_--Mortgages or bonds payable. The third class represents secured liabilities, while the first two represent unsecured liabilities. Continuing the previous illustration, we find the balance sheet of our imaginary ledger to be as follows: [Illustration] SAMPLE TRANSACTIONS =84.= At the end of the first year, the trial balance of a single proprietorship was as follows: DEBIT BALANCES Bank Account $ 764.20 Sundry Open Accounts Receivable 1,127.30 Bills Receivable 475.00 Furniture and Fixtures 325.00 Cash in Office 68.50 Purchases 9,571.40 Expense 675.00 Discount on Sales 96.75 Interest 72.10 -------- 13,175.25