=10.= An inventory is taken by counting, measuring, or weighing all goods in stock. The stock is listed on journal paper or in a day book, listing first the quantity; second, the name of the article; third, the price; fourth, the value of each item. [Illustration: Inventory Sheet] [Illustration: Trial Balance] =11. Pricing.= In taking an inventory, _all goods must be priced at cost--never at the selling price_. If selling prices are used, credit is being taken for profits which cannot be earned until the goods are sold. It may even be found advisable at times to list goods at less than cost. Some classes of goods deteriorate; at other times the stock may contain merchandise that was purchased on a high market, on which prices have been materially lowered. To price such goods at actual cost prices is creating fictitious values. Conservatism is necessary in pricing an inventory, for the taking of credit for unearned profits is wrong in principle. This inventory shows the cost of goods in stock to be $1,042.77. =12. Closing the Books.= This is the process of balancing all revenue accounts, and transferring the balances to the profit and loss account, the balance of the account being finally transferred or closed into the capital, surplus, or deficiency account, as the case may be. We have learned that in a single proprietorship, profit and loss is finally closed into capital or investment account. [Illustration: ERECTING SHOP IN THE WORKS OF THE BALDWIN LOCOMOTIVE WORKS, PHILADELPHIA, PENNA.] This being a trading business, the first step is to open a _trading account_ for the purpose of finding the gross profit. The accounts now in the ledger to be closed into trading account are _merchandise_, _inventory_, and _purchases_, which are entered on the debit side; and _sales account_, which is entered on the credit side. The present inventory is now entered on the credit side; the two sides of the account are footed; and the difference or balance represents the gross gain or loss. =13.= The trading account shows a credit balance or gross profit of $92.00. This balance is now closed into profit and loss, being entered on the credit side. The only revenue account now open is expense, which shows a debit balance of $38.00. This is a revenue expenditure, representing a loss, and is therefore transferred to the debit or loss side of profit and loss account. Profit and loss shows a credit balance or net profit of $54.00. The balance closes into the account of the proprietor, where it is entered on the credit side increasing his net investment to $1,487.00. NOTE--Complete postings from page 4 of the journal. =14.= _A balance sheet_ should now be prepared; and if our work is correct in every particular, the present worth will correspond in amount with the net investment shown by the proprietor's account. BALANCE SHEET, Nov. 30 _Assets_