If the assets include an amount for good will, the banker will exclude it in making his estimate.
It should be ascertained whether or not interest upon capital has been deducted before arriving at the profits for the year.
A banker may have, in many cases, to help a customer in making out a balance sheet, and much may be done to assist in obtaining a statement from which nothing material has been omitted, and in which none of the assets are overstated. Such a balance sheet should be signed by the customer. Balance sheets should be preserved so that a new one may be compared with the previous ones.
The most satisfactory form of private balance sheet is one that is certified by an auditor or accountant.
A readiness on the part of a customer to supply particulars of his position begets con fidence in a banker's mind. George Rae in " The Country Banker " says : " The solid man of business who, from pride or pre judice, hesitates to disclose the position of his business affairs to the confidential ears of his bankers, damnifies himself in two ways ; on the one hand, he lessens the full measure of credit which lie might obtain from them should he ever desire to borrow ; on the other, he fails to furnish them with data whereon to speak of his position, with knowledge and decision. in reply to inquiries
from without." With respect to the balance sheet of a bank the usual items on the liabilities side are : Paid-up capital.
Reserve fund.
Deposits, current accounts, etc. 1 Liabilities Acceptances, indorsements, - to the etc. public. Notes in circulation on the assets side the items are :— Ca'n in hand and at Bank of England. Money at call and short notice. Investments.
Bills discounted.
Current accounts and loans. Acceptances and indorsements r, as per contra .
Bank premises.
A banker endeavours to keep the assets in such worm that he may be able to provide for all demands which may be made upon him. One banker may consider it necessary. from the 3uctuating nature of his deposits. to preserve a larger stock of cash in hand and money at call than another whose deposits are more stable. Money at call and short notice is called a banker's second line de:ence. See GILD RESERVES.