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ACCOUNTING
BASIC REPORTS
 PREFACE
Accounting: Basic Reports is a companion text to Accounting: To Trial Balance. It is designed
specifically for students studying Prepare Financial Reports as part of the Financial Services
Training Package. The text is also suitable for other accounting courses in basic undergradu-
ate accounting, in TAFE colleges and in the secondary school area.
In order to satisfy the requirements of the Financial Services Training Package, this text
follows closely the structure of the unit of competency. Its main emphasis is on building
skills associated with recording balance day adjustments and closing entries, and on prepara-
tion of financial reports for single-owner business entities that are not reporting entities. It
provides comprehensive material covering Generally Accepted Accounting Principles and
Accounting Standards, as well as accounting entries for balance day adjustments, reversals
and closing entries, and preparation of final reports for various sole trader businesses (ser-
vice and retail). To meet the requirements of the unit of competency, a chapter covering
accounting for depreciable assets has also been included in the book. All material has been
written in strict accordance with current accounting standards.
All units contain full topic introductions, illustrative examples, extensive graded ques-
tions in a learning sequence and solutions to some key questions. A solutions manual con-
taining those solutions not currently provided in the text is also available directly from
Cengage Learning Australia. Note further that some questions have been adapted to accom-
modate the application of MYOB Accountright software.

GST
The treatment of GST as it relates to balance day adjustments and final reports is in line
with current accounting practice and meets legislative requirements.

Accounting standards
This edition has been updated to reflect the recent introduction of Australian equivalents of
International Financial Reporting Standards (IFRS).

viii
ABOUT THE AUTHORS
Dr Nicholas A Mroczkowski
PhD (Finance) Monash, MAcc (Finance) RMIT, BBus (Accounting) Swinburne, DipBus (Financial
Accounting) Ballarat, BEd Hawthorn Inst Ed, FCPA, Chartered Accountant.
Nick is a Senior Academic in the Faculty of Business at the Australian Catholic University,
Melbourne (ACU). He has more than 30 years of professional experience in Australia and
abroad, encompassing a variety of technical disciplines including auditing, financial account-
ing, finance and education. Prior to joining ACU, Nick was a Senior Lecturer in Finance and
Accounting at Swinburne University of Technology, Lecturer in Accounting and Finance at
Monash University, and a Senior Lecturer in Accounting at Deakin Business School. Nick has
also held senior positions in professional practice, including the position of Technical Director
(Audit and Accounting) for a major chartered accounting firm for a period of 15 years. His
client base includes banks, non-financial institutions, governments, educational bodies and a
range of medium-to-large companies in the private sector.

David Flanders
CPA, BCom, BEd
David Flanders has been an accounting teacher at Kangan Institute for more than 20 years.
His main teaching areas are computing accounting, financial accounting, budgeting and corpo-
rate governance. He has co-authored several textbooks across different accounting areas for
more than 10 years and has been extensively involved in writing materials for students via
distance learning.

ACKNOWLEDGEMENTS
The publisher and the authors would like to thank Daryl Fleay and Neville Poustie for their
contribution to the previous edition.
Their work has provided a tremendous platform for future editions to follow. They have
also assisted in reviewing and providing valuable feedback to the current edition.
We would also like to thank Silvana Disisto for completing a technical edit of the
textbook.

ix
x
Resources guide

xi
 COMPETENCY GRID
This text covers the following competencies from the FNS10 Financial Services Training Package:
• BSBFIA401: Prepare financial reports.
The following grid maps the elements of the above unit to the relevant chapters of this text.
BSBFIA401: Prepare financial reports
Element Chapter
1. Maintain asset register 2, 5
2. Record General Journal entries for balance day adjustments 2, 3, 4, 5
3. Prepare final ledger accounts 2, 3, 4
4. Prepare end of period financial reports 2, 4

Visit http://www.cengagebrain.com and search for this book to access the

bonus study tools on the companion website for Accounting Basic Reports 10e.

xii
1
INTRODUCTION TO
ACCOUNTING: REGULATIONS,
REPORTS AND SYSTEMS

Learning objectives
Upon completion of this chapter you should be able to:
• briefly describe the accounting Conceptual Framework
• briefly explain the term ‘GAAP’
• briefly explain the role of the Statements of Accounting Concepts
• briefly explain the role of Australian accounting standards
• define and explain the purpose and role of the following statements:
– statement of financial position for a sole trader business for both external accounting and
internal management purposes
– statement of comprehensive income for a sole trader business for both external accounting
and internal management purposes
• explain the basic factors that influence the design of an accounting system and the role of a
chart of accounts as part of the management information system for a sole trader business.

1
 Accounting Basic Reports

The need for financial reporting

The preparation of financial reports is often considered to be the most important part of the accounting pro-
cess, since the information gleaned from them can be used by several different parties for making informed
decisions regarding the business entity. These parties include management, shareholders, suppliers, custo-
mers, finance providers, regulatory authorities, employees and the general public. A financial report can be
any report that highlights financial data, such as a statement that shows total money received and paid by
the entity (receipts and payments report), or that shows the total sales for a particular period by the entity
(a sales report for example). Typically, however, the term ‘financial report’ relates to specific types of finan-
cial statements required to be prepared by the entity, and usually for the benefit of parties external to the
entity; for example, investors, suppliers of credit, lending institutions and other interested parties such as
those described above.
An authoritative definition of the term ‘financial report’ is provided in the Corporations Act 2001 (Cth)
(discussed below), which states that a financial report must consist of the financial statements for the year
and the notes accompanying the financial statements. Financial statements are defined as those required by
accounting standards, and include the statement of financial position, the statement of comprehensive
income, the statement of changes in equity and the statement of cash flows. Notes accompanying the
financial statements include specific disclosures required by various regulations (such as the Corporations
Act) and accounting standards; they may include any additional information and notes required to further
explain particular items disclosed in the financial statements. In more conventional terms, this means that
entities that are required to prepare a financial report must, as a minimum, actually prepare four reports
and provide additional information explaining the various items disclosed in those reports. Furthermore,
to avoid duplication of terminology, the four individual reports that make up the financial report are more
commonly referred to as statements rather than reports and include the following:
• a statement that shows the assets, liabilities and equity of the business, commonly known as the balance
sheet, but now more formally known as the statement of financial position
• a statement that shows the income and expenses of the business and the resulting profit or loss for the
period, commonly known as the profit and loss statement, but now more formally known as the statement
of comprehensive income
• a statement that shows all movements in equity (put simply, the amounts owing to the owners of the
business), formally known as a statement of changes in equity, and
• a statement that shows the flows of cash (by category) in and out of the business, formally known as
the statement of cash flows.
From a user’s perspective, all four statements can provide useful information regarding various aspects of
the business entity’s activities. For instance, the statement of comprehensive income can reveal whether
the firm is profitable and this information could prove invaluable to various parties that may wish to assess
whether the level of profit (and return on their investment) is sufficient in relation to comparable firms
and investments. The statement of financial position will provide useful information relating to the

2
 Chapter 1 Introduction to accounting: Regulations, reports and systems

financial stability of the business entity – in particular, whether or not the entity has the potential to sur-
vive in the short term and in the long term. The statement of changes in equity will show the changes that
have affected the owner’s claims on the business entity during the year. Finally, the statement of cash flows
will provide valuable information allowing users to assess the quality of the earnings generated during the
period and also to determine what financing and investing decisions have been made by management dur-
ing the period. The focus of this text will be the preparation of two of the primary statements described
above: the statement of financial position and the statement of comprehensive income.
While it may appear to be a simple process, the preparation of financial reports, particularly reports
prepared for the benefit of external parties, can often be a very complex task even for the most qualified
and experienced accounting practitioner. This stems mainly from the many rules and regulations relating
to financial reporting and the size and nature of the business entity itself. Indeed, many countries have
extensive and complex financial reporting regulations and Australia is no exception in this regard. Often
the arguments for greater regulation in financial reporting arise from the need for greater transparency
and disclosure of vital information, particularly for entities in which the general public may have consid-
erable exposure. For example, large public companies listed on the Australian Securities Exchange will
have a considerable number of shareholders (hundreds and sometimes thousands) whose interests need
to be monitored and protected by financial reporting regulations and by other means. While many of
these rules and regulations are outside the scope of this text, it is important for students of accounting
to have a general understanding of the financial reporting framework within a specific country, albeit at
a basic level. In this regard, the following paragraphs briefly examine the general financial reporting envi-
ronment in Australia.

GAAP
‘GAAP’ is the acronym for Generally Accepted Accounting Principles and traditionally it was taken to mean all
of the basic principles and conventions of accounting. For instance the principle of historical cost, the
concept of the accounting period, the doctrine of conservatism, the entity convention, the principle of
accrual accounting and all of the other elementary principles underlying the fundamentals of accounting
were collectively known as GAAP. More recently, however, the term has been given a wider meaning, both
internationally and within Australia. What GAAP now stands for is the entire financial reporting framework
specific to a particular country including, in the case of Australia, relevant Acts of Parliament, accounting
standards and pronouncements, securities exchange listing rules, internal rules of the accounting professional
bodies (for instance, CPA Australia, the Institute of Chartered Accountants in Australia, and the Institute of
Public Accountants), statements and guidance releases issued by regulators, and various concepts statements
and interpretations issued by those bodies that set accounting standards, such as the Australian Accounting
Standards Board. Some of the components of Australian GAAP, also commonly abbreviated as A-GAAP, are
considered overleaf.

3
 Accounting Basic Reports

Corporations legislation
Generally, in Australia the Corporations Act 2001 is at the top of the financial reporting hierarchy for com-
panies and other specific entities required to comply with the reporting provisions of the Act (such as listed
trusts). Therefore, when determining what the financial reporting requirements are for an individual busi-
ness entity, the first step is usually to identify the structure and/or legal form of the entity itself. If, for
instance, the entity is a company, then the Corporations Act will apply, since the legislation is intended to
regulate the affairs of all companies and provide detailed rules and regulations ranging from basic registra-
tion procedures and day-to-day management to complex periodic financial reporting requirements. The
Corporations Act is a Federal Act of Parliament that applies to companies and other entities required to
report under the Act; for example, all entities listed on the Australian Securities Exchange (whether they
are companies or not). Entities that are not companies typically include listed trusts and other investment
schemes that raise funds from the general public by issuing a prospectus. Companies often also issue a
prospectus (an offer document) to raise funds from public investors. In simple terms, a prospectus is a
legal document inviting the public to invest in shares, units or interests in profit-making schemes.
The financial reporting requirements for companies (other than small private companies that are specifi-
cally defined in the Corporations Act 2001) are extensive and will usually require the application of all of the
GAAP rules, including compliance with the full reporting provisions of the Corporations Act. For this rea-
son, the comprehensive financial statements of large companies are often referred to as statutory accounts
(that is, the external financial statements that are required by the law). In contrast, detailed financial state-
ments required for internal and specific purposes are often referred to as management accounts. These inter-
nal financial statements are rarely (if ever) made available to the general public. Companies and other
entities required to prepare financial reports must also have their financial statements audited. Stated
simply, an audit is an examination of the financial affairs of the entity by an independent auditor who will
provide an opinion on whether the financial statements are presented fairly (that is, whether they present a
true and fair view of the financial affairs of the entity).
It is noted that, while the financial reporting requirements of companies and other similar entities are impor-
tant for an understanding of GAAP, the focus of this text is on the preparation of financial reports for sole
traders. The general financial reporting requirements for sole traders are explained at the end of this chapter.

Accounting standards,
pronouncements and concepts
The Corporations Act 2001 also requires companies and other entities that are required to prepare a financial
report to comply with relevant accounting standards and other pronouncements issued by the Australian
Accounting Standards Board (AASB). The AASB, which was first established by the Commonwealth govern-
ment in 1989, has the responsibility for developing accounting standards and making other important

4
 Chapter 1 Introduction to accounting: Regulations, reports and systems

pronouncements relating to financial reporting for companies and other entities in the private sector.
Accounting standards can be described simply as authoritative rules of accounting, which can include spe-
cific methods of accounting practice such as the manner in which particular types of transactions and
other events should be reflected in the financial statements. For example, there are specific accounting stan-
dards that prescribe accounting methods and procedures for such items as inventory (stock), depreciation,
property, plant and equipment and the like, and some of these standards also require certain information
to be disclosed in the financial statements. In the case of property, plant and equipment for instance, the
method of valuation of such assets is required to be disclosed in the notes accompanying the financial
statements. Note that the application of AASB standards is a legal requirement for all companies and
other entities that are required by the Corporations Act to prepare financial reports. Non-compliance with
AASB standards in preparing and presenting financial statements may result in serious consequences for
the entities concerned.

The Conceptual Framework

The AASB is also responsible for developing the Conceptual Framework, which is simply a set of basic con-
cepts and principles that provide the foundations for financial reporting. These include concepts that:
• identify the types of business entities that need to prepare financial reports
• explain the objectives of financial reporting and identify relevant parties interested in financial reports
• outline the basic qualities of financial information
• define the fundamental elements of financial reporting (that is, assets, liabilities, equity, income and
expenses).
On a basic level, concepts can be regarded as the building blocks of financial reporting, which have been pro-
gressively developed over time into an overall framework for the preparation and presentation of financial
reports. The existing conceptual framework in Australia has taken more than 30 years to advance to its cur-
rent state and continues to evolve in line with ongoing changes to economic, commercial, technological and
legal environments both in Australia and abroad. Among these developments, standards and pronounce-
ments issued by international accounting standards setting bodies such as the International Accounting
Standards Board (IASB) have played a significant role in shaping the conceptual framework and accounting
standards in Australia.
One of the first concept statements in the Conceptual Framework is primarily concerned with identify-
ing reporting entities. These are business entities with particular characteristics, which are required to prepare
comprehensive financial reports: for example, large public companies listed on the Australian Securities
Exchange. Comprehensive financial reports, which are also (and more accurately) referred to as General
Purpose Financial Reports (GPFRs), are detailed financial reports that comply with all of the requirements of
GAAP. The reporting entity concept has been developed and issued in the form of a statement titled State-
ment of Accounting Concepts SAC 1 Definition of the Reporting Entity. Similarly SAC 2, (although now
repealed and thus withdrawn) dealt with the objectives of financial reporting, and was issued as an

5
 Accounting Basic Reports

authoritative statement; its full title was Statement of Accounting Concepts SAC 2 Objective of General
Purpose Financial Reporting.
It is worth noting the genesis of the Conceptual Framework in Australia. Prior to 1 January 2005, the
AASB’s Conceptual Framework consisted of four statements of accounting concepts: not only SAC 1 Definition
of the Reporting Entity and SAC 2 Objective of General Purpose Financial Reporting as mentioned above, but
also Statement of Accounting Concepts SAC 3 Characteristics of Financial Information and Statement of
Accounting Concepts SAC 4 Definition and Recognition of the Elements of Financial Statements. However, follow-
ing Australia’s decision to adopt the Australian equivalents of International Financial Reporting Standards
(AIFRS) from 1 January 2005, both SAC 3 and SAC 4 were withdrawn. The former SAC 3 identified the
‘qualitative characteristics’ of financial information that should be contained in GPFRs. Qualitative character-
istics are the ‘ideal’ qualities that a financial report should possess in order to be useful in making commercial
decisions, whereas the objectives of the former SAC 4 were ‘to establish definitions of the major elements of
financial statements and to specify criteria for their recognition’. It should be noted however that, while both
SAC 3 and SAC 4 have been withdrawn, the substance of the statements has been included in the AASB’s
current Framework for the Preparation and Presentation of Financial Statements (usually abbreviated simply as
‘the Framework’ or ‘the AASB Framework’). The Framework is an extensive individual document which (prior
to December 2013) was the third component of the Australian Conceptual Framework and was, and still is,
largely based on the International Accounting Standards Board’s (IASB’s) Conceptual Framework for the Prepa-
ration and Presentation of Financial Statements (the framework which Australia adopted when AIFRS first
became applicable from 1 January 2005). The major financial reporting elements addressed in the Framework
are assets, liabilities, equity, income and expenses, and these have been given brief coverage in the companion
text, Accounting: To Trial Balance. However, the detailed definitions and criteria for recognition of the various
elements in the Framework are lengthy and complex, and beyond the scope of this text.
In summary, the Conceptual Framework in the Australian financial reporting context prior to December
2013 consisted of three components:
1 Statement of Accounting Concepts SAC 1 Definition of the Reporting Entity
2 Statement of Accounting Concepts SAC 2 Objective of General Purpose Financial Reporting, and
3 AASB Framework for the Preparation and Presentation of Financial Statements.
Furthermore, the status of the Conceptual Framework within the GAAP hierarchy is that concepts statements
in their own right do not have mandatory status. This means that there are generally no legal or other
requirements that compel preparers of financial statements to comply with any of the concepts statements.
Despite this, SACs have developed as an important source of guidance for practitioners; for example, SAC 1
is currently used to help identify reporting entities. Also, SACs do have some status indirectly because defini-
tions and other aspects of concepts statements are now very much a part of GAAP and, as discussed above,
many of the components of GAAP are compulsory for many types of business entities. For instance, most of
the definitions relating to financial reporting in concepts statements (assets, liabilities, equity and so forth)
are now included in accounting standards that are mandatory for companies and other entities required to
prepare financial reports under the Corporations Act 2001.
Given the discussion above, it is important for students of accounting to be aware of the various con-
cepts statements and perhaps, for more advanced students, to have a detailed knowledge of the various

6
 Chapter 1 Introduction to accounting: Regulations, reports and systems

sections within the specific concepts statements. For the purposes of this text, a brief description of both
SAC 1 and SAC 2 and the AASB Framework is provided below, although it should be noted that SAC 2
has recently been absorbed into the AASB Framework for the Preparation and Presentation of Financial
Statements following an amendment issued by the AASB in December 2013 (see further details below).

Statement of Accounting Concepts SAC 1

SAC 1 defines reporting entities as those entities in which it is reasonable to expect that there will be users
who depend on GPFRs for information that will aid them in making and evaluating commercial decisions.
What this means is that a reporting entity exists where there are users dependent on financial information;
that is, they are only able to obtain information for their specific needs through comprehensive financial
reports prepared by the business entity. Entities that fall into this category are usually large companies
and listed trusts in which the general public has considerable exposure. General GPFRs are further
explained below, but as a general rule, it can be assumed that most entities are reporting entities except
the following types:
• sole traders
• partnerships
• family trusts
• small proprietary companies.

Statement of Accounting Concepts SAC 2

(withdrawn December 2013)
When operative, SAC 2 defined a General Purpose Financial Report as ‘a financial report intended to meet
the information needs common to users who are unable to command the preparation of reports tailored so
as to satisfy, specifically, all of their information needs’.
Put simply, this means that a GPFR is essentially a comprehensive set of financial statements prepared
in accordance with GAAP; that is, all the legislative requirements and all accounting standards and pro-
nouncements issued by the regulators and by the AASB. It should further be noted that financial reports
other than GPFRs are referred to as Special Purpose Financial Reports (SPFRs) and may take many shapes or
forms depending on the needs of the users who are able to command specific information. For instance, an
SPFR may simply consist of a cash budget requested by a lending institution, or a set of basic financial
statements prepared on a cash basis. Management or internal reports would also be included within the
definition of SPFRs.
SAC 1 requires all reporting entities to prepare GPFRs. Non-reporting entities, however, are not required
to prepared GPFRs and accordingly would normally prepare SPFRs. Thus the financial reports for sole
traders, partnerships, family trusts and small proprietary companies are most likely to be SPFRs.

7
 Accounting Basic Reports

As a result of the AASB issuing AASB CF 2013–1 Amendments to the Australian Conceptual Framework in
December 2013, SAC 2 was withdrawn and no longer applies in Australia. The consequential effects of
these amendments, however, have been to include updated contents of the former SAC 2 into the AASB
Framework for the Preparation and Presentation of Financial Statements.
When the amendments were issued, they had the effect of bringing the Australian Framework in line
with the IASB amendments to the international framework issued in September 2010. (This has now been
renamed the IASB Conceptual Framework for Financial Reporting.) It should be noted that the AASB has not
accepted the IASB’s new title for their amended framework, and thus continues to use the IASB’s former
title Framework for the Preparation and Presentation of Financial Statements. Moreover, the AASB did not
accept the contents of the amended IASB The Conceptual Framework for Financial Reporting issued in 2010,
but rather opted to effect the changes progressively by issuing separate amendment documents, the first
of which is AASB CF 2013–1 Amendments to the Australian Conceptual Framework issued in December 2013.
Thus, as from December 2013, Australia’s conceptual framework consists of the following documents:
• Statement of Accounting Concepts SAC 1 Definition of the Reporting Entity (discussed above)
• the AASB’s existing Framework for the Preparation and Presentation of Financial Statements (i.e. not includ-
ing the IASB’s 2010 amendments), and
• AASB CF 2013–1 Amendments to the Australian Conceptual Framework, which is to be read in conjunction
with the existing conceptual framework document above.

The Framework for the Preparation and

Presentation of Financial Statements
As explained in the introduction to the AASB Framework, the purpose of the Framework is to set out the
concepts that underlie the preparation and presentation of financial reports for external users. The Frame-
work must always be read in consultation with any amendments issues by the AASB, including amendment
‘AASB CF 2013-1 Amendments to the Australian Conceptual Framework’ issued in December 2013. In this
regard, the Framework is primarily concerned with the following:
• objectives of financial statements
• assumptions underlying the preparation of financial statements and reports
• qualitative characteristics of financial reports
• elements of financial reports
• recognition criteria for the elements of financial statements.
While an in-depth discussion of the Framework is not covered in this chapter, brief comments in the fol-
lowing paragraphs should help to provide a basic understanding of the major features of the Framework.

Status of the Framework

Consistent with the non-mandatory application of concepts discussed above, the Framework states that
concepts are not set out as requirements for the preparation of GPFRs and also that the Framework is not

8
 Chapter 1 Introduction to accounting: Regulations, reports and systems

an accounting standard. Rather, the intent of the Framework is to provide guidance and assistance to a
range of parties, including preparers of financial reports, auditors and users of financial reports.

Objectives of financial reports

Objective 1
The objective of general purpose financial reporting forms the foundation of the
Framework. Other aspects of the Framework – a reporting entity concept, the
qualitative characteristics of, and the constraint on, useful financial information,
elements of financial statements, recognition, measurement, presentation and
disclosure – flow logically from the objective.
AASB Framework p. 11

Interestingly, the Framework is specifically concerned with general purpose financial reporting, although it
also states that the Framework may be applied in the preparation of SPFRs where requirements permit.

Objective 2
The objective of general purpose financial reporting is to provide financial infor-
mation about the reporting entity that is useful to existing and potential inves-
tors, lenders and other creditors in making decisions about providing resources
to the entity. Those decisions involve buying, selling or holding equity and debt
instruments, and providing or settling loans and other forms of credit.
AASB Framework p. 11

Assumptions underlying the preparation of reports

Two important bases for the preparation of financial reports are identified by the Framework:
1 the going concern basis, which assumes that the entity is a going concern (i.e. not ceasing to operate)
and will continue operations into the foreseeable future
2 the accrual basis, which requires the effects of transactions to be recognised when they occur (that is,
not necessarily when cash is received or disbursed) and recorded in the periods to which they relate.
Note that the 2013 amendments remove the accrual accounting concepts as a basis for the preparation of
financial statements, but include the following commentary.
Accrual accounting depicts the effects of transactions and other events and circum-
stances on a reporting entity’s economic resources and claims in the periods in which
those effects occur, even if the resulting cash receipts and payments occur in a differ-
ent period. This is important because information about a reporting entity’s economic
resources and claims and changes in its economic resources and claims during a
period provides a better basis for assessing the entity’s past and future performance
than information solely about cash receipts and payments during that period.
AASB Framework p. 15

9
 Accounting Basic Reports

Qualitative characteristics
The 2013 amendments have completely removed the sections covering qualitative characteristics of finan-
cial statements in the existing Framework and have replaced these with new sections tabled in an Appendix
to the amendments. In the introduction to qualitative characteristics, the amendments state that:
The qualitative characteristics of useful financial information discussed in this chapter
identify the types of information that are likely to be most useful to the existing and
potential investors, lenders and other creditors for making decisions about the report-
ing entity on the basis of information in its financial report (financial information).
AASB Framework p. 18

Briefly, the Framework requires that, as a minimum, financial statements should include information that
displays two fundamental qualitative characteristics:
1 information needs to be relevant, and
2 information needs to be faithfully represented if it is to be useful.
The amendments further state that ‘Comparability, verifiability, timeliness and understandability are qualitative
characteristics that enhance the usefulness of information that is relevant and faithfully represented’.
In effect, financial statements should as a minimum be:
• readily understandable
• relevant to the needs of users
• reliable and free from error and bias, and
• comparable.
Further detailed explanations are provided for each of these fundamental and enhancing qualitative charac-
teristics in the Framework.

Existence and recognition of elements of

financial reporting
As already mentioned, assets, liabilities, income, expenses and equity are covered in some depth in the com-
panion text: Accounting: To Trial Balance. Therefore, only a brief summary of the definition of each element
is provided here for the sake of completeness.
• Assets – The Framework defines assets as ‘resources controlled by the enterprise as a result of past
events and from which future economic benefits are expected to flow to the enterprise’.
• Liabilities – The definition of liabilities provided in the Framework states that ‘liabilities are present
obligations of the enterprise arising from past events, settlement of which is expected to result in an
outflow from the enterprise of resources embodying economic benefits’.
• Income – The Framework generally defines income as ‘increases in economic benefits during the
accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result
in increases in equity, other than those relating to contributions from equity participants’.

10
 Chapter 1 Introduction to accounting: Regulations, reports and systems

• Expenses – These are generally defined as ‘decreases in economic benefits during the accounting period
in the form of outflows or depletions of assets or incurrences of liabilities that result in decreases in
equity, other than those relating to distributions to equity participants’.
• Equity – This is defined as ‘the residual interest in assets of the enterprise after deducting all its
liabilities’.

International Financial Reporting

Standards (IFRS)
With the ever-increasing importance of international trade, Australian standard setters had the foresight in
the early 1990s to recognise the need for comparable accounting standards between countries. The potential
benefits to be gained from Australia having similar financial reporting rules to those of its major trading
partners are substantial, particularly in regard to the facilitation of trade and investment between countries.
Indeed, foreign traders and investors will be able to trade more freely and with less uncertainty with
Australian entities that prepare financial statements using similar rules to those used internationally. Less
uncertainty usually means that the entity will have a lower risk profile, and will therefore be able to borrow
funds at more competitive interest rates and also attract investors requiring more stable rates of return. This
in turn will lower the cost of raising capital and result in considerable cost savings for the entities concerned.
The process of preparing and adopting comparable accounting standards first started in 1996 when the
AASB issued policies that would eventually result in compatibility between Australia and New Zealand’s
accounting standards. This process was referred to as harmonisation, which in general terms was intended
to reduce the differences between accounting standards of different countries. With the increasing impor-
tance and global application of international accounting standards issued by the IASB, Australia’s harmoni-
sation program soon extended to include international accounting standards relevant to the Australian
financial reporting environment. In 2002, the Australian Financial Reporting Council (a statutory body
that oversees the role of the AASB) issued a directive stating that Australia would fully adopt international
accounting standards by 1 January 2005. Full adoption involved a detailed process of convergence, whereby
International Financial Reporting Standards would be used as the stable platform for Australian accounting
standards. This meant that Australia would adopt substantially all of the content and wording of the inter-
national standards, but would include additional text or requirements, or amend the standards, to reflect
conditions specific to the Australian financial reporting environment (for instance, requirements for not-
for-profit entities, which are not specifically covered in the IASB framework). In this sense, then, Australia
has not adopted international standards per se, but has issued Australian equivalents to International
Financial Reporting Standards (hence the use of the popular acronym ‘AIFRS’). Note also that there is a
small number of standards in Australia that do not have an international equivalent, but continue to be in
force for Australian reporting purposes (for example, AASB 1039 Concise Financial Reports). By February
2006, the task of internationalising Australian accounting standards had largely been completed.

11
 Accounting Basic Reports

Compliance with GAAP

While there are several mechanisms in Australia that require entities to comply with the various compo-
nents of GAAP, two are most prevalent: the Corporations Act 2001, which requires certain types of compa-
nies and other entities to prepare financial reports and comply with accounting standards, and the by-laws
of the various professional bodies. The Australian Securities Exchange (not covered in this text) also has
extensive reporting requirements for all entities listed on the Exchange.
The role of professional bodies is an important aspect of any compliance regime. The accounting profes-
sion in Australia is represented by a number of self-regulated bodies, including:
• CPA Australia
• Institute of Chartered Accountants in Australia (ICAA)
• Institute of Public Accountants (IPA).
Membership of a professional body provides accountants with numerous benefits, including professional
recognition and community standing. In return for these benefits, members must comply with strict ethical
by-laws, which ensure that their professional conduct is maintained at the highest level. By-laws also require
members to comply with accounting standards and other pronouncements when preparing financial reports
for certain types of business entities.
Professional bodies also provide members with an extensive body of current technical knowledge
through ongoing research and education. In this respect, CPA Australia and the ICAA have joint respon-
sibility for the operation of the Australian Accounting Research Foundation (AARF), which is a body that
currently undertakes research, formulates auditing standards and reviews legislation that has an impact on
financial reporting.

Reporting requirements for

sole traders
As already mentioned, sole traders are typically non-reporting entities and, except for the owner of the
business and perhaps an external party (for instance, a finance provider) that may have a specific interest
in the entity, there are generally no dependent users. Furthermore, there does not appear to be any manda-
tory or legal requirement for sole traders to prepare financial statements, although it would be most
unusual for them not to do so. Often, for instance, sole traders may compile financial statements to accom-
pany the lodgement of a taxation return (which is mandatory) that may show details of income and
expenses, and also key details of assets and liabilities (for example, balances of stock and written-down
values of property, plant and equipment). More commonly, owners wishing to exercise good management
will often prepare detailed financial reports to better understand and to monitor the operating performance

12
 Chapter 1 Introduction to accounting: Regulations, reports and systems

and financial stability of the business. While these reports are generally regarded as management or internal
reports, it is not uncommon for these reports to reflect all of the conventional accounting principles and
concepts embodied in GAAP; for instance, accrual accounting, historical cost, entity convention, monetary
convention, definitions of the elements of financial reporting and so on. In reality, while this is not manda-
tory, some sole traders will often also apply the methods and procedures prescribed in some accounting
standards to provide greater scope and depth of financial reporting. For instance, the application of mea-
surement standards dealing with inventory, property, plant and equipment, and impairment of assets, is
common. Moreover, other examples include identifying and disclosing material items in preparing specific
financial reports such as the statement of comprehensive income.
In this text, the preparation of basic financial reports for sole traders will reflect the general principles of
accounting embodied in GAAP together with the application of sound accounting practices prescribed by
accounting standards, where relevant.

Design of an accounting
system: Basic issues
To meet the many different requirements for preparing financial reports, an entity must have a well-
designed accounting system that captures information appropriate to the size and nature of the entity. As
outlined in Chapter 1 of Accounting: To Trial Balance, an accounting system consists of the various proce-
dures and records used by an entity to perform its accounting function.
An accounting system must be designed to meet the needs of the users of accounting information.
These will often be determined by several factors, including:
• the nature of the business – For example, the accounting reports prepared for a motor vehicle manufac-
turer would place considerable emphasis on the production function, whereas reports for a legal practice
would emphasise the costs of providing services.
• the size of the business – For example, the accounting reports of a large mining business would be con-
siderably more complicated than those of a small retail business.
• the variety of accounting reports required – The degree of complexity of an accounting system will be
greater, for example, for a public company listed on the Australian Securities Exchange, due to the strin-
gent reporting requirements discussed above.
As a general rule, the more complex the reporting requirements are, the more likely it is that the accounting
system will be computer-based. Computerised accounting systems are now more affordable and most busi-
nesses now have some access to technology-based systems. Computer-based systems offer considerable
advantages over traditional manual systems, including point-of-sale recording, controls over the recording
process, preparation of extensive reports, timely reporting, flexibility in reporting formats and regular sys-
tem upgrades.

13
 Another Random Document on
Scribd Without Any Related Topics
But whose soul was this, and what body had it animated in this world?
The soul of Lyntje? That could not be. They prayed every day for her,
and had resolved to use no more milk, for the repose of the soul of this
very regretted friend.
We have said before that they attended regularly every morning the first
mass in the cathedral. In consequence of these reflections, they resolved
hereafter to hear two masses a day, the second for the soul in trouble
which had chosen their dwelling to manifest its desire to be delivered
from purgatory. They had a firm belief in the efficacy of prayer, but
unfortunately the masses failed to have any good result. The apparition
returned every night, the sighs and groans increased in violence. At first,
they were not discouraged, but soon lost confidence in their prayers, and
with that, courage. They slept no more and during the days conversed
only of the incredible events of the nights, and to complete their sorrow,
they dared not speak of it to any one for fear of being called
superstitious or visionary. It was not astonishing, then, that the
neighbours noticed a great change in the habits of Dewis. Both he and
Gertrude became more melancholy and grew thin and pale. Their shop
remained shut for days in succession. At last they concluded they could
no longer endure this state of things, and accordingly Dewis told his wife
that he was going to the archbishop to tell him of the affair,
notwithstanding the gossip such a step would give rise to. Far from
opposing, she applauded his design. And this is the reason why the
basket maker had dared dress himself up in his best suit to make this
visit, so well calculated to astonish his neighbours.
Admitted to the presence of this worthy ecclesiastic, he informed him
fully of the grave motives which had forced him to take this step. He
spoke to him of the remedies employed—the sprinkling of holy water,
prayers repeated with fervour, and long masses. He did not hide from
him that all this had been of no avail, which had occasioned in himself
and wife a certain lack of confidence in their pious practices. In
conclusion, he explained the nature of their relations with the deceased
milk girl.
The high dignitary listened with patience to the explanations and griefs
of the basket maker, and when he had finished made him a little sermon
upon his lack of faith in prayers and masses. He promised to come to his
house that evening, to see or at least to hear the specter, to exorcise it,
and to deliver the house from the obnoxious visitor. His words filled the
basket maker with great joy, and if he had not been forbidden, he would
have cried aloud in the street that the archbishop was to honour him
with a visit that evening. Thus on returning before his neighbours his
looks evinced so much joy and pride that Schuermans and his wife, also
Dorekens, were perhaps more puzzled than they were an hour before at
his profound sorrow.
The archbishop came in the evening to the dwelling of Dewis, and
remained very late at night. What did he? What saw he? What was his
opinion of the specter, and in what category of phantoms did he place it?
Did his prayers dissipate it? These are questions which it is impossible
for us to answer, as no one ever knew what transpired. But tradition
says that from that night the house of the basket maker was no more
troubled, and everything resumed its customary appearance. They
contented themselves with their morning mass, as formerly, and held
their usual conversations with their neighbours at the door.

IV

But a few days hardly had passed after the visit of the archbishop when
one morning the Milk Market was in great commotion, all the inhabitants
formed in groups, men and women talking and gesticulating with
vehemence.
“Have you seen it? Have you heard it? What will become of us?” Such
were the interrogations which were heard from all. The answers
appeared to satisfy no one and only served to increase the general
agitation. The milk girls mixed with the groups, neglecting their business
to listen with astonishment to the interesting explanations of
Schuermans and his friends. It must have been something very grave,
for the inhabitants of the neighbouring streets came in crowds to learn
the cause of the disturbance. The sighs and groans which had so long
troubled the old basket maker and his wife had been driven from the
dwelling of Dewis. Immediately after midnight the specter had
promenaded back and forth in the streets, and each time that it passed,
had stopped before the door of its friends, and had filled the air with its
lamentations. It complained now in a more distinct manner, and cried
frequently:—
“Half water! Half milk! Small measure! I have lost my soul!”
It was this the plumber heard, and his wife, and the baker and others.
But no one except Dewis could explain these exclamations. He could be
silent no longer. He called Schuermans and a few others, and confided to
them the secret of what had happened to him. They all agreed that it
was the soul of Lyntje alone which troubled the repose of the
inhabitants. If it was not, why had it always showed a marked
predilection for the house of Dewis? They now recollected that they had
often had suspicions of the colour of the liquid which Lyntje sold, and
many housekeepers had complained of the smallness of her measure,
which applied so well to the words of the ghost:—
“Half water! Half milk! Small measure!”
The following night the same cries and lamentations were heard. There
was no more sleep for those that dwelt on the Milk Market. Many of the
inhabitants decided to move immediately rather than continue to reside
in a street visited by specters and phantoms. They foresaw the time
when the market would present the appearance of an abandoned village
—when, happily, the plumber Schuermans had a brilliant idea. He
proposed to place upon the middle of the market a monument
representing the material form of the soul of Lyntje.
“It was,” he said, “a sure remedy against invasions of specters, and had
been proved successful many times.” He went on to explain the virtue of
this remedy. “Specters, it is well known, are souls which some crime or
sin obliges to wander over the earth until they can find some one who
will replace them in this world. A statue serves perfectly well as a
representative, and consequently produces the same effect.”
Dewis then made known to them that the archbishop had counseled him
to erect a statue of the Holy Virgin. After long deliberations it was
resolved that they would place two statues at the expense of the
neighbourhood. Before the end of the week they set up both. The
statuette of Lyntje was placed over a well at the north of the market,
that of the Virgin at the south, near the dwelling of Dewis. It is useless
to add that from that day they have had no more trouble with specters.
The legend explains the origin of the two images which are still to be
seen at the “Marché au Lait.” Several years ago, when wells were
replaced by pumps, they put the statuette of the Milk Girl upon the top
of the pump. It is a veritable work of art, a jewel. We regret that the
name of the sculptor is unknown to us.
 CHAPTER XIV
IN THE WALLOON COUNTRY

HE line of the old Flemish principality ran from Antwerp

southwest to Courtrai, but today the line that divides the
French and the Flemish speaking Belgians runs due east
and west, from Visé to Courtrai, with Brussels midway in
its course.
North of the line are the fertile plains and gardens, the busy cities and
the factories, of Flanders. Through them flows the Scheldt, the river of
commerce.
South of the line are the mines and the mountains, the foundries and
the forests, of Namur, Liège, Hainault, and the Ardennes. This is the
Walloon country, through which runs the Meuse, the river of romance.
In the north live the stolid, easy-going, devout Flemish peasantry, while
in the south are the lively, energetic, enterprising Walloons. They are a
larger people physically than their neighbours, more heavily built, and of
darker colouring, for there is a strain of Spanish blood in their ancestry.
Many Walloons came to America in the seventeenth century, and we
have had few immigrants of better stock. Showalter says that the
women are “famed for their industry, thrift, cleanliness, capacity for hard
work, and cheerfulness whatever their lot.”
The country of the Meuse and the Sambre is by far the loveliest part of
Belgium. It abounds in myths and legends suited to the wild, romantic
scenery of its hills and valleys. It abounds also in the villas and châteaux
of the Belgian noblesse and haute bourgeoisie. The wealthy people of
the cities delighted in their summers among the mountains of the
Ardennes, while many families of ancient lineage but lesser fortunes
lived the year round in their old-world houses.
Some of the châteaux were of exceptional beauty. Our trip to Belœil, the
seat of the de Ligne family, will never be forgotten, for it was the finest
château in Belgium. His Highness the Prince de Ligne had asked us out
to luncheon, and we started about nine, motoring out toward Hal and
Enghien.
It was a bright, sunny day, and the country rolled away on every side,
checkered with its crops in varying stages of ripeness into fields of green
and orange and lemon and brown. The roadside was flecked with red
poppies and blue cornflowers, and quaint farmhouses dotted the
landscape. We passed deep forests, too, with glimpses of old châteaux
through the vistas.

A Village in the Ardennes

At Hal there was a lovely old church, with a Virgin famous for miracles.
We stopped and went in; choir boys were singing antiphonally, and there
was a sweet smell of incense and a soft, religious light.
At Enghien there was a château which was favoured with a fairy
protectrice, no less than Melusine, so famous in song and story. Long,
long ago she married a mortal, Comte Raymond de Forêt, and raised for
him a castle which she never ceased to guard. Always before the death
of a member of the family “la fée Melusine apparaît sur la terrasse du
château.” The Luxembourgs and other noble families changed their
pedigrees in order that they might claim descent from fairy Melusine.
Of lower degree but even greater service were the fairies who dwelt
aforetimes in a cave at Arquenne. The good folk of the neighbourhood
used to leave their soiled linen there of an evening, with some food. In
the morning they would return to find that the “little people” had done
their work and left the clothes all clean and white.
After passing numberless quaint and picturesque villages we came at
length to the gates of the park behind which stood the château of
Belœil, with its courtyard and inclosing wings. We followed the road lined
with orange trees and crossed a bridge over the moat into the broad
court with the façade of the house on three sides. Footmen lined the
steps as we mounted into the cool vestibule, from which we passed
through various rooms into the handsome salons.
The house was a museum of valuable and historic things—potiches,
curios and rare furniture. On the walls were great pictures representing
scenes in the story of the de Lignes, and presentation portraits of kings
and queens.
Through the windows we could see the wide moat outside, and the
English garden opposite with its beds of brilliant flowers and its
background of trees and foliage. Soon after luncheon we went out into
the sunny glare and the great heat of the open terraces, and crossed
into the cool alleys of the French garden.
A great lagoon opposite the main terrace was continued in a vista
through the forest off to the horizon, broken by a monumental sculpture
which was reflected in the water. The wood was divided formally by
alleys leading to some architectural or natural detail, and open glades
were arranged with pools, while a little rivulet, made artificially natural,
went winding through the woods with a pretty path alongside.
The Prince permitted the greater part of the garden and park to be used
by the people of his little town, but Belœil was so out of the way that
strangers never went there. I use the past tense, because the château
has been razed to the ground since the war began. I also learn that two
members of the de Ligne family have been killed.
In order to carry out our plans we had to leave Belœl in the heat of the
early afternoon. Motoring out again across the rolling landscape we
came to Mons, passing on the way through some of the de Croÿ
properties and forests. This region is the great coal-mining district, the
Borinage, and the beauty of the scenery is rather spoiled by the huge,
conical mountains of the detritus which is brought out of the mines, and
by the black, sooty look of things.
Mons was a dull, quiet old town, rather picturesque in its way, with its
old church and belfry crowning the hill. As we came out of the church
the chime of bells in the tower musically rang the hour, sounding sweetly
in the sleepy silence of the place. The stillness has since been broken by
other sounds than those, for Mons figured largely in the battle of the
Meuse.
From there we were off once more to visit the ruins of the old château of
Havré, once the stronghold and residence of the de Croÿ family. It rose
high out of a stagnant moat, all gray and pinkish, with irregular
architecture and a tall tower with a bulbous top. From this rose the cross
of Lorraine, for the de Croÿs quartered their arms with this great family.
The château was quite stately and magnificent, and its courtyard, all
grass-grown, must have seen fine sights in its day.
Not far from Mons is Binche, a town celebrated for its carnival held on
Mardi-Gras—the festival of the Dancing Gilles. In spite of the fact that it
has always been a source of much pride to the Belgians, its only unique
feature was that of the Gilles, which distinguished it from other carnivals.
These Gilles, or dancing men, were characterized by their headdress and
humps. The former was most striking and elaborate, resembling in shape
the old top-hat of our great-grandfathers, and surmounted with
magnificent ostrich feathers three or four feet long, giving the wearers
the stature of giants. From each hat, besides, flowed wide, variegated
ribbons. The trousers of a Gille were bedecked with trimmings of real
lace, and ribbons matching those on the hat. About the waist was a silk
belt from which hung small bells. Each Gille wore a mask.
The entire outfit cost from forty to fifty dollars, which was a large sum
for the peasant youths who were generally chosen by the carnival
committee. But the honour of being a Gille was so great, since only good
dancers could be selected, and carried with it such prestige among the
local damsels, that the young men were only too pleased to make the
necessary financial sacrifice.
On the afternoon of Mardi-Gras the Gilles, in full uniform and preceded
by the local brass bands and musical clubs, appeared in procession and
marched, two hundred strong, to the Grande Place, dancing to the music
of the band. At every few steps they stopped, bending this way and that
to make the bells at their waist ring more effectively. Their streamers
floated to and fro with every motion, enveloping them in a rainbow of
ribbon. The simultaneous ringing of bells and thumping of wooden
sabots on the cobblestones sounded like the echo of a cavalry charge.
Each Gille had a straw basket hanging from one side of his belt and filled
with oranges, with which he bombarded the spectators as he danced
along, men appointed for the purpose following close behind to see that
the baskets were kept filled. A general battle of oranges between Gilles
and carnival merrymakers ensued, lasting till the procession reached the
town hall. In front of this, on a platform, sat the mayor and his officials,
and here the Gilles terminated the day’s festivities by a sort of war dance
which gave them a chance to show what they could do.
The public joined in the fun, and soon thousands of persons—men,
women and children—were gaily waltzing around the Grande Place. The
sight of an entire population in carnival costume and masked, dancing in
the open air to the music of the bands, was not one to be easily
forgotten. The sport continued till late evening, when it was brought to
an end by the mayor, who formally awarded a gold medal to the Gille
who had proved himself the most expert dancer of them all.
From Binche we motored on again, calling on Prince Henri de Croÿ’s
cousins who lived in the château of Le Roeulx, where Prince Henri
himself had been born and brought up. Part of this house dates from
1100 A.D., and after its destruction in succeeding wars was rebuilt and
added to repeatedly. For six centuries the de Croÿs have lived there
without a break.

PRINCE HENRI DE CROŸ.

In passing through a small town one came suddenly on its gate and saw
the wide-standing façade of the château facing across the terraces of the
park. Inside there was a Gothic vestibule, and the rooms stretching into
the wings were old-fashioned and interesting, some of them with old
Chinese paper on the walls. On the rear side, towards the park, the
ground fell away abruptly, so that the building seemed to stand very
high, and one looked out over the tops of the trees of the forest. The
living room was, strangely enough, at the top of the house, and was
approached by a great double stairway with very old carved balustrades
and paneling.
Of still a different type was Ophem, the seat of the de Grunne family.
The château was very quaint and pretty, an old monastery with a simple,
vine-covered façade surrounding a little flower-bordered and parterred
garden with a high balustraded wall at one side, shaded by overhanging
trees. The front had been added at a later time and was quite rococo in
style, with many heavy moldings. This looked out over a terrace with a
bit of park sloping down to a lagoon. Flowers in formal beds and rows
gave colour everywhere. Near by was a dear little chapel with a statue in
a niche outside; we were told that the niche had been designed by the
Comtesse de Flandre.
After tea we set off for home, scooting down towards Wavre and
Perwez, through the land of Brabant. From the broken, hilly country we
dropped gradually back among the rolling fields once more, all aglow
with their crops, through the tree-lined avenues of the Forêt de Soignes,
and so into Brussels.
The château life was not one of gaiety—in fact, I think perhaps most of
us would have considered it rather dull. There was some riding on
horseback, walking, and a little tennis, but on the whole not very much
outdoor exercise. Some one has said that “they raised the habit of doing
nothing in the open air to the level of a science.”
The chief interest of the men was shooting and hunting. On many of the
properties the game was carefully preserved. When the season opened,
château life became for the time quite gay, with déjeuners de chasse
and dîners de chasse, lively reunions of the fashionable set. They hunted
foxes and hares, and a few kept packs of hounds. Over the border in the
Grand Duchy of Luxembourg, where some Belgians held property, the
wild boar was occasionally hunted.
As the Belgians are nearly all musical, the children of the family were
taught to play various instruments, and the evenings were passed
pleasantly enough, some member of the group singing while others
played the piano, ’cello, or violin.
In the Ardennes country the houses were often near enough for
frequent calls and visits, made in the late afternoon when all would
assemble round the tea table. The quiet days were rarely broken by
even the smallest excitement. These families certainly passed from one
extreme to the other during the early months of the war.

Another motor trip took us somewhat farther afield, by Liège and Spa
into the Ardennes, and back through Dinant and Namur. This is the
Belgium of the Middle Ages, of Emperor Charlemagne and all his kin, of
wars, and of wonders without end. Even its once famous watering place
we found a thing of the past and not out of harmony with the legendary
land round about.
Liège is the capital of the Walloon district, and with its dozen strong
fortresses was, with Namur, considered the chief defense of the Meuse
valley. Namur was supposed to block the road between France and
Brussels, while Liège was to fend off Germany from the Belgian capital.
It commands all the roads from Germany, indeed it was the door to
Belgium which, once forced open, left the whole country at the mercy of
the invaders. In ten days from its fall, the government officials removed
from Brussels to Antwerp, later to Ostend, and finally to Havre. In a
fortnight the Germans had hewn their way to Charleroi. Liège as we saw
it had about two hundred thousand inhabitants, and was beautifully
placed on a high bluff overlooking the river, with hills and fertile valleys
surrounding it.
Not far from there is the ancient little town of Jupille, which they say is
haunted by the shade of Pepin the Short, who lived there long ago. They
still showed one the ruins of an old mill at the lower end of the village
where Pepin’s wife, Bertha of the Big Foot, took refuge from her irate
lord on the occasion of some misunderstanding between them.
 GENERAL VIEW OF LIÈGE.

This Bertha was the mother of the great Charlemagne and lived to a ripe
old age, coming down to us as the heroine of many legends. It is
claimed that her famous son was born in this same village of Jupille,
although this is much disputed. The author of “La Meuse Beige”
suggests that the Emperor may have been born in a carriage or at some
village inn, for “Pepin his father constantly found himself on the high
roads about 742, and Bertha his mother was obliged, like the honest
woman she was, to go from one place to another to meet her lord.”
At Liège we crossed the river, with its pretty embankments and bridges,
into the more hilly country, climbing up winding roads that followed the
ravines and streams, into higher places where the air was fresh and
fragrant. Some of the towns through which we passed had a really
Alpine look. Finally we turned into the long avenue which led us into
Spa.
This pretty town, so famous as the first watering place in Europe, and
for a long time the most fashionable, was deadly quiet that warm
summer afternoon. On the terraces of the casino there was not a soul to
be seen, and only two or three forlorn-looking drinkers at the spring-
house. Even the promenades were empty.
We thought it might be the hour when people were resting, so later we
fared forth to see the gaieties of which we had heard so much. This time
we found half a dozen others walking aimlessly up and down the streets.
At dinner, silence reigned. In the evening we tried our best to cheer up,
and went to the casino where a few persons were scattered about the
auditorium listening to music. This seemed to be the height of the
season at Spa, whose name has come into our language as a synonym
for gaiety and relaxation.
So we got away next morning and ran up a long, steep, splendid road on
to fine rolling uplands that waved away like the Bohemian Highlands,
with lovely views in the blue distance. We were some fifteen hundred
feet up, and the air was very refreshing as we sped along. Now and then
we dipped again into valleys with wooded slopes and ravines with
palisades. We were in the real Ardennes country, the famous “Forest of
Arden“ of ”As You Like It,” which was sung by Ariosto a century or so
before that.
In this region was the church of St. Hubert, to which peasants made
Christian pilgrimage. Under the choir was a crypt where they knelt. A
thread from the stole of the ancient saint was said to have had the
power to cure hydrophobia, if aided by cauterization. But more easily,
“one may prevent hydrophobia by carrying on the finger a ring or
wearing a medal which has touched the relics of the saint; also by eating
or making one’s animals eat the blessed bread of St. Hubert.” This bread
is given chiefly to dogs, I believe.
We ran by picturesque La Roches and Rochefort, with fine smooth roads
following the beds of little rivers in the valleys and climbing in zigzags
the low mountains till we came, about one o’clock, to Han. Here we
went at once, of course, to the Grottes de Han, which were very popular
with tourists. It was an experience worth having. We passed through
endless passages, grotesque and beautiful with stalactites and
stalagmites, the varied effects well lighted by electricity. The finest thing,
most terrible and impressive, was the Salle du Dome, where the black
shadows were lost in the immensity of the vault. It is a cavern four
hundred feet high and more than that in breadth, with a sort of
mountain of broken boulders up which winds a path into the dusky
gloom and blackness of the upper regions. But I must say it was more
suggestive of the lower regions than the upper, especially when a guide
with a flaring torch climbed and climbed, disappearing behind cliffs of
darkness and reappearing on precipices till he stood at last, a tiny figure
far above us, in Satan’s Pulpit, and lighted a fire that seemed to burn in
another world.
Later we came to the banks of the subterranean river that flows through
the mountain, and got into boats. As we floated down, the vaults
reëchoed the singing of our fellow-travelers. But presently we saw ahead
of us the light of day, peering in through the end of the cave, and
slipped out—into the rain.
The car met us there, so we were able to get away again quickly. Off
once more over the fine roadways, we passed Ciergnon, the summer
château of the King, on its high bluff overlooking the vast landscape.
Through more broken country we came down into the valley of the
Meuse at Dinant, then one of the most picturesque places in Europe. Its
palisades and striking cliff formations were crowned with ruined castles,
like a miniature Rhine. The city has since been destroyed.
The abbey of Waulsort, which became a château, was at one bend of
the river. According to tradition, it was founded by Count Eilbert in the
reign of Louis IV—about the middle of the tenth century. The Count went
one day to a fair in Picardie, and there he saw a horse which was much
to his liking. He had no money with him, but offered the priest who
owned the animal his beautiful graven beryl as a pledge till he could
send home for funds. The priest accepted the offer and gave him the
horse, but when the Count returned with the money he denied that he
had the jewel or had so much as seen the Count before in all his life. In
a fury Eilbert collected his men-at-arms and attacked the city where
dwelt the forgetful cleric, sacking and destroying it, even to the church.
Then his anger cooled, and he regretted his hasty vengeance. As a sign
of penitence he not only rebuilt the church, but erected the abbey also.
 Château de Waulsort on the Meuse

Just down the river from Waulsort is the cave of Freya, near a château of
the same name. The cavern is not large but is very beautiful, with
shining white stalactites, pointed columns piercing lofty vaults, and
jeweled cascades. One of its chambers has an opening in the roof which
lets in the daylight. Some young men who were anxious to avoid the
conscription of the Empire are said to have let themselves down into this
cave by means of ropes. They lived there for some time, cooking by a
small fire whose smoke blackened the walls of the cave, as you can still
see. They were contented to stay quite close to this one room, without
much exploration, and it remained for a dog to really discover what lay
beyond.
The dog was a small one, and in chasing a fox he followed it through a
hole in the earth and into the farther depths of the cave. Hearing his
barks reëchoing weirdly, the hunters enlarged the opening which he had
found and followed him into the series of halls and galleries which make
up the cavern. On the walls are traces of pagan ceremonies which lead
scholars to believe that the place was used in ancient times for the
worship of the goddess Freya, who was the patron of love and liberty in
the Scandinavian mythology.
Speeding along the river toward Dinant we came to the famous Rock of
Bayard, a tall pinnacle split off from the main cliff, with the road passing
through a narrow gorge between. It has been renowned since the days
of Charlemagne, when Bayard, the enchanted horse, with the four sons
of Aymon clinging to his back, leaped across the chasm in mad flight
from the vengeance of the Emperor. As one of the brothers was no less
than sixteen feet in height, and the other three nearly as tall, it was
really something of an achievement.
But Bayard was a very remarkable animal. The sons of Aymon had
received him as a gift from their cousin Maugis, along with an excellent
sword named Flamberge, whose very wind would cut off a man’s head.
It seems that this Maugis had heard of a wonderful steed reared on an
island in the Meuse and kept there by a giant named Rouart. So he went
over and called on the giant, telling him stories till he fell fast asleep.
Then he set out to find the horse, which he soon discovered in a cavern
stable guarded by a dragon. With no other weapon than a fork, Maugis
slew the monster. When Bayard came forward to see what was going on,
the young man asked politely if he might mount him. As the horse made
no objection, Maugis mounted and rode him down to his boat.
 ROCK OF BAYARD, DINANT.

After many adventures, Bayard and the four sons of Aymon were all
captured by Charlemagne, who pardoned the young men on condition
that the eldest should make a pilgrimage beyond the seas and free his
horse before he went.
But the older brother was hardly out of sight when the Emperor ordered
Bayard brought to a bridge across the Meuse for his inspection. “Ah,
Bayard,“ said he, ”you have plagued me many times, but I have you
now!” With that he had a great stone fastened about the horse’s neck
and the animal thrown into the river. When he saw that Bayard sank to
the bottom he cried out, “I have nothing more to ask. Finally he is
destroyed!” But Charlemagne rejoiced too soon, for the horse struck off
the weight, rose to the surface, and set out for shore. There he shook
himself, gave a loud neigh, and was off at top speed for the sheltering
depths of the forests of the Ardennes, where, they tell you, he still lives
to this day.
Of Dinant so much has been written that there is little new to be said. In
the Middle Ages it was famous for the work of its brass and copper
smiths, and for its cakes. These were made of a sort of gingerbread and
were often celebrated in song. One rime tells of the plight of the bakers
who, in their anxiety to entertain properly the governor of their province,
made in his honour a cake so large that the biggest oven in town was a
foot too small to hold it.
Because of its odd Latin inscription, the bridge of Dinant has also been
much sung. Says one of the ditties:

“Although the bridge of Dinant is a fine bridge of

stone,
Its beautiful inscription is finer still, I own.
’Tis writ in perfect Latin, so read and do not jeer:
’Hic pons confectus est’—it was built, you see,
right here!”

All around Dinant it is a storied land. There was, for instance, the cow of
Ciney, who made quite a stir in her day. It happened in the year of our
Lord 1274, when the counts of Luxembourg and Namur were holding
tournament at Andenne, and all the knights for leagues around had
come flocking to show their prowess in feats of arms. Into the throngs
gathered to watch the spectacle came a peasant, leading behind him the
cow of cows. “He knew that after the heroic strife the contestants were
accustomed to eat largely, and however much their glory, nothing was so
comforting as a quarter of roast beef. Consequently he brought to sell to
the butchers of Andenne a cow, superb and without faults, save for a
slight blemish which did not in the least detract from the savour of the
meat—she was not really the property of the young man, for he had
stolen her.”
The cow belonged by rights to a good bourgeois of Ciney whose name
was Rigaud. As it happened, he was in the crowd and recognized his
property. Finding near him the sheriff of his town he stated his case and
demanded instant justice on the robber. Now the sheriff was out of his
own province, and had no authority to act. So he engaged the young
man in conversation and led him artfully out of Andenne till they had
crossed the boundaries of his own territory. Once there it was, of course,
a very simple matter to seize him and hang him by the neck till he was
dead.
But the matter did not end there, in spite of the good sheriff’s
precautions. The peasant was not a native of either Ciney or Andenne,
but of the village of Jallet. His fellow villagers considered themselves
affronted, and complained to their overlord. He was more than affronted
—he was positively outraged. Summoning his vassals he set forth to
Ciney for the purpose of sending to its long rest the soul of the sheriff
thereof. Ciney, however, closed its gates and sent to its brother towns for
aid. Jallet likewise called upon its friends and laid siege to Ciney. The
Duke of Brabant became involved in the war that followed, along with
the counts of Flanders, Namur and Luxembourg. The Marshal of Liège
invaded the Ardennes with fire and flame.
Presumably the cow of Ciney returned to her master’s home on the night
of her abductor’s death. But for more than two years the war on her
behalf was waged, and fifteen or twenty thousand men were killed. At
last the King of France was called in to settle the dispute, and the weary
disputants accepted his verdict thankfully enough. It was to the effect
that each side being equally to blame, they must bear their own losses
and leave things as they were before the war—so far as they could. Thus
ended “la guerre de la vache de Ciney.”
Beyond Dinant lies the little village of Bouvignes, whose ruined tower of
Crève-Cœur has its story, too. In the sixteenth century the French laid
siege to the place, which was an important town at that time. Among its
defenders were three men of Namur whose beautiful wives had followed
them to the front, fighting always at their sides like Amazons. When they
saw their lords fall dying before them and realized that the enemy was
making the last assault, they climbed to the top of the tower and, joining
hands, threw themselves upon the rocks below.
There have been forts in Namur since Roman days, and perhaps before
that. A year ago there were nine, for the city with its thirty thousand
inhabitants stands at the junction of the two rivers, Sambre and Meuse.
Namur was the door to France, and the nine forts were its bolts and
bars. On the 22d of August the Germans attacked it, and the next day
the French, who had come to its defense, were forced to withdraw,
defeated.
Namur as we saw it was a busy and prosperous town. The Sambre is a
water route to the Borinage, and the Meuse a financial asset to any city.
Its streets were wide, with many parks. One feature made it specially
attractive—on the lamp-posts hung circular baskets just beneath the
light, filled with flowers and hanging vines.
Not far from Namur is the old hermitage of St. Hubert, clinging to a
rocky cliff. There, in the Middle Ages, it was customary to illustrate Bible
stories by the use of marionettes, small wooden figures which moved
about the stage at the will of the monks. They were capable of acting
out before the eyes of the marveling country folk the story of the
Passion, of the cock that crowed thrice, and the penitence of Peter,
stirring sluggish imaginations to renewed devotion. “At the right, against
the wall, you see a table. There, you should remember, rested the
scaffolding in the midst of which was played the Passion. From the
opening below, the man of God pulled the strings of the machine.... The
man of God was the hermit, at once the author of the actors and of the
piece, and impressario of the troop which he had made with his own
hands.”
Such was the Walloon country, as we saw it in our journeyings. It was
our last trip in Belgium, for my husband received word that he had been
named Ambassador to Japan. So we packed up our things and sadly said
good-by to all the friends who had been so kind to us. Little did we think
that there was soon to be war, and that many of them we should never
see again.
 OLD HOUSES ON THE SAMBRE, NAMUR.

But Belgium has been through many wars before this, many sieges and
sackings and burnings, so we can feel sure that the spell of its
enchantment will survive the gray wave of soldiers which has swept
across the land during these last sad months.
 CHAPTER XV
A LAST WORD

I
Synopsis of the War
Last night, when the half moon was golden and the white stars very
high, I saw the souls of the killed passing. They came riding through
the dark, some on gray horses, some on black; they came
marching, white-faced; hundreds, thousands, tens of thousands.
The night smelled sweet, the breeze rustled, the stream murmured;
and past me on the air the souls of the killed came marching. They
seemed of one great company, no longer enemies.
John Galsworthy.

E were in America when the war broke out. It was as

unexpected to me as an earthquake, notwithstanding
the warning I had when we were in Brussels. Not
knowing the situation then—that war was bound to
come—I remember my interest in the excitement of
several diplomats who dined with us one evening.
They knew that trouble was brewing among the European nations. They
could see the spark from the fuse of the bomb that was to throw all
Europe into war. The bomb at last exploded, but not until June 28, 1914.
The Servians in revenge for Austrian oppression killed the Archduke
Franz Ferdinand, heir to the Austrian throne, when he and his wife were
in Sarajevo, Servia, on an official visit.
Two of the principal events leading up to this situation were the
assassination of King Alexander of Servia, son of King Milan and Queen
Draga, in June, 1903, and the occupation of Bosnia and Herzegovina by
Austria in 1908.
Under King Peter, Alexander’s successor, Russian dominance over Servian
affairs grew stronger.
When the heir to the Austrian throne was murdered the German
Emperor sent a telegram to the Czar which read:—

“The unscrupulous agitation which has gone on for years in Servia

has led to the revolting crime of which Archduke Francis Ferdinand
was the victim. Undoubtedly you will agree with me that we two,
you and I, as well as all sovereigns, have a common interest in
insisting that all those morally responsible for this terrible murder
shall suffer deserved punishment.”

The Servian and Austrian governments could not come to an

understanding, and Austria declared war on Servia.
In answer to the Kaiser’s telegram the Czar replied:—

“A disgraceful war has been declared on a weak nation. The

indignation at this, which I fully share, is immense in Russia. I
foresee that soon I cannot withstand the pressure that is being
brought to bear upon me, and that I shall be forced to adopt
measures which will lead to war.”

So it developed that Russia backed up Servia, and Germany backed up

Austria.[10]
Germany needed to expand her territory and commerce and was
thoroughly prepared for war. At that time Germany, Austria and Italy
were in a Triple Alliance; Russia, France and England a Triple Entente;
Italy refused to aid Germany and Austria, however, because she was not
bound by her treaty to do so in an offensive war. She was humorously
classed with Greece and Roumania in “the triple attendre,” but on May
22, 1915, she joined the Allies, declaring war on Austria.
One of Germany’s excuses in entering upon the war was to keep the
“barbarian Russians” out of Europe, but curiously, at this time King
Albert received an ultimatum from the Kaiser demanding that the
German army should be given the right of way through Belgium. The
King replied that the Kaiser must respect the independence and
neutrality of Belgium, and refused to let the Germans pass through the
country. A second ultimatum was delivered, which demanded that a
reply be given within seven hours. If within this time no answer was
returned, or an answer unfavourable to Germany, war would be
declared.
On August 2d the Germans entered the Grand Duchy of Luxembourg. On
the 3d they entered Belgium.
The statement made by the Imperial Chancellor von Bethman-Hollweg in
the Reichstag on August 4th acknowledges the violation of Belgium:[11]
“We were compelled to over-ride the just protests of the Luxembourg
and Belgian governments. Our troops have occupied Luxembourg and
perhaps are already on Belgian soil. Gentlemen, that is a breach of
international law. It is true that the French Government has declared at
Brussels that France is willing to respect the neutrality of Belgium so
long as her opponent respects it. France could wait, but we could not.
The wrong—I speak frankly—that we are committing we will endeavour
to make good as soon as our military goal has been reached.”
The Germans motored into Belgium by three different roads. Fifteen
hundred picked soldiers came in advance in one hundred and fifty
automobiles. The army followed at such speed that their commissariat
could not keep up with them, and they did not even wait for their heavy
siege guns. They expected to live on the country, and so some straggling
parties of German soldiers were captured by peasants with an offer of
food.
The charming little border town of Visé was the first to be destroyed by
the Germans. “This district contains a large population of gun-makers
familiar with the use of firearms and unfamiliar with the ways of warfare,
and it seems proven that several citizens of Visé did take part in the
hostilities and that they fired at the enemy. The Germans retaliated with
ruthless severity.”[12]
Among the weaknesses in the defense of Liège were the lack of
sufficient soldiers to man the forts, and the long distances between the
different fortresses, as well as the lack of support by rifle
entrenchments. The fortresses did not prove impregnable because they
were built to withstand a horizontal fire, while the German howitzers
dropped shells from above. The three German army corps under General
von Emmich made attack after attack. On the third day they lost twenty-
five thousand men, some of the crack regiments from Berlin suffering
heavily. The forts held out long after the town was occupied by the
Germans for the reason that they were built to defend the river
approaches rather than the town, and until August 5th the Germans
were unable to cross the Meuse.
It was difficult for the Germans to get the proper range for their big
guns, and the story is told that a German soldier with a white flag of
truce walked towards a fort in order to get the correct distance. His
white flag was respected until he arrived at a spot where he signaled
back to his comrades. It is needless to say that he was then killed. From
the moment when the Germans were able to get the proper range with
their heavy siege artillery, the fate of Liège was sealed. Toward the end
of August, all the forts were occupied by the Germans.
“The resistance of Liège is not only one of the most magnificent
achievements in military annals;—it is also one of the decisive events in
the world’s history.”
It has already been the inspiration of much poetry and prose. The
following extract is taken from the poem called,

“HOW LIÈGE HELD THE ROAD”[13]

We were pounding at the anvils when they pounded

at our gate;
“Open,” cried the German squadrons; “let us pass, or
meet your fate!
We are millions; dare deny us and Liège is but a
name.”
 But we chose to die in honour than to buy our lives in
shame.
So we banked our eager fires, and we laid aside the
sledge,
Recking only that our sires had endowed us with the
pledge
To maintain an ally’s honour, to uphold the Belgian
code,
And we answered with our cannon, THAT LIÈGE
WOULD HOLD THE ROAD!

Here are a few of Verhaeren’s remarks on the fall of Liège:

“It is true that for the moment our factories are silenced and
seemingly dead, but as soon as the war is over they will awake
again like sleeping monsters. We were a little too sure of the
tomorrow. War in our eyes was other people’s business. It has come
to us, formidable and terrible, at a moment when we did not look
for it; like a mountain whose crumbling rocks are falling upon us to
crush us William’s army has come upon us. Our numbers were small
and we stood alone. We were attacked with disloyalty and betrayal.
We hastily raised our forces at Liège in old forts. All that was done
in a day, in an hour, in a moment, and at once we became the
marvel of the world. The fate of the Spartans was like that of the
Liègeois. Today, as then, a handful of men saved the world. We
should have only room in our hearts for pride. Tears dishonour us.”
 Citadel, Namur

Namur, another great stronghold of Belgium, was bombarded on August

21st, and thirty-six hours later the Germans entered the town. When the
forts were destroyed only twelve thousand out of the twenty-six
thousand Belgian soldiers were left. Ammunition was so scarce in this
region that the Civic Guard had to give up their weapons to the
remaining Belgian troops. The French and the British as well suffered a
terrible defeat at Charleroi August 22d, and were obliged to retire.
Fighting all the way, they made their masterly retreat through Mons into
France by way of St. Quentin.
Between the fifth and twentieth of August the poor wounded and dying
soldiers were brought into Brussels. When the crowd in the streets
shrieked and howled “Vive la Belgique!” the wounded tried to wave their
arms (those who had them), and show some sign of appreciation.
Houses were opened and prepared by the Red Cross Society to receive
them. The refugees as well, from Charleroi and Liège, and from the
districts where the fighting was going on, rushed to Brussels for
protection, but the Germans were close behind and entered the city on
August 20th without firing a shot.
At the beginning of the war hardly any food was to be had in Brussels
and other Belgian towns, and what could be bought went up to very
high prices. Flour cost fifty cents a pound, and bread one franc for two
pounds. Salt was not obtainable.
Adolphe Max, the Burgomaster of Brussels, was forced to take charge of
all supplies. The city fed the Germans for eight days without pay. After
this period the Mayor refused to furnish food longer without
compensation. Then field kitchens were established in several prominent
squares—in the Grande Place, before the Palais de Justice, and in front
of the King’s palace—where the beautiful trees of the park were cut
down for firewood. The museums and hotels were turned into sleeping
places for officers and men. The Palais de Justice was made not only a
kitchen but also a bath house. The railway stations, too, were used for
this purpose.
No carriages or bicycles were allowed to leave Brussels. The people lived
in constant terror from German aëroplanes that were flying overhead.
After the Germans occupied the city no one dared to speak English.
The Germans thought that Belgian weapons were hidden in the ponds,
and so they drained them, and carted away the fish to be eaten by
themselves. Fish and bread could not be bought by the people, even if
they offered to pay for them.
Every day fresh troops and aëroplanes and ammunition passed through
or over Brussels. Cartloads and trainloads of dead Germans were
brought night and day to the Gare du Luxembourg to be shipped on to
the Fatherland. The moaning of the wounded and the dying was pitiful.
Non-combatants of all nations fighting the Germans were taken
prisoners and sent to Germany. All women between the ages of fifteen
and forty were kept under German guard; those over forty were told to
report every few days to the German authorities.
Villages like Hofstade and Sempst were taken and retaken again and
again. Dinant and Termonde fell within a week after the occupation of
Brussels. The bombardment of Malines lasted three weeks. Termonde
changed hands twice, Malines three times.
The siege of Antwerp began the 26th and lasted several days. The
Zeppelin raid before the bombardment was most terrible, but the
Germans did not accomplish their purpose of striking the palace and
killing the royal family. After this, the Queen went to England for a time
with her children, returning later, but the King remained in Antwerp and
led the defense.
The small Belgian force had at least kept the Germans out of Antwerp
until the valuable oil tanks had been destroyed, as well as the ships in
the harbour and the precious stores of rubber from the Congo. The
English marines appeared toward the last, and gave some assistance,
but the city was finally captured by the Germans, before whom, on
September 5th, the Belgian army retired to La Panne. Ostend was
occupied by the Germans the 16th of October. Severe fighting took place
at Nieuport the 23d, and Westende and Middelkerke were destroyed.
Dixmude fell November 11th. Between the 12th and the 15th, 100,000
Germans were killed, and the Yser Canal flowed with human blood.
 Nieuport

November 18th, Flanders, as in days of old, was flooded from the sea-
coast almost to Ypres, drowning out the enemy. In December, activities
were renewed along the Yser, but the trenches about Ypres, “the key to
the coast campaign,” were only captured February 15th. Ypres at last fell
in May, after repeated attacks.
The exodus of a bleeding race was one of the saddest sights in history.
The Belgians literally swarmed into Holland, where they are cared for in
camps even today. The reason of this exodus to England and Holland is
found in the treatment of the Belgians by the invaders. I will not go into
the subject of atrocities, but simply give an extract from the report of
the Commission of Inquiry on the Violation of the Rules of International
Law, and the Laws and Customs of War.
“From the total mass of evidence received by us we are able to deduct
and prove absolutely true the following conclusions....
“I. The first was the barbarous device of compelling bodies of citizens,
old and young, male and female, to march in front of German troops in
order to shield them from the fire of the Allies.
“II. The second was the imprisonment, either under the title of
’Hostages,’ or on other pretexts, of individuals, families, or groups of
people, who were arrested at hazard and for no good reason, shut up
without air, without sanitary precautions, and without food, in churches,
barns and stables, and carried off to Germany, where they were kept
under conditions which made hygiene and decency impossible.
“III. The third series of acts consists of wholesale murders of civilians
and of the sack and burning of dwelling houses; concerning these
incidents the light of evidence grows daily stronger.”
These men were in command when the atrocities were perpetrated: The
Governor-General of Belgium was Field Marshal Baron von der Goltz; von
Buelow was in command of Namur and Liège; von Boehn was in
command at Termonde. Others in this list were von Emmich, von Nieker,
von Luetwitz, and Major Dieckmann.
But the Belgians are a brave people and they are used to misfortune, so
we may believe that though seemingly conquered, they will finally be
triumphant. Long live the Belgians! Long live their King!

II
Letters from the Front
I insert a few extracts from letters written by reliable people about
Belgium, or by Belgians during the war, in order to show the true state
of affairs. Most of them were written in French and have been
translated. With the exception of the Cardinal’s letter,[14] none of them
have been published.
Extract from a letter from Brussels in August, 1914.
“We are living in suspense now, as the Germans are getting very strict
and angry. Boys and young men leave daily to join the army, and the
different ways of crossing the frontier are very amusing. The Germans
have forbidden the letter by the Cardinal of Malines to be read in the
churches, but needless to say, we all have it.”

Extract from the Pastoral Letter of His Eminence, Cardinal Mercier,

Archbishop of Malines, Belgium:

“My very dear brethren:

“It was in Rome itself that I received the tidings—stroke after stroke
—of the partial destruction of the Cathedral Church of Louvain, next
of the burning of the library and of the scientific installations of our
great university, and of the devastation of the city, and next of the
wholesale shooting of the citizens and of tortures inflicted upon
women and children and upon unarmed and undefended men.
“And, while I was still under the shock of these calamities, the
telegraph brought us news of the bombardment of our beautiful
metropolitan church, of the church of Notre Dame au delà Dyle, of
the episcopal palace, and of a great part of our dear city of
Malines....
“I craved courage and light, and sought them in such thoughts as
these; a disaster has visited the world, and our beloved little
Belgium, a nation so faithful in the great mass of her population to
God, so upright in her patriotism, so noble in her King and
Government, is the first sufferer. She bleeds; her sons are stricken
down within her fortresses and upon her fields, in defense of her
rights and her territory.
 CARDINAL MERCIER.

“Soon there will not be one Belgian family not in mourning. Why all
this sorrow, my God? Lord, Lord, hast Thou forsaken us?...
“When, immediately upon my return from Rome, I went to Havre to
greet our Belgian, French and English wounded; when, later, at
Malines, at Louvain, at Antwerp, it was given to me to take the hand
of those brave fellows who carried a bullet in their flesh, a wound
on their forehead, because they had marched to the attack of the
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