So far, the consideration of profits from sale of real property has been confined to the methods of bringing them on the books of account. The present chapter will consider how much of these "book profits" has been actually earned and therefore may be distributed to the stockholders as dividends. It is proposed to discuss this question in detail, but only so far as it relates to gross profits, that is, to the difference between the cost of the property and its selling price.

If the methods described in the preceding chapters have been followed, the profits will appear in the general ledger in one or more accounts, each of which is distinguished by the word "Gain" appearing in the name of the account, as "Gain on Sales," "Hillbrook Gains," etc. The profits remain in these accounts until it is desired to close the accounts and ascertain the profits for any given period. The only exception to this rule is in the case of cash sales, where the gains are carried directly to "Profits" (Section82), and of those time sales which have been cancelled and the gains carried to "Cancellation Profits" (Section 153).