FIFTETENTH ANNUAL YEAR BOOK— PART X 693 



A SYSTEM OF FARM COST ACCOUNTING. 



BY C. E. LADD, AGENT, OFFICE OF FARM MANAGEMENT. 



(Farmers' Bulletin 572, U. S. Dept. of Agriculture.) 



INTRODUCTION. 



The farmer wishes to know how much he is making or losing on his 

 business each year, how much he is making or losing on each crop or 

 class of animals, and how he can improve his business so as to make 

 more money. Cost accounting for the farm is the same sort of work 

 which the large meat-packing companies are doing to learn whether they 

 make a profit on canned goods, smoked meats, etc. The farmer wishes 

 to know whether his wheat pays and whether his cows or orchard pay. 

 These are some of the things which a set of farm cost accounts will show. 



Many farmers are desirous of keeping accounts of this sort, but do not 

 know how to start. Undoubtedly many are deterred from starting be- 

 cause they believe that they do not know enough about bookkeeping and 

 because they have ifa mind no definite method of procedure. To any such 

 men who desire to keep accounts and who have not worked out a system 

 for themselves, it is believed that the system outlined in this paper will 

 be helpful. Those who are already keeping accounts but are not satisfied 

 with the results obtained may find here some suggestions of value. 



Farm cost accounting, of necessity, involves many estimates, but there 

 is no reason why one should lose faith or be discouraged because of them. 

 If the worker has reasonably good judgment and is not prejudiced in 

 favor of any crop or animal he can obtain satisfactory results. The sys- 

 tems of cost accounting in use by the large packing companies and by 

 large wholesale grocery houses involve as many estimates and do not give 

 any more accurate results than do well-kept farmers' accounts. 



Cost accounts cannot be absolutely exact. They contain many es- 

 timates. It is foolish to spend time with refinements in methods of book- 

 keeping that are designed to check exact work to the last cent. In fact, 

 attempts to find insignificant errors often disgust persons with the whole 

 question of accounting. 



Of the desirability of keeping accounts on a farm much has been said 

 in the agricultural press. In an agricultural survey of Tompkins county, 

 N. Y., made in 1907, it was found that 45 per cent of the farmers already 

 kept some sort of records or accounts. 



This bulletin simply aims to give a description of a system of farm 

 cost accounting which has been tried for three years in the state of New 

 York with fifty-three farmers under widely differing conditions and has 

 proved fairly successful. It is a method so simple that a farmer can keep 

 it without assistance. 



TIME REQUIRED TO KEEP ACCOUNTS. 



The first question which the practical farmer asks about a set of ac- 

 counts is, "How much time will it take?" The time required is one of 

 the chief objections made to most kinds of farm cost accounting. The 

 farmers who have used this particular system during the past year 



