BUSINESS ASPECTS OF FARMING 443 



Another inventory should be taken at the close of the year. 

 By placing the two inventories side by side as shown in Table I, 

 a comparison of the net worth at the beginning and at the 

 close of the year's business can be made. The amount of gain 

 or loss does not tell the whole story. It is more important to 

 know where the gain or loss has occurred. The inventory may 

 show a gain of $500 in the value of hogs, but if this increase 

 has cost $550 a fact which the inventories cannot show it 

 does not represent gain but loss. To determine which depart- 

 ment made money and which lost money it is necessary to carry 

 ledger accounts for the various parts of the business. Table II 

 shows a ledger account properly opened, with the items entered 

 for the year, and closed at the end of the year. 



584. What accounts to keep. Accounts should be kept with 

 those parts of the business which are- of the greatest importance. 

 By keeping ledger accounts with the principal classes of live 

 stock, and with the more important crops, the sources of the prin- 

 cipal gains or losses will be revealed. The remainder of the 

 receipts and expenses may be included in a general-expense 

 account. If it is desired to find out what has been paid for labor, 

 for family living, or for any other particular expense, the general- 

 expense account may be divided so as to show these facts. 



The crop and stock accounts take care of the productive enter- 

 prises on the farm, and the general-expense account will take 

 care of the heavy expenses, like labor expenses, family living, 

 and the purchase of feeds and supplies. If the business is con- 

 ducted entirely on a cash basis, these accounts will make the work 

 complete. If the farmer is buying and selling on account, he 

 will need to carry additional accounts of bills payable and bills 

 receivable. 



585. How to keep accounts. The values as shown by the in- 

 ventory should be entered in the various accounts, and in all 

 these, with one exception, this value should be placed on the 

 left-hand, or expense, side of the account. This exception is 

 in bills payable. The expenses of live stock should include all 

 cash outlay for additional animals and for veterinary fees, also the 



