BOOK-KI.I.I'Im; for farmers. 



907 



the house built and fences erected, the one account will suirice; 

 but if unimproved land is obtained, and the additions made sub- 

 sequently, two or even more divisions would be preferable. 



2. Live stock, including horses, cattle, sheep, pigs, and fowls, placed in 



separate accounts or together, according to importance. It is usually 

 desirable to keep the horses separate, as, unless breeding is carried on, 

 depreciation must be allowed for and loss incurred. 



3. Plant, fixed and movable. — Where much heavy fixed plant is in 



use, the two classes may be kept distinct, as differing allowances 

 for depreciation have to be made. 



4. Farm products on hand (ready for sale or use). 



5. Farm products growing. — If the inventory is made at the slackest 



period of the year, these may not be very extensive, and may even 

 be neglected. To prevent an over-estimate, any such crops should 

 only be priced at the cost of labour, seed, and manure, the benefit 

 of any profit being carried to the year in which the harvesting is 

 done. 



6. Furniture and domestic effects. 



. This must be supplemented by a statement showing the cash in hand 

 or in bank, debts owing to or by the farmer, promissory notes, mortgages, &c. 

 Possibly the most difficult task is the assigning of a value to the farm and 

 buildings, and the tendency would be to overestimate it. Due consideration 

 must be given to the original cost, and to the subsequent improvements, 

 whether made by the farmer in the ordinary course, or carried out by trades- 

 men for a definite amount. In the case of a tenancy, an estimate must be 

 made of the present worth of any additions or improvements, based upon 

 the fact that the value of such must be spread over the term of the leas* 

 and will be considered as of no value at the end. 



A Balance-sheet. 



This will constitute his balance-sheet, showing his assets, or what he owns, 

 on the one side, and his liabilities, or what he owes, on the other side, and 

 the difference between these two will be his capital — provided, of course, 

 that the assets exceed the liabilities. 



All such balance-sheets inevitably include approximations to value, and 

 not actual values (which can only be ascertained when a sale is effected), 

 and, therefore, the merit of any system of book-keeping must depend, first 

 and foremost, on the nearness to accuracy of the various valuations. 



Specimen Balance-sheet. 

 £ s. d. 



S. (1. 



£1,455 £1.455 



It will be seen from this example that four out of the five divisions into 

 which the assets are divided must of necessity be valuations on the part 

 of the owner, and if in any way inflated will, when realisation takes place. 

 Teduce the stated capital to its correct figure. 



