THE FARM RECORD 485 



ing of details concerning the use of labor, the work done by 

 horses and the consumption of feed by livestock. 



Accounts should be kept with cash, real estate, equipment, each 

 person to whom or from whom money is owing; each class of 

 livestock, each crop raised, equipment expense, miscellaneous in- 

 come, household. The titles of the accounts mentioned above 

 should be written at the tops of the pages at reasonable intervals, 

 allowing more pages for some accounts than others. For exam- 

 ple, the word "cash" should be written at the top of the first 

 page, leaving about twenty pages to be used for cash entries 

 later when pages 1, 2, 3, etc., become filled with such items. 

 Then at the top of page 21 might be written the words "Real 

 Estate." Only one page need be reserved for this. 



Procedure. — AVhen starting to keep accounts, the first step is 

 the taking of a physical inventory or preparation of a list of 

 assets and liabilities. This consists in listing the quantities and 

 value of all assets and liabilities of the farmer. (An asset is 

 property controlled or owned by the farmer and amounts col- 

 lectible by him from others. A liability is an amount owing by 

 the farmer to some one else.) The difference between the total 

 assets and total liabilities is known as the net worth of the indi- 

 vidual or business. 



Assets are listed by groups as cash, real estate, equipment, 

 livestock, etc. Details are shown under each group. For exam- 

 ple, under "equipment" are listed wagons, plows, cultivators, 

 and other units of machinery and tools. 



AVith the inventory completed and the net worth calculated 

 therefrom, one is ready to make the opening entries in the ac- 

 counts. The amount of each asset, as cash, real estate, equip- 

 ment, cattle, horses, corn, hay, etc., is recorded on the left side 

 of the account bearing these respective titles. Any liabilities 

 are recorded on the right side of the properly named liability 

 account, as mortgage payable, White Implement Co., etc. The 

 net worth is recorded on the right side of an account with the 

 farmer, commonly known as proprietorship or capital account. 

 Thus, the sum of all items on the left side of the ledger accounts 

 is equal to the sum of all items on the right side. This equality 

 is maintained at all times by recording for every transaction 

 equal amounts on the left and right side of the ledger. Every 

 transaction permits of the recording of an amount in two 

 accounts and also requires such two-fold effect to be shown in 

 order to present the results in the best manner. 



Construction of accounts. — Presuming that all assets and lia- 



