42 THE AGRICULTURAL CLUB. 



questions of principle, as well as matters of valuation and 

 estimate and personal opinion, have to be considered, and that 

 consequently the determining of profits is a matter of real diffi- 

 culty, which affords scope for wide variation of treatment and 

 on which honest differences of opinion may exist without improper 

 motives or ulterior objects being imputed. 



Farm Costs. 



To distinguish these cost records from ordinary farm accounts, 

 they may be defined as the detailed records showing the cost 

 and result of each branch of the farm, as distinct from the ordinary 

 farm financial account, which shows the profit or loss on the 

 working of the farm as a whole. 



The usual form of farm account does not show the profit 

 or loss of each branch of the farm. Each item of expense appears 

 in one total without showing which branch of the farm has 

 received the benefit, and the final figure of profit is the over-all 

 profit of the farm as a whole. This inclusive profit generally 

 conceals a loss (perhaps an expected and necessary loss) on one 

 or more departments. 



One of the main objects of cost records is to show separately 

 the cost, and profit or loss result, of each crop and class of stock, 

 etc., and the records are obtained as follows : 



Part of the information from which these cost records may 

 be prepared will already appear in the financial accounts, but 

 some additional work is necessary. 



1. The various expenses are split up and charged to 

 the branch in respect of which they are incurred. Thus 

 wages, according to its employment, will be apportioned 

 to the various crops, live stock, etc. 



2. Effect is also given to certain transactions that do not 

 appear in the Cash Book. These are various " internal " 

 transactions, not involving money payment, in respect 

 of mutual services rendered by one branch of the farm 

 to another, e.g., home-grown crops fed to the stock, labour 

 of work horses on the crops, manure produced by the live 

 stock for use on the land, etc. 



3. Certain of the expenses (e.g., for cleaning land and 

 for certain manures), the benefit of which extends over 

 more than one year or crop, are divided over the various 

 crops as accurately as possible, according to the benefit which 

 each receives. Suitable forms are used to record these 

 " internal " transactions, the most important of which 

 are the daily employment of the labour, and the consump- 

 tion of the farm produce by the stock. 



In rough, broad outlines, this is how the cost of each crop 

 and class of live stock is ascertained. The corresponding income 



