I4 FOREST VALUATION 



prietor is to obtain as great a ratio of income as possible for each 

 unit of capital employed, whether this outlay takes the form of 

 investment or subsequent expenses. 



23. The Relation in Time between Outlay and Income. - 

 The element of time enters into every process of production 

 ( n). Effort normally precedes satisfaction. Money income is 

 to business what the satisfaction of personal wants is to an in- 

 dividual. Since outlay and effort are synonymous, it follows 

 that in all forms of business, investment must precede the re- 

 ceipt of income. 



This process is easily recognized in the period of installation, 

 especially in such forms of business as require the completion 

 of material structures. But it is equally true of the current 

 business of a going concern. The receipt of income is reck- 

 oned from the moment a trade is concluded. Actual payment 

 may be delayed, but this is a matter of accounting. Upon the 

 delivery of the goods, all expense connected with the securing 

 of this income terminates, except where contracts stipulate 

 future maintenance in good order for a stated period. Conse- 

 quently, the wages and all other charges incurred in the securing 

 of this income normally precede the final sale. The postpone- 

 ment of payment of these expenses is also a mere matter of 

 accounting. The liability or indebtedness for expenses is in- 

 curred previous to receipt of income in practically every case. 



24. The Total Investment. The total capital invested in 

 a business is always greater than that represented by the cost 

 of the assets listed under the capital account. Were income and 

 the items charged under expense to occur simultaneously, the 

 one should cancel the other, leaving the surplus or profit to 

 apply as interest or dividends on the capital originally invested. 

 After a business is established, this actually takes place and unless 

 the scope of operations is enlarged, the capital required should 

 not subsequently increase. But this apparent coincidence of 

 income and outlay does not alter the tune relation shown to 

 exist between them. The expenditures of to-day are for the pur- 

 pose of securing future income, while the income of to-day is the 

 result of past outlays. 



