j6 FOREST VALUATION 



income becomes abnormally long, the amount of capital required 

 to carry the project to completion is proportionally increased. 



25. Cost Accounts. A cost account differs from a general 

 profit and loss account in that it analyzes the cost of producing 

 a given unit of output, instead of accounting for the current 

 outlay and income of the business as a whole. Such an account 

 traces the history of the product from the time of its purchase 

 or inception until it is sold. The costs incurred fall into two 

 groups: specific costs, which include that for raw materials 

 and labor directly applied in production; and overhead charges, 

 which include taxes, insurance, light, fuel, superintendence, 

 rent and other items, which must be apportioned on an equitable 

 basis over the entire output. Cost accounts in forest production 

 sum up the cost of growing a crop of timber from origin to matu- 

 rity. Owing to the great length of the period involved, the 

 factor of compound interest on invested funds, when introduced 

 as a cost in such accounts, becomes one of the largest items of 

 expense. 



26. Income. In 8 and 9 it appears that prices for fin- 

 ished products are the source of value for all forms of property. 

 Value, as distinguished from cost, depends upon net income and 

 looks to the future. The income from finished products, which 

 gives them their value, corresponds with the services they are 

 capable of rendering by being used or consumed. 



The sources of income from productive property consist 

 either of finished products or materials in a raw or unfinished 

 state, while the income derived from the business of operating 

 such properties is the money received from the sale of the output. 



27. The Economic Opportunity. To derive or produce 

 an income, some human want must be supplied. The greater 

 the range and diversity of these wants and the greater the 

 purchasing power or capacity of the average individual to 

 gratify them, the more numerous and promising will be the 

 economic opportunities for business. Inequalities in the dis- 

 tribution of wealth, and the existence of a pauper class, greatly 

 diminish the total business of a nation and divert much of it 

 into wasteful and injurious channels. 



