RECORDS AND ACCOUNTS 381 



which was invested from month to month. Hence it is important for 

 the farmer's guidance and encouragement that he make an annual 

 inventory of his farm investments. This inventory should be a 

 detailed list, with values, of everything used in the farm business, 

 including land, buildings, live stock, machinery and tools, produce for 

 feed or sale, supplies, bills receivable, and cash; also a list of all 

 accounts and bills owing. The difference between the total assets and 

 debts shows the net farm worth. 



A study of two successive inventories of a farm in New York state 

 illustrates how one young farmer on 100 acres prospered regardless of 

 the fact that he had almost no cash at the end of the year. The total 

 assets at the beginning of the year amounted to $13,090 and to 

 $13,400 at the end 'of the same year, an increase of $310. The 

 increased investment in live stock, machinery, and tools, and more 

 produce held for sale amounted to $1,073, but this was partially offset 

 by the cash decrease of $763 . The farm indebtedness was also reduced 

 by $253, thus making a total increase hi net worth to the farm business 

 of $563. . The inventory values covered all depreciations and increases 

 in values, so that this $563 was net increase in the value of the farm 

 investment. It means that this sum was saved from the year's busi- 

 ness after all farm expenses had been paid, including interest on 

 borrowed money and all living expenses. The amount of cash at the 

 end of the year, $133, proved to be no indication of the success of the 

 year's business. 



124. MAKING THE INVENTORY 1 '" 

 BY FRED W. CARD 



The farm inventory should include all property, of whatever 

 description, which the farmer may possess. A better record of the 

 business situation can be obtained by keeping the inventory of the 

 land itself separate from that of the buildings and other improvements. 

 In considering these improvements the point is quickly reached where 

 it becomes a question what to consider as investment and what to 

 look upon as an operating expense. Fencing is properly a farm 

 expense, and under average running conditions may as well be so 

 considered at once. Yet in taking hold of a run-down farm, where a 

 heavy outlay for fencing may be needed all at once, a portion of the 



1 Adapted from Farm Management, pp. 150-56. (Copyright by Doubleday, 

 Page & Co.) 



