406 AGRICULTURAL ECONOMICS 



Cost accounts cannot be absolutely exact. They contain many 

 estimates. It is foolish to spend time with the refinements in methods 

 of bookkeeping that are designed to check exact work to the last cent. 

 In fact, attempts to find insignificant errors often disgust persons with 

 the whole question of accounting. 



In order to have a complete set of farm accounts three records are 

 necessary: (i) an inventory at the beginning and at the end of the 

 year; (2) an account of all money paid out or received; (3) a record 

 of all work done by men and horses during the year. 



The annual inventory shows the annual gain or loss on the farm 

 business, but it does not show what crops or what animals have made 

 a gain or loss. On nearly every farm where accounts have been kept 

 the gain or loss for the year resulted from losses on several accounts 

 and gains on several accounts. In every case the farmer was much 

 surprised to see which accounts showed a gain and which a loss. 

 Results like these can only be shown by a complete system of accounts. 



A record of the receipts and expenditures on the farm is necessary 

 for a complete set of accounts. For this purpose the page is ruled 

 and items are entered as shown in the sample account with potatoes 

 in Table II. The financial record book at the end of the year 

 becomes the completed account book and will have a summary of 

 labor entered in it from the work record as described later. 



A separate account is kept with real estate, each crop grown, each 

 class of animals, machinery, labor, interest, persons dealt with, bills 

 payable and bills receivable, and with such other items as may be 

 found necessary or convenient. 



The items that make up bills payable and bills receivable should 

 be listed in the inventory at the end of the year, as mentioned, either 

 from memoranda or in any other way which may be found convenient. 

 In closing out the inventory at the end of the year, the items for which 

 money is due or owing should be charged or credited to their respective 

 accounts. When these bills are settled, during the early part of the 

 following year, the entries should be made under bills payable or bills 

 receivable, as the case may be. 



In this book two pages facing each other are taken for each 

 account. The name of the account is written at the top of the page. 

 The right-hand page is marked "Credits," and is used only to record 

 credits to the account. The left-hand page is marked " Charges," and 

 is used only for charges against the account. The pages then appear 

 as shown in the sample account with a crop of potatoes (Table II). 



