8 FARM ACCOUNTING 



ing a total of $2000. His expenses were, for rent, $400, 

 for labor $300, and general expenses $300, a total of $1000. 

 If he received cash for all the products sold, and paid 

 cash for all the expenses, it would mean that he received 

 $2000 during the year from farming operations which cost 

 him only $1000. The other $1000 represents profit and 

 was used to pay off his mortgage and bank loan. 



The Loss and Gain Statement discussed above, shows the 

 elements contributing to the increase in wealth only in 

 a very general way. A more detailed treatment of this is 

 taken up in connection with the subject of Cost Account- 

 ing7 



Having examined the Statement of Resources and Lia- 

 bilities, and compared one year's statement with another; 

 and having observed the relation of the Loss and Gain 

 Statement to them, we have seen in a general way what 

 the object is in keeping records of business transactions. 

 Briefly stated, the object in keeping books of account is to 

 furnish the essential facts from which one can find the 

 financial condition of the business at any given date f and 

 the progress of the business over a given period of time. 

 The Statement of Resources and Liabilities shows the con- 

 dition f while the Loss and Gain Statement shows the 

 progress. 



Remembering that these statements are to present facts 

 and results in the aggregate, at least once a year (or oft- 

 ener if desired), we shall try to find out how the records 

 are kept from day to day so that this valuable information 

 may be readily obtainable in a good form that is easily 

 understood. 



There are two essential points to bear in mind in keep- 

 ing the records during the year: 



1. Classification of the transactions. 



(In what detail are the transactions to be analyzed, 



