150 FARM ACCOUNTING 



to General Expense account after closing, thus effecting a 

 "sale" of the commodities to the succeeding year's busi- 

 ness. Such an entry decreases the General Expense for 

 the year below what it would be if the inventory of sup- 

 plies as cement, nails ; nd so on were not considered. It 

 increases the expense of the succeeding year. In other 

 words, the expense of the year is increased in which the 

 cement and nails arc used, regardless of when they are 

 purchased. 



Considering the General Expense account of Illustration 

 28 with the inventory record, it is seen that the $11.50 

 debit in the account is tin- same as the total miscellaneous 

 supplies on March 1, 191."). in the valuation column of the 

 inventory record. Also, the $:MO credit in the account is 

 the same as the total of miscellaneous supplies Feb. 29, 

 1916. 



Although General Expense account has been used in 

 illustrating the relation between ledger accounts and the 

 inventory of miscellaneous supplies it is not the only ac- 

 count that might be affected by an inventory of miscel- 

 laneous supplies. Any given inventory of sundry articles 

 affects the account that was debited when the articles were 

 purchased. For example, when axle grease is bought, it 

 is charged to Equipment Expense account. If only one 

 or two boxes are bought at a time, they need not be con- 

 sidered in the inventory. However, if a large quantity 

 is bought a short time before the close of the fiscal year, 

 it should be inventoried as one of the miscellaneous sup- 

 plies. In recording the inventory for such axle grease, 

 the entry both credit and debit is made in the Equipment 

 Expense account, in a way similar to that used in record- 

 ing nails in General Expense account of Illustration 28. 



Cost price is taken as a basis for valuing the products 

 and miscellaneous supplies from year to year. However, 

 when one does not operate under a cost system, the cost 



