COST ACCOUNTING 307 



(d) In what detailed respects and why are the following ac- 

 counts different under the two methods: Loss and Gain, Interest 

 on Investment, Interest, Horses, Cattle, Hogs, Sheep, Poultry, 

 Mill Feed, Corn, Oats, Wheat, Hay, Equipment Expense, Gen- 

 eral Expense, Labor, Pasture, Exchange Labor, and House-* 

 hold? 



(e) Why is the trial balance after closing the same under the 

 two methods? 



(f) In comparing the Farm and Individual Income State- 

 ments and the Change of Wealth Statements under the two 

 methods, how do you account for any differences and similarities 

 found therein? 



(g) In general how may the fundamental differences in the 

 results under the two systems be summarized? 



(h) Which method do you think is the better? Why? 



(i) In view of the study made of L. E. Fay's productive ac- 

 counts under the two methods, what can you say as to the mean- 

 ings attached to the words "gain" and "loss"? 



Note. It is the aim in the several succeeding problems to con- 

 centrate more on the principles arising in cost accounting and 

 the closing process, and less on the recording. of the more simple 

 entries which must always arise in the course of a year's opera- 

 tions. The problems which follow are adopted from the ac- 

 counts of an Illinois farmer, but modified for the purpose of 

 illustrating the treatment of various principles in cost account- 

 ing. 



The detailed transactions with outsiders and with the House- 

 hold are stated in aggregate form except in the case of unusual 

 transactions. For example, a transaction showing the cash pur- 

 chase of $310 worth of supplies for the household is stated near 

 the close of the year. This means that, as a matter of fact, the 

 farmer in question made a number of small purchases through- 

 out the year, each of which caused a debit to Household and a 

 credit to Cash. Similar examples in the reduction of the number 

 of entries might be cited for General Expense items, Labpr 

 items, products consumed by the household, and other simple 

 transactions in which sufficient drill has been given in problems 

 of the preceding chapters. 



