FARM ACCOUNTING 



11 



OPENING THE LEDGER 



It has been determined that accounts will be kept with each of the general divisions 

 of the business named before. Enter the titles in the general ledger, one page each, reserv- 

 ing page one for the proprietor, and opening the other general accounts, giving Cash page 2, 

 Merchandise 3, Real Estate 4, Chattels 5, Dairy 6, Teams 7, Hogs 8, Poultry 9, Orchard 

 10, Labor 19, General Expense 20. (Reserve pages 11 to 18 for crop accounts that will be 

 opened later in the year.) Enter the accounts with notes and persons beginning with Notes 

 Payable in the second division of the ledger, on page 21, giving one page to each account. Be 

 careful to index all accounts. / 



Post the proprietor's credit on page 1. Likewise post Real Estate, Chattels, and Cash 

 to the respective accounts, using the explanatory space in each instance. 



When the financial accounts are posted, the explanatory space should be freely used 

 describing notes and the itemized debits and credits of the accounts with persons. An ac- 

 count with a person should be self-explanatory, so that any discussion relative to it would 

 not, as a rule, require reference to the original eqtry. 



Post all accounts in the opening entry. 



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1 



THE TRIAL BALANCE 



A continuous trial balance book is used. This book contains the account titles at the left 

 with columns at the right for the monthly trial balances of a year. In entering the titles, fol- 

 low the order in the ledger, and leave blank spaces for such pages as are not used. Notes 

 Payable, the first of the financial accounts, would be written on line 21 of the trial balance, 

 and lines 7 to 20 would not be required in the opening trial balance. 



After entry, if the trial balance proves, you may consider the books opened. 



USE OF THE GENERAL ACCOUNTS 



An understanding of the use of the general accounts (those on pages 3 to 20) is essen- 

 tial. Study carefully the following facts. 



Merchandise. Every salable or usable thing produced on the farm (for example, corn, 

 hogs, wheat, fruit, milk, eggs), is charged to this account as soon as the farm process of 

 preparing it is completed. It is then to be disposed of and when so disposed of, Merchan- 

 dise account is credited. Merchandise is the trading account of the farm. 



Real Estate. The cost of the land, buildings and other permanent improvements and 

 any labor, cash, or property expended upon it is charged to this account. Real Estate is cred- 



