FARM ACCOUNTING 



PREPARATION 



It is assumed at the outset that the student is familiar with ordinary business papers and 

 legal forms. Among these are included the note, check, draft, receipt, bill or invoice, bank 

 book, deposit ticket, statement of account, duplicate order and other carbon duplications, let- 

 ter, envelope, R. R. bill of lading, R. R. expense bill, stock certificate, telegram, C. O. D. 

 form, lease, common agreement, bill of sale, deed, mortgage, release of mortgage, insurance 

 policy, proof of loss, etc. There are few, if any, general business forms that will require par- 

 ticular attention in a study of this kind. 



In bookkeeping the student is expected to know the double entry principle and to use 

 it in the common books of original entry, together with posting, trial balance and financial 

 statement. It is desirable that he be able to introduce special columns where needed. Some 

 review in the methods of transferring department statistics to general accounts would also 

 be in order. These matters can be gathered from the general treatment in this set but its 

 practical value would be enhanced if the attention is not diverted from the problem actually 

 in hand. 



OBJECT 



The objects to be emphasized in this set are (1) an exhibit of the cost of producing each 

 of the farm products, (2) the returns derived from their sale or use, (3) the general value 

 and progress of the business. These facts should be placed in such form as to render 

 convenient comparison from year to year. 



THE LEDGER 



This book is divided into two parts — the first, for general accounts, including an account 

 with each department of farm industry considered ; the second, including accounts with notes 

 and persons. It should be a book large enough and well enough bound to last on an 

 ordinary farm for a period of ten years. The standard double entry ledger ruling is used, 

 as the explanation column in it allows room for the memoranda that should accompany prac- 

 tically all entries. 



TRIAL BALANCE BOOK 



A continuous trial balance (one with titles to the left and several sets of debit and credit 

 columns for successive trial balances to the right) is used, in which are recorded the trial 

 balances taken on opening the books and thereafter on the last date of each month. 



JOURNAL 



A six-column journal is used for all current entries. This book has special debit and 

 credit columns for cash receipts and payments, also merchandise cost and returns. (It will 

 be noted that the Merchandise account represents all finished product in marketable condi- 

 tion.) The journal also holds the distribution of labor, team use, and product. These items 

 are summarized monthly and charged or credited through the journal to the departments 

 affected. 



SUMMARY BOOKS 



The essential summary books are three in number : One having columns each for every 

 department requiring manual labor, called the Labor Summary; one having columns for the 

 departments requiring the use of teams, called Team Use Summary; and one having col- 

 umns for each division of production having regular output, called Product Summary. Each 

 of these books has a miscellaneous column for entries of unusual labor service, team service, 

 or source of product. 



The distribution of above essentials is made daily in the summary books. The daily 

 items are footed monthly and carried to the ledger accounts affected as above explained. 



The sales summary may be used for original entries like the other summary books, if sales are active 

 as they would probably be when garden truck is scld. In such case, sales on account can be posted from the 

 sales summary without entry in the journal, except in totals at the close of the month. 



