COOPEKATIVE MILK-DISTRIBUTTNG PLANTS. 29 



which quickly enables the various phases of the business to be ana- 

 lyzed and comparisons to be made, thus giving the best opportunities 

 for policies to be formulated for the greater success of the business. 



NECESSITY FOR ADEQUATE ACCOUNTING SYSTEM. 



Among the important causes of many business failures in recent 

 years, according to our large commercial reporting agencies, has been 

 a lack of accurate and detailed information concerning the business. 

 Inasmuch as the only reliable source of information concerning busi- 

 ness operations is the records kept of them, it would seem that the 

 importance of proper records as an aid to successful management is 

 deserving of more consideration than is ordinarily given the subject. 

 The importance is further emphasized by the statement of a certain 

 national trade association that 85 per cent of the failures in business 

 are due to inadequate bookkeeping. It is the unanimous opinion of 

 those who have made a study of the subject that a very decided im- 

 provement must be made in bookkeeping methods before any appre- 

 ciable decrease can be expected in the present heavy business mor- 

 tality rate. 



In cooperative organizations it is just as essential that adequate 

 and proper accounting records be kept as it is in private and cor- 

 porate enterprises. Aside from the question of success or failure 

 there are other benefits which may be derived from adequate account- 

 ing. Uniformity in the manner in which financial and operating re- 

 ports are compiled is of great importance. The true progress of a 

 business can be judged only by comparing the results of one year with 

 those of preceding years. Therefore, if it is desired to know the 

 progress that has been made, the reports must be comparable. The 

 reports are not comparable and can not be made so unless the records 

 have been kept on the same bases year by year and all the facts have 

 been recorded. Unless the system is truly adequate, some of these 

 facts are sure to be omitted and thus the entire report rendered worth- 

 less. 



The preparation of proper income-tax reports, cost statements as 

 a basis for selling prices, wage scales, and the whole operation of the 

 business depend upon information which can be secured only by the 

 use of an adequate system of accounting. 



But first it should be determined for a certainty that the system 

 is really adequate. A small number of forms, requiring little work 

 to keep them and purchased at a small initial cost, by no means con- 

 stitutes an adequate system of accounting. Any system is worthless 

 if it does not supply the information needed to conduct the business 

 properly. 



