A SYSTEM OF ACCOUNTING FOR COTTON GINNERIES. 3 



The cost of such an audit may seem prohibitive to some of the 

 smaller organizations. However, this expense may be somewhat 

 reduced by the formation of a cooperative auditing association, such 

 as is now in existence in some sections of the country. It is strongly 

 recommended that an audit of the kind referred to above should be 

 made at the close of the fiscal year. 



Part I.— REPORTS THE MANAGER NEEDS. 



BALANCE SHEET. 



The investigations made by the Bureau of Markets have disclosed 

 the fact that many cotton ginneries have never made either an income 

 and expense statement or a balance sheet. A model of each of these 

 forms is therefore shown. The arrangement of balance sheet shown 

 herein conforms to that suggested by the Federal Reserve Board and 

 is recommended as a simple yet comprehensive exhibit of the financial 

 position of the company. The management should very carefully 

 study the statement of one year as compared with another, noting 

 particularly the increases and decreases in such important items as 

 Notes and accounts receivable, Inventories, Depreciation reserves, 

 Notes and accounts payable, Surplus, and Total net worth; also, the 

 relation of Total current assets to Total current liabilities, which 

 should be approximately 2 to 1, if the organization is in sound finan- 

 cial condition. 



