38 



BULLETIN 994, U. S. DEPARTMENT OF AGRICULTURE. 



DISTINCTION BETWEEN "COMPLETE COST ACCOUNTING" AND "FARM RECORDS." 



Many persons interested in the farm business are inclined to con- 

 fuse the keeping of ordinary farm records with detailed cost account- 

 ing. Most of the agricultural colleges, in cooperation with the 

 extension agencies of the United States Department of Agriculture, 

 have prepared farm record books for the recording of inventories 

 and cash accounts for individual farms, and recently these have 

 been used extensively in the making up of the income-tax state- 

 ments required by the Federal Government. Keeping such records 

 is a most important step in the business operation x>f the farm, but 

 it should not be called "complete cost accounting," nor should it 

 be implied that the farmer will know the cost of producing his 

 separate products by the keeping of such a book. 



The farm inventory and cash account will give the farm receipts, 

 the farm expenses, farm income, labor income, the net worth, the 

 interest earned on investment, and other figures that are very 

 important to the farmer. Cost accounting goes considerably further 

 in that it includes the labor record, feed record, production record, 

 and the summarizing of the data at the end of the year so that each 

 productive enterprise bears its share of the overhead or general 

 farm expense. One is relatively simple and the other is so complex 

 that few farmers can afford to give the attention necessary to keep- 

 ing a set of detailed cost accounts. It is believed, however, that 

 every farmer would find it advisable to keep a simple farm record 

 book. 



To illustrate the wide difference in the results obtained by the 

 detailed cost-accounting method as compared with the common 

 farm record book, the following comparison is made : 



Results obtained from sim- 

 ple farm records. 



1. Total profit or loss. 



2. Total receipts, ex- 



penses, farm income 

 and labor income. 



3. Distribution of receipts 



and expenses. 



4. Total capital. 



5. Total net worth. 



6. Income-tax statement. 



7 . Crop acres per man and 



per horse. 



8. Receipts per acre .and 



per animal unit. 



9. General distribution of 



farm area. 



Results obtained from detailed cost-accounting studies. 

 (Other than those given for simple farm records.) 



1. Relative profitableness of enterprise. 



2. Distribution of capital, income, cost, and profit or 



loss by enterprises. 



3. Relative importance of the elements of cost. 



4. Labor requirements of enterprises. 



5. Distribution of labor by days, months, and seasons, 



and by enterprises. 



6. Utilization of various sized power units by operation. 



7. Comparative cost of operation of various forms of 



farm power. 

 S. Utilization and working life of farm implements. 

 9. Cost of maintaining farm work horses. 



10. Quantities of feed consumed per head by seasons by 



various classes of stock. 



11. Productivity of live stock. 



12. Length of working day, by individ uals, by seasons. 



13. Yielding qualities of the soil. 



14. What the farm contributes to the family living. 



15. Utilization of farm area by measured acreages. 



16. Arrangement of fields and farmstead. 



