2 BULLETIN 559, U. S. DEPARTMENT OP AGRICULTURE. 



A sound and adequate system of accounts is a prerequisite to good 

 management in every organization, and the adoption of a uniform 

 system applicable to the industry as a whole facilitates the inter- 

 change of ideas and affords comparisons and collections of data which 

 make for greater efficiency, saner competition, and sounder methods 

 throughout the entire business. An accounting system to be uniformly 

 applicable to both large and small units must be flexible enough to 

 satisfy the needs of all and yet simple enough to appeal to those 

 organizations which do not employ technical bookkeepers. The 

 system presented in this bulletin offers the results of careful study 

 and practical experiment in creameries operating under widely vary- 

 ing conditions. It is designed to meet the increasing need of country 

 creameries which are demanding an efficient and practical method of 

 accounting. 



TYPES OF CREAMERY ORGANIZATION. 



The types of organization found among creameries vary as widely 

 as do those of other marketing associations. Various influences have 

 prevailed to bring about these differences, among which may be 

 cited the preferences of individual outside organizers, the desire of 

 farmers for a free expression of cooperative theory, limitations 

 caused by local competitive or trade conditions, and the legal forms 

 of organization prescribed by State laws. None of these factors, 

 however, have operated to determine any form of organization on a 

 broad scale. Rather, they have brought about variations in the 

 types of individual creameries, even where these have been situated 

 in close proximity to one another. Forms of organization to some 

 extent influence the business relations of creameries to then patrons 

 and thus have a bearing upon the methods of keeping creamery 

 accounts. 



Among cooperative creameries, namely, those paying limited 

 stock dividends and distributing the balance of their net earnings 

 in the form of patronage dividends, the most favored form of organi- 

 zation is the stock corporation, with by-law stipulations limiting 

 the ownership of shares by any one member to a prescribed number 

 and distributing the voting power on the basis of membership rather 

 than on ownership of stock. In organizations of this type one vote 

 is allotted to each member. A few creameries are nonincorporated 

 associations, and still others, although incorporated, have no capital 

 stock and in some cases have even no stipulated form of membership. 



As a general rule the plan of organization of any association whose 

 operations require the ownership of properties should provide that 

 all capital be subscribed in specific, definite amounts, through the 

 purchase either of shares of capital stock or memberships of stipu- 

 lated value. This defines clearly the relative financial interest of 



