1920.] Faru Accounts, Profits, and Costs. 165 



in these cases varies. Sometimes the work is carried forward 

 at cost and no profit is shown in the accounts until the building 

 is completed. Or, again, some proportion of the profit may 

 be taken credit for in each of the three years of construction, 

 according to the progress of the work. But any >uch anticipa- 

 tion of the final profit is generally made on a most conservative 

 basis. The comparison with the farm cattle difters in this 

 respect, viz., that the contractor knows the final price he will 

 receive on completion of the work, while the farmer does not 

 know how the markets will stand when his stock is ready for 

 sale. There is consequently greater need for him to be cautious 

 in taking credit for any intermediate profits. 



Again, expenditure may be incurred, the beneficial results 

 of which will last for more than one year, such as laying hedges 

 or drainage work. This outlay in ordinary cases should be 

 written off in instalments over the period receiving the benefit. 

 The benefit of cleaning the land and applying manures lasts 

 for more than one year, but if the rotation is steady and the 

 same cultivation and manuring is followed, these matters will 

 average out. 



2. Valuation. — {a) Introductory. — As the farm is a going 

 concern, there are at the end of any year a number of unfinished 

 transactions. Many of the difficulties in arriving at a proper 

 figure of profit would disappear if all the transactions had been 

 completed and realised or paid in cash (say at the close of a farm 

 tenancy). In practice this is impossible. All the operations 

 of raising and selling the produce are going on continuously. 

 The final results of these operations cannot be ascertained 

 until they are realised in cash, and in the meantime the}- have 

 to be valued, for the purpose of making up each annual account. 

 This element of valuation is one of the chief factors involved, 

 and there is wide scope, not only for differences of personal 

 opinion, but also for difterent methods and principle to be 

 applied in making ihe valuation. 



(6) Two Classes of Stock. — The various items of live and dead 

 stock that are the subject of valuation at the end of each 

 year are not all of the same character, and are not meant to 

 serve the same purpose in the farm econom3\ This may affect 

 the basis on which the two classes of stock are brought into the 

 Accounts. In general terms, two distinct classes of stock are 

 generally included in the valuation, which may be termed 

 " Fixed " and " Circulating." 



(c) Fixed. — Machinery and implements, work horses, breeding 

 stock, etc. These are not intended to be sold but to remain 



