i66 Farm Accounts, Profits, and Costs. [may, 



on the farm as the means of production for that farm. They are 

 to that extent fixed or permanent or capital assets, and in their 

 present or equivalent form they must always be employed 

 on the farm while its present system of farming is continued. 

 They will be referred to as " fixed assets." They are the 

 property with which the farm is carried on, and the essential 

 point to remember is that they are retained for production 

 purposes, and are not intended to be sold. 



{d) Circulating. — The other class is represented by the crops 

 and five stock held for sale, miscellaneous stores of fertihsers, 

 feeding stuffs,' etc., and tillages. These are primarily meant 

 to be sold and are not intended to remain on the farm. Some 

 of the crops may be sold, not as crops, but in the form of the 

 live stock to which they have been fed. 



The first class has already been termed the fixed assset, 

 and these may be correspondingly termed the floating " 

 or " circulating " assets, in that they are always circulating, 

 i.e., when they are sold they are turned into cash — this cash 

 in turn is used to purchase other five stock or to produce 

 other crops and stock — these in turn will be again converted into 

 cash, with which crops and stock will be again produced — 

 and so the process continues during the whole tenancy. 



(e) Alternative Bases of Valuation. — There are alternative 

 bases on which the valuation may be taken, which need con- 

 sideration. 



All, or any, of the items in the valuation may be taken at 

 cost price, or market price, or at something under market price, 

 or at a fixed price, or on some other basis. 



I will deal in detail with two of these — the Cost Basis, and 

 the Market Basis. 



(/) Cost Basis. — By this method all the live and dead stock 

 is carried forward in the accounts at its cost price until it is 

 disposed of. The profit on any sale does not therefore appear 

 in the accounts until the sale occurs. Until that time the move- 

 ments of the market, whether up or down, are ignored in the 

 accounts. This method corresponds most closely to those 

 addpted by industrial concerns. It avoids the difficulties 

 which are apt to occur, when market prices of unsold stock are 

 put into the accounts and the market falls before they are 

 ready for sale. But whatever merits this cost basis may possess 

 very few farmers are able to adopt it, as the necessary informa- 

 tion as to the cost is not available. 



