1920.] Farm Accounts, Profits, and Costs. 



169 



to be included with the other annual expenses, while in another 

 case the part of the increased cost arising from tlie better 

 quality or improved type may be regarded as an addition 

 to the capital value of the equipment. 



A^ain, continued high farming would add to the value oi 

 the farm, though this increasing value would not be shown in 

 the accounts, as each year's cost of cultivations, fertilisers, 

 etc., would be treated as expenses of the year. 



5. Household Transactions. — Another difficulty in arriving at 

 the final figure of profit or loss on the farm is the dovetailing 

 of the farm transactions with those of the household and the 

 farmer personally, owing to the extent to which the farm is 

 used and worked by the farmer and his family. 



These transactions do not involve the payment of cash,, 

 but in order to obtain accurate profit results, some at least 

 of them should be given effect to in the accounts. Certain 

 farmers may also desire to include with the expenses interest 

 on the capital employed on the farm, before striking the final 

 figure of profi.t. 



Private income and expenditure, received and paid in cash, 

 should always be excluded from the farm Profit and Loss 

 Account. 



It vdW be seen that in settling the profits quite a number 

 of questions of principle, as well as matters of valuation and 

 estimate and personal opinion, have to be considered, and that 

 consequently the determining of profits is a matter of real 

 difficulty, which affords scope for wide variation of treatment 

 and on which honest differences of opinion may exist without 

 improper motives or ulterior objects being imputed. 



FARM COSTS. 



To distinguish these cost records from ordinary farm accounts, 

 they may be defined as the detailed records showing the cost 

 and result of each branch of the farm, as distinct from the 

 ordinary farm financial account, which shows the profit or 

 loss on the working of the farm as a whole. 



The usual form of farm account does not show the profit 

 or loss of each branch of the farm. Each item of expense 

 appears in one total without showing which branch of the farm 

 has received the benefit, and the final figure of profit is tlic 

 over-all profit of the farm as a whole. This inclusive profit 



