170 



Farm Accounts, Profits, and Costs. [may, 



generally conceals a loss (perhaps an expected and necessary 

 loss) on one or more departments. 



How to Obtain Cost Racordt. — One of the main objects of cost 

 records is to show separately the cost, and profit or loss result, 

 of each crop and class of stock, etc., and the records are obtained 

 as follows : — 



Part of the information from which these cost records 

 may be prepared will already appear in the financial accounts, 

 but some additional work is necessary. 



1. The various expenses are split up and charged to 

 the branch in respect of which they are incurred. Thus 

 wages, according to its employment, will be apportioned 

 to the various crops, live stock, etc. 



2. Effect IS also given to certain transactions that do not 

 appear in the Cash Book. These are various internal " 

 transactions, not involving money payment, in respect 

 of mutual services rendered by one branch of the farm 

 to another, e.g., home-grown crops fed to the stock, 

 labour of work horses on the crops, manure produced by 

 the live stock for use on the land, etc. 



3. Certain of the expenses {e.g., for cleaning land and 

 for certain manures), the benefit of which extends over 

 more than one year or crop, are divided over the various 

 crops as accurately as possible, according to the benefit 

 which each receives. Suitable forms are used to record 

 these " internal " transactions, the most important of 

 which are the daily employment of the labour, and the 

 consumption of the farm produce by the stock. 



In rough, broad outlines, this is how the cost of each crop 

 and class of live stock is ascertained. The corresponding 

 income of each branch is known and the difference is 

 the profit or loss. The aggregate amount of these profits 

 or losses should agree with the over- all profit in the financial 

 accounts. 



Farm cost records require care, and while the regular records 

 to be kept through the year are fairly simple, the closing work 

 to get at the final cost is more difficult. The natural harmony 

 of the rotation introduces difficulties, as does the analysis 

 of the " internal " transactions between the different branches 

 and the rotation course, and questions of principle arise which 

 affect the basis of the cost records. 



It must be admitted that many farmers have not the requisite 

 time or ability to keep costs without assistance. But if, as is 



