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Simple Cost Accounts for Farmers. 



[June, 



SIMPLE COST ACCOUNTS FOR 

 FARMERS. 



Sir a. Daniel Hall, K.C.B., F.R.S., 



Chief Scientific Adviser to the Ministry. 



At the present time farmers may find it advisable to pay 

 Income Tax upon profits under Schedule D rather than under ' 

 Schedule B, in which case it is necessary that they should adopt 

 some system of account keeping. It is possible indeed that 

 Schedule B may be withdrawn. The most desirable system of 

 book-keeping is one based upon " costs." Not only does it 

 obviate the danger of the farmer being called upon to pay tax 

 upon profits he has not realised, but it can be made of great help 

 in the conduct of his business because it makes clear what the 

 various parts of the business are contributing to the final result. 

 It is often objected that farming must be looked at as a whole, 

 that the flock and the bullock feeding are so bound up with the 

 corn growing that one can neither say how much one makes in 

 comparison with the other, nor change the way of farming to 

 correspond with the estimated profits or losses. No great diffi- 

 culty will, however, be found in separating the costs of the main 

 items of the business of a particular farm, like the corn growing, 

 the milch cows, the flock, &c., and the farmer who is persistently 

 confronted by a loss in one department will not be long before he 

 finds a more profitable way of conducting that part of his business 

 and exchanging it for some other. The great point of cost 

 accounting is the power of control vrhich the farmer obtains by 

 thus seeing how the various items which go to make up the busi- 

 ness of a farm are each of them answering. 



Again, a cost account gives a much sounder statement of the 

 results of the year's working. ITnder the ordinary system of 

 book-keeping a valuation has to be made at the beginning and 

 end of the year, and these valuations are combined with receipts 

 and expenditure to make up the profit and loss account. The 

 valuations introduce two sources of error. The quantities of 

 produce like corn may be incorrectly estimated and the values 

 attached may never be reahsed. Again, the valuation confuses 

 stocks which are only used as " plant " and are not meant for 

 sale with the produce of that plant. For example, between 

 Michaelm_as. 1919, and Michaelmas, 1920, the valuation of the 

 ewes in a breeding flock had appreciated by something like £S 

 a head. Unless the farmer is meaning then and there to dispose 



