16 BULLETIN 1150, U. S. DEPARTMENT OF AGRICULTURE. 
At the end of the month, the totals of all the columns are brought 
down on the same line and are carried forward to the end of the 
year. However, in preparing the statement of resources and liabili- 
ties at the end of each month, the balances in the different accounts 
should be determined and only these used. (See statement of re- 
sources and liabilities for November 31, 1921, on p. 49.) 
INFORMATION NEEDED TO DETERMINE THE BUSINESS STANDING. 
The records of many associations go no further than the prorating 
sheet, and information as to their business standing or the condition 
of their different accounts is not available. It is necessary, if proper 
accounting is to be done, that the results of the individual shipments 
be accumulated until the final reckoning at the end of the fiscal 
period, or oftener. As the estimates for insurance and overhead 
expenses are often intentionally made high or low, this final reckon- 
ing will reveal the excess or deficiency of such estimates and bring 
to light other items which may have been overlooked. Proper dis- 
position can then be made of the excess reserved, or provision made 
for taking care of the deficiency. : 
Furthermore, every association transacts some business which has 
reference to no particular shipment. Equipment is bought, claims 
are collected, money is borrowed or a note paid, office supplies are 
purchased, the premium on the manager’s bond is paid, or farm 
supplies are shipped in. These transactions affect the standing of 
the business just as much as those which relate directly to specific 
shipments. 
All of the business transacted, whether it affects cash or property, 
debts, reserves, expenses, net worth, or what not, should therefore 
be brought together and classified according to the accounts affected. 
Only when this is done will the association be able at all times to 
answer the question, “ How do we stand?” with any degree of assur- 
ance that it is answered correctly. 
The business standing of an individual or a business concern is re- 
vealed by the statement of resources and liabilities. In the case of 
a farmer purchasing a farm for $50,000 and paying $30,000 in cash 
and giving mortgage notes for $20,000, the statement of resources and 
liabilities would appear as follows: 
Resources. Liabilities, 
| DENS £77 1 CRASS aS Eas pou, 000: | Notes: payable +3. = $20,000 
Net: worth...) oe ee ee 
Owner’s investment__________ 30, 000 
50, 000 50, 000 
This statement shows, first, that the farm business, as a unit in 
itself distinct from the owner, is in the possession of property valued 
at $50,000. In the second place, the statement shows the kinds and 
the amounts of the different equities in the business. Note holders 
have a prior claim of $20,000 against the undivided property of the 
farm business. The remaining §3.0,000 represents the owner’s equity. 
If the owner had invested $40,000 instead of $30,000, the other 
items (value of farm and the indebtedness) remaining the same, the 
owner’s claim against the business would be worth only 75 cents on 
the dollar, as there would be only $30,000 left after paying the note 
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