A SYSTEM OF ACCOUNTING FOR COTTON GINNERIES. 3 
The cost of such an audit may seem prohibitive to some of the 
smaller organizations. However, this expense may be somewhat 
reduced by the formation of a cooperative auditing association, such 
as is now in existence in some sections of the country. It is strongly 
recommended that an audit of the kind referred to above should be 
made at the close of the fiscal year. 
Part I.—REPORTS THE MANAGER NEEDS. 
BALANCE SHEET. 
The investigations made by the Bureau of Markets have disclosed 
the fact that many cotton ginneries have never made either an income 
and expense statement or a balance sheet. A model of each of these 
forms is therefore shown. The arrangement of balance sheet shown 
herein conforms to that suggested by the Federal Reserve Board and 
is recommended as a simple yet comprehensive exhibit of the financial 
position of the company. The management should very carefully 
study the statement of one year as compared with another, noting 
particularly the increases and decreases in such important items as 
Notes and accounts receivable, Inventories, Depreciation reserves, 
Notes and accounts payable, Surplus, and Total net worth; also, the 
relation of Total current assets to Total current labilities, which 
should be approximately 2 to 1, if the organization is in sound finan- 
cial condition. 
