26 BULLETIN 994, U. S. DEPARTMENT OF AGRICULTURE. 
the charge for plant food consumed to a definite and practical basis. 
Soils are so variable in physical condition and soil theories are still 
so unsettled as to make it extremely difficult to set a standard 
which will be generally acceptable. Assuming that a charge for 
consumed fertility might be made against the crop, it is obvious 
that the account to receive the credit would be the land. This 
would mean making land values variable, according to the kind of 
crops grown. It can readily be seen that this would lead to great 
confusion. 
The fertilizer cost item illustrates the extreme variability that 
exists in the cost of farm products because of the great variation 
in soil types, farm practices, and fertility methods. Without more 
definite data than are now available it becomes dangerous to make 
arbitrary charges for the fertility removed from the soil. 
Interest. — Considerable difference of opinion exists as to the practice 
of including interest as a cost in farm-cost accounting. Commercial 
accountants are divided into two schools on this question and two 
procedures are followed in commercial accounting. Many authori- 
ties include interest for certain organization studies and omit it as 
a cost in arriving at conclusions on other lines. Cole 1 states that 
proper accounting is based primarily on the purpose served, and 
relates only secondarily to the object with which the expense chances 
to be identified. The principal purpose of farm cost accounting, from 
the standpoint of the farmer, is to provide figures that will make it 
possible to compare the costs and profits of competing enterprises 
on individual farms. Hence the inclusion of interest as a cost in 
farm accounting as a matter of fact is not contrary to the principles 
of commercial accounting if more profitable farming is the object. 
The use of capital, whether in the form of land, live stock, or 
equipment, whether' borrowed or provided from a surplus, is an 
element of cost in production that must be reckoned with and 
allowed for in any adequate accounting system. Statements of 
business men, economists, and at least a representative number of 
accountants confirm this practice in comparative analyses of various 
units of industry. 
Hatfield 2 clearly points out that where it is essential to determine 
whether capital shall go into a given industry or not, what is wanted 
is a correct estimate of the net income after deducting ail interest on 
capital and other items frequently excluded from cost accounts 
themselves. "The information necessary to show whether an enter-, 
prise is ultimately successful is very different from that which shows 
whether an enterprise once established should be continued.'' The 
comparison of farm enterprises in this connection clearly necessi- 
1 Accounts— Their Construction and Interpretation, by William Morse Cole, p. 114. 
2 Modern Accounting, p. 307. 
