The Osceola times., 1885-08-08
FARM FINANCE
How Farm Accounts should BE K...
and What Elements of Caleulatlon p''
should BE Considered.

"ii' reports OF farm
transactions relating to money. H.
seem to be certain faults which So.
from lack of knowledge of the MIS-
ciples of finance: capital owned !, con
founded with capital borrowed in,n.
est with profit, and wages with nros,
These mistakes lead to confusion TS.
greatest pains may be taken to arrivo :.
just conclusions, but if care is NOT tste'
to give each account its proper posi,ion
or value, the result, on paper, win Off,
be at variance with the reality. hsra
seen printed reports of farm cron .o
counts from which, after the closas,
study, | could not arrive at conclnsio.s'
The accounts were jumbled. and tho 80
suits misleading. The foundation .,
every mans business is capital Tbs
result Of the proper use of capital i
profit. The cost of the means of arriy'
ing at this profit is wages. II capital !.
borrowed, or land rented. the cost q,
the use of either is called interest q,
rent. The two are exactly similar. In.
terest is rent paid for the use ~
money Of the two, rent is generanv
less than interest, because land is safe,
in sn other persons hands than money
tits generally from the improper use a
interest, that confusion arises in ac
counts. Interest should never enter into
an account at all. 1t should be used
only on the outside, as it were or
(more plainly after the account is com.
pleted. We must remember that "a
make an account exact, only actual
value and cost must enter into it. In.
terest bears no relation whatever TO the
account, but only to the capital invested
that is, interest is neither part of the
value nor part of the cost, but onlya
part of the profit, and as such should be
considered. What has been said Of in.
terest will also apply to rent.
Briefly, farm bookkeeping may be
divided into two classes-business ac.
counts and crop accounts. BY the first,
we ascertain the gain or loss on our can.
ital invested. In this will appear al
real ard personal accounts; all actual
business transactions, and thus all
moneys paid for rent, interest, taxes,
labor stock. etc. Be sure never to al.
low anything but actudt business trans.
actions to enter into this account II
no land is rented, there will be no rent
account; il no money is borrowed or
lent, no interest, and so on. Make no
charge for your own labor, or for any
member of your family-your living,
family keep and profits are your pay
1t is altogether unnecessary to keep &C.
count of hay, grain, straw, etc. grown
and fed upon the farm. The returns for
these will be found in the increase in
value of the stock and manure. (0i
course all feed and manures purchased
will come into the accounts). Neither
is it necessary to make charges for any
thing grown on the farm and used 10
the family, for reasons as obvious.
Open these accounts by taking stock Of
everything you possess at a fair market
value. Add any notes or accounts ow-
ing to you, and cash on hand; subtract
all notes or accounts owing by YOU.
The result viii represent your capital
Open accounts for grain, implements
and stock. charging only actual trans
ections in each; keep separate accounts
for labor, interest. expenses, etc. At
the end of the year, take stock again,
balance your books, and the difference
between your stock at the end, and nj
the beginning of the year will represent
| your loss or gain. lupractice it is unnec.
essary to take stock of household furni.
/ ture, clothing, or even goods or produce
/ on hand that are 10 be used In the fam.
lily, as these are not part of your busi.
/ ness investment, and are practically the
same at any time. All small articles
/ about the house used in connection with
milk, etc, must be taken into account
as well as everything used in connection
with the farm, such as feed and imple-
mentS.
In the crop accounts, the capital in.
vested on the crop value of land, seed
and manure). wages (cost of working
land, putting in, taking off and market
ing crops) and taxes represents the debit
side, or actual value of investment plus
the cost. The credit side or actual val.
ne of returns. is represented by the val.
ne of land, manure left in land, and
market value of crop. The difference
between the debit and credit represents
the loss or gain. Neither rent or inter.
est has anything to do with this account
The reason for this will be plain, if we
consider why these accounts are entered
into. We keep an account with a crop
that we may ascertain whether that par
ticular crop pays or not. The transac'
ton is exactly similar to one in trade OF
manufacture. The price of the land i
represented by the cost of raw material
TO the manufacturer, and the wholesale
cost of the traders goods. The means
taken to arrive at n profit in either case
are exactly similar Again, the profit
on crop depends more upon the seed,
manure and labor used, than upon the
value of the land; we may so use the
land that it will return no profit what
ever. II we own the land, the land,
seed and manure represent our capital
invested; and the profit represents the
percentage made upon the capital II
we hire the land, our capital Is repre-
sented by seed and manure only; there.
fore the rent represents that share OF
the profit which belongs to the owner Of
the land, and should be deducted IRON
the profit, and not added to the cost
If money is borrowed TO purchase seed
and manure, IL is clear we can have no
capital, and therefore no profit, IL
there does appear profit, il is false; u
is not profit, but wages. Here is the
cause of hard times among the tenant
farmers. They do not consider enougn,
the relation between capital, wages ana
profit. Cor. Country Gentleman,
A delicious Condiment"