Wisconsin bankers' farm bulletin
Wisconsin bankers' farm bulletin. Bulletin no. 6: business methods on the farm PDF (1.0 MB)
MILESTONES IN FARM BUSINESS, OR ANNUAL INVENTORIES. By the Department of Economics, Colege of Agriulture, University of WIsconein. An inventory Is a statement showing in detail the value of land, buildings, livestock, equipment, produce, cash on hand ahd in the What Is an Inventory? bank on the date of inventory, together with the amounts of all notes and bills that others owe to the farmer as well as those that the farmer owes others. An inventory shows, first, the farmer's total investment, second, his net worth, third, how much his net worth has Increased or decreased during the year. The total investment is determined by adding Why take an ifventaryt together the values of the various cksea of property. On this investment the farm must Day a fair rate of interest befe there is an return for labor. It is often desirable to know how much of the total ceital is invested In horses, land, buildings, etc., and by a proper grouping of the hna property the annual inventory will furnish the most excellent material for such study. In case there are no debts, the net worth will be the same as the total investment; but on farms where there are debts these mwst be subtracted from the total investment. By comparing the net worth of the inventory at the beginning of the year and the net worth of that at the end of the year, the farmer can see how mach he has gone ahead or dropped behind. Besides furnishing the farmer and his family a living, the increase or de- crease in the net worth is what the farm has given in return for labor and the use of captal. To be able to determine how much one has gained or lost during the year is of great importance, and the value of this information lone will more than repay the farmer for the time spent on the inventory. it is a com- mon mistake for all those who do not take the inventory to look at the amount of available cash as a gauge of their business success. This is a grievous mis- take for fluctuations in cash mean practieally nothing. A gain of $1,000 in cash at the end of the year may simply mean that some of the property on hand last year has been turned into cash. On the other hand, a decrease of $1,000 may mean that what was cash last year appears now in the form of a hew building or some other improvement. An annual inventory will also be of material assistance in adjusting a loss by fire-should buildings, or contents, be burned. For Wisconsin the time of taking an inventory will vary between January 1 and April 1, preferably March 1. The exact date will depend on the location of the farm and the type of farming. On a poultry Time of taking Inventory. farm the most convenient date is in the fall; where- as on dairy and stock farms where there Is likely to be a great deal of feed on hand earlier in the year it might be advisable to postpone this work until later in the winter. For best results the inventories ought to be taken on the same date each year, and, hence, it Is advisable to choose a date that is early enough to make it possible to get this work done before field work begins even during years of early spring. 4 1.
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