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Wisconsin bankers' farm bulletin

Wisconsin bankers' farm bulletin. Bulletin no. 6: business methods on the farm PDF (1.0 MB)

                     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
What Is an Inventory? bank on the date of inventory, together with the
                       amounts of all notes and bills that others owe to
farmer as well as those that the farmer owes others.
   An inventory shows, first, the farmer's total investment, second, his
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
interest befe there is an return for labor. It is often desirable to know
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
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
of the inventory at the beginning of the year and the net worth of that at
end of the year, the farmer can see how mach he has gone ahead or dropped
    Besides furnishing the farmer and his family a living, the increase or
crease in the net worth is what the farm has given in return for labor and
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
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
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
and April 1, preferably March 1. The exact date will depend on the location
                           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
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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