Introduction

• Farm inventory is the list of all the physical property of a business along with their values at a specified date.
• It includes a complete listing of all that a farm owns and owes at a particular date, generally at the beginning and at the end of each agricultural year.
• As regards, the date for the preparation of inventory, two things are important i.e.

i) Lesser needs of price estimates- this period should be one when most of the farm produce to the year has been sold and most of the supplies and feeds on hand are exhausted.

ii) Convenience- in free time or a period when where there is little essential work to be done should be chosen for farm inventory preparation.

• Farm inventory includes not only the listing of physical assets but also values of all such assets, liabilities and debts as well. The farm inventory is a necessary step in complete farm accounting.
• It helps to work out the measure of income and depreciation costs. It is also the basis of income statement.