Research Progress Report 216 February 1966
Functional Accounting for Farm Management Decision Making
K. K. Caspall and L. M. Eisgruber Department of Agricultural Economics
INTRODUCTION
The Problem
The ever-increasing emphasis on sound managerial decision making which utilizes modern decision making tools has placed the development and use of farm accounting systems for agriculture into a new perspective. This new perspective and the need for the development of a suitable accounting system make it necessary to use knowledge and experience from several disciplines. The disciplines concerned are farm management, accounting, operations research, computer sciences, and economic theory. While considerable knowledge and experience have accumulated in these disciplines, they have not been integrated effectively. This is partly true because the various disciplines involved are either very young (operations research and computer science) or it was believed that they had nothing to offer each other (economic theory, accounting, and farm management).
Many agricultural colleges and several other institutions are presently making first
attempts at integrating these disciplines when they utilize electronic equipment for analyzing farm records. 1/ Most of these "mail-in” account projects are still in the developmental stages. Each project has a different orientation, depending largely on historical commitments of the various institutions. These commitments include service to farmers, business analysis, collection of research information, and county and extension specialist orientation. These projects constitute a step in the right direction. However, they do fall short of fulfilling the task of collecting the necessary data needed for effective managerial decision making, farm management research, and extension. Above ail, little thought is generally given to a flexible, integrated, easy-to-use, and economical system.
The Objectives
This study was concerned with the problem of analyzing basic requirements for an accounting system when viewed in the broad context of managerial decision-making, farm management education, and farm management research. An operational accounting system (including recording forms, reports, code,
1/ Donoth, John (ed.), "The Management and Educational Possibilities of Electronic Mail-In Farm Records Systems," Michigan State University, Department of Agricultural Economics, A. E. 896, East Lansing, Mich., November 1962.
PURDUE UNIVERSITY • Agricultural Experiment Station • Lafayette, Indiana