Income Statements Flashcards
Income Statements
record of revenues and expenses over a period of time
finds profitability
Income =
Revenue minus Costs
If you made money last year, it is called…
Profitability
Revenue
farm business only
cash and non-cash
Cash Revenue
Anything you get a check for
- crop sales
- feeder livestock
- crop and livestock product sales
- government payouts, crop insurance
- byproduct sales
Non-Cash Revenue
- Inventory Changes in commodities ready for sale (raised breeding livestock giving birth)
- Accounts receivable (ending balance - beginning balance)
- Trades
- Custom Harvest
Cash Expenses
account for all business expenses incurred during the period
- operating expenses
- changes in accounts payable
- depreciation
- purchased inputs
- labor and services
- repairs and maintenance
- property taxes, insurance
- interest expenses on loans
- everything you buy FOR THE FARM
- DO NOT INCLUDE principal payments on loans
Non-Cash Expenses
- Depreciation
- Accounts Payable (accrual adjustments
Prepaid Expenses
record in current year for prepaid expenses you paid last year if being used this year
- put expenses into the year in which they are used
Accrual Adjustments
To be made at the end of each year
Cash Receipts:
- change in inventory values
- change in accounts receivable
Expenses:
- cash interest paid
- property taxes paid
- income taxes owed
- accounts payable
- accrued expenses
FFSC recommendation for Accrual vs. Cash
Cash Accounting with Accrual Adjustments at the end of each year
Net Farm Income from Operations (NFIfO)
Total Revenue - Total Expenses
production alone (not investment or management)
Where does gain/loss net gain from sale of capital assets go?
Net farm income
Total Revenue - Total Expenses +/- capital gain/loss
Adjusted Net Farm Income from Operations
Net Farm Income from Operations PLUS interest expense
Return on Assets
Adjusted Net Farm Income from Operations - opportunity cost of unpaid labor - opportunity cost of management
