Accounting in farming
What does GAAP stand for?
"Generally Accepted Accounting Principles"
When are records ONLY useful?
When they are useful.
balance sheet
shows assets, liabilities and equity
Enterprise budget
covers only income and costs associated with a single enterprise
Financial accounting standards board
Why are records important?
Income statement
income and expenses for a given period
Partial budget
covers only the costs and income that will change as a result of the decision that is being considered.
What does FFSC stand for?
Farm Financial Standards council
What are the purposes of a budget
Used as a guide when carrying out a plan, and shows yourself and others that your goal is working.
Statement of cash flow
all money coming in or going out during a time period
Cash flow budget
an estimate of cash to be received vs. cash to be used to pay bills, make investments and cover other needs.
Why was the FFSC formed?
due to the debit crisis in agriculture during the 1980s.
What records should be kept?
Tax forms, management decisions, credit and investments.
Statement of owner equity
reports the factors that have caused the owner's equity to change between one balance sheet and another.
Variable expenses
Changes
ex: seed, fuel, chemicals, feed
What is used most widely in farm accounting systems?
FFSC
What are the budgets three main parts?
Revenue, expenses, and income.
Operating budget
covers all expected income and expenses for a family, a farm or a business for one year.
Fixed expenses
Does not change
Ex: Land taxes, depreciation interest