terms
Operating budget
covers all expected income and expenses for a family, a farm or a business for one year.
What budget is usually best
Conservative budget
What are two main purposes of a business budget
Used to prove to yourself and others that your plan has a good chance of working
Used as a guide in carrying out your plan in a way that will improve the chances that it will work.
Why are records important
Records can be useful in making and updating a business plan.
Enterprise budget
covers only income and costs associated with a single enterprise (corn crop or hog enterprise).
What are the three major sections to a budget
Revenue - from all sources
Expenses - fixed and variable
Income
Calculating revenue
Multiply the selling price per unit times the number of units sold.
What does the GAAP stand for
Generally Accepted Accounting Principles
Partial Budget
covers only the costs and income that will change as a result of the decision that is being considered.
Variable expenses
Linked to production: seeds, chemicals, fuel, etc
Calculating Expenses
Total expenses are obtained by adding up all the listed expenses.
What does the FASB stand for
Financial Accounting Standards Board
Cash Flow Budget
an estimate of cash to be received vs. cash to be used to pay bills, make investments and cover other needs.
Fixed expenses
Occur regardless of production: Land taxes, depreciation, etc
Calculating net income
What you have left after subtracting expenses from income.
What does the FFSC
Farm Financial Standards Council
Budget
an estimate of expected costs and returns for a specified time period into the future, usually a year.
What are three basic uses for records
Completing tax forms
Making management decisions
Acquiring credit and investments