Transcript A Positive Cash Flow Does Not a Profit Make!

A Positive Cash Flow Does
Not a Profit Make!
The Income Statement
The Accrual Adjusted Income
Statement
Revenues
Livestock and crop sales
Changes in inventories
Government payments & other farm income
Gain/loss from sale of culled breeding stock
Change in value due to change in raised
breeding livestock numbers
Accrual adjustments in asset accounts
Changes in Inventories
Market livestock
Raised crops/feed inventories
Gains/Losses on Sale of
Culled Breeding Livestock
Purchased breeding stock: subtract cost
basis from the sale proceeds
Raised breeding stock: subtract base
value from the sale proceeds
Change in Value Due to Change in
Raised Breeding Livestock Numbers
Number of head transferring from one
classification to another, e.g., replacement
heifers to cows
Differences in base values of the two
classifications
Accrual Adjustments (Assets)
Change in:
Accounts receivable
Prepaid expenses
Cash investment in growing crops
Supplies
Contracts and notes receivable
Investment in cooperatives
The Accrual Adjusted Income
Statement
Expenses
Purchased market livestock
Cash operating expenses
Changes in feed inventories
Accrual adjustments for liability accounts
Depreciation
Cash interest paid
Change in accrued interest
Accrual Adjustments
Changes in:
Purchased feed inventories
Accounts payable
Ad valorem taxes
Employee payroll witholding
Accrued expenses
Accrued interest
Depreciation
Straight line depreciation:
Cost - Salvage value
Years of life
Tax depreciation as a proxy
The Accrual Adjusted Income
Statement
Net Farm Income, Accrual Adjusted =
Gross Farm Revenues
Total Operating Expenses
Total Interest Expense
+/- Gain/Loss on Sale of Farm Capital
Assets
Gains/Losses on Sale of
Farm Capital Assets
Difference between the value for which
the items is sold and the adjusted basis
(cost minus depreciation taken)
What is the effect on net farm
income?
Increase in crop inventories?
Decrease in accounts receivable?
Increase in cash?
Decrease in accounts payable?
Decrease in prepaid expenses?
Increase in accrued interest?
Increase in notes payable?
Decrease in growing crops?