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Keeping Ag Records

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Keeping Ag Records – PowerPoint PPT presentation

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Title: Keeping Ag Records


1
Keeping Ag Records
  • Road to FFA Degrees and Awards

Modified by Georgia Agricultural Education
Curriculum Office June 2002
2
Why are records kept?
  • Inflow and outflow of money
  • Determine earnings
  • Observe financial progress
  • Determine which enterprises are profitable
  • Income taxes
  • Management Decisions
  • Future Planning
  • FFA Degrees and Awards

3
What is a Budget?
  • List of anticipated income and expenses for a
    given period of time
  • Will the business be profitable?
  • Summarizes where money will be needed
  • Basis for business agreements
  • Information for securing credit
  • Standards for checking progress
  • Basis for business planning

4
When should a Budget be developed?
  • First step in planning an enterprise
  • Decision to carry out enterprise should not be
    done until budget is completed
  • Cover period of natural production (yr)

5
What is included in a budget?
  • Expenses
  • land or facilities rent
  • machinery
  • feed
  • seed
  • fertilizer
  • pest control
  • Income
  • sales of products
  • products used at home
  • Include both cash and noncash items
  • increase or decrease in inventory
  • used at home

6
Budgeting Practices
  • Use Current Prices
  • If prices vary, use highest cost, lowest income
  • Custom rates for machinery
  • Depreciate capital items (buildings)
  • Products used at home income
  • Self -labor not included
  • Change in inventory income or expense (which
    ever is appropriate)

7
  • Develop a budget for the following
  • 10 acres of land renting at 30/acre
  • 3 acre-feet of water at 5/acre-foot
  • seed at 5/cwt...... planted at 70/acre
  • Fertilizer at 2.20/acre
  • Machinery 2.50/acre
  • Pest control 4/acre
  • Sale of grain at 3/bu at 25 bu/acre
  • sale of straw at 10/acre
  • finance charges borrow 400 with 10 interest/yr
    for 6 months

8
Budget
  • Expenses
  • Rent 300
  • Water 15
  • Seed 35
  • Fertilizer 22
  • Machinery 25
  • Pest 40
  • Interest 20
  • Total Expenses 457
  • Income
  • Grain 750
  • Straw 100
  • Total Income 850
  • Profit 393

9
  • Develop a budget for the following
  • 10 feeder steers _at_300 each at70/cwt......
  • facilities rent 6 1/2 months _at_10/month
  • 20 hrs labor _at_ 4/hr
  • 9 tons hay _at_ 60/ton
  • 10 tons grain _at_ 80/ton
  • pest control _at_ 2/head
  • machinery cost _at_ 10/hr , 3 hrs
  • Sale 10 hd weighing 800 _at_ 85/cwt.......
  • sale 10 ton manure _at_ 3/ton
  • finance charge 2000 loan for 6 months _at_ 10
    interest

10
Budget
  • Expenses
  • 10 steers 2100
  • rent 65
  • labor 80
  • hay 540
  • grain 800
  • pest cont. 20
  • machinery 30
  • interest 100
  • Total Cost 3735
  • Income
  • steer sale 6800
  • manure sale 30
  • Total Income 6830
  • Profit 3095

11
What is a Business Agreement?
  • Lists responsibilities of each party involved
  • states how profits will be divided
  • states who will perform the labor
  • who will make managerial decisions
  • when and how expenses will be paid
  • provides a legal document should problems arise

12
When should a Business Agreement be developed?
  • After the budget is done
  • dates, names of all parties
  • kind, size, location, duration of enterprise
  • equipment, facilities, labor, financing
  • what student receives
  • what parent or other provides
  • financing arrangements
  • signatures

13
What is an Inventory?
  • itemized list of all personal and real property
    (assets) on hand at any time
  • assets items owned
  • Beginning Inventory
  • Ending Inventory
  • Ending Inventory becomes Beginning Inventory of
    next cycle

14
Value of an Inventory
  • used to determine Net Worth
  • may be only place where a profit appears
  • business management decisions
  • show change in resources
  • needed for credit
  • depreciation for income taxes

15
Inventory
  • Beginning Inventory complete after business
    agreement
  • Physical count how many?
  • Determine value
  • Current Market Value (if sold today)
  • Remaining Investment Value (depreciation)

16
What is depreciation?
  • Method of expensing capital items
  • Depreciable Assets have a useful life of more
    than one year
  • decrease in value
  • used in business
  • machinery, equipment, purchased breeding stock,
    buildings
  • Non-depreciable dont decrease in value (feed,
    market livestock, raised breeding livestock, land)

17
How do you calculate depreciation?
  • Straight Line
  • Cost divided by years of use
  • If asset is only owned for part of a year,
    depreciation is taken for that part of a year
  • buy cow in July for 1000
  • useful life of 10 years
  • normal depreciation 100 / yr
  • half year depreciation 50

18
How do you calculate depreciation?
  • Remaining value cost minus total depreciation
    taken
  • Buy a cow for 1000 on Jan 1, 1995
  • Useful life of 10 yrs
  • Annual depreciation 1000
  • What is the remaining value on Jan 1, 1997?
  • 1000 - (100 x 2) 800

19
Inventory Practices
  • include all enterprise resources
  • current prices for non-depreciable assets
  • raised livestock are not depreciated
  • use salvage value for depreciated assets that are
    completely depreciated
  • develop depreciation schedule

20
Develop a Beginning Inventory
  • 10 hd feeder steers
  • avg. wt 600 _at_ 75/cwt....
  • 5 tons alfalfa hay _at_ 75/T
  • 3 tons barley _at_ 90/T
  • 1 1/2 tons oats _at_ 80/T

21
Beginning Inventory
  • Steers 4500
  • Alfalfa 375
  • Barley 270
  • Oats 120
  • Total Value 5265

22
Income and Expense
  • record of all cash and non-cash transactions
  • begin this section when project begins
  • record all transactions as soon as they occur
  • date, item, cost or amount
  • describe entries as much as needed
  • qty and price should be directly related
  • qty 75 pounds, price .04/LB
  • qty 10 tons, price 50/T

23
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24
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25
Concluding Records
  • When should record books be closed?
  • end of calendar year or production cycle
  • Summarize records

26
Why should records be summarized?
  • basis for new enterprises
  • help to adopt approved practices
  • basis for expansion of enterprises
  • help in making accurate budgets
  • help in setting up goals

27
What records are summarized?
  • Inventory
  • Gain or Loss
  • Income
  • Expenses
  • (Income Inventory) - Expenses
  • Production Records
  • bushels/acre
  • cost/bushel
  • profit/acre

28
What is a Net Worth Statement?
  • Lists all assets (items owned)
  • Lists all debts (money owed to others)
  • Assets - Debts Net Worth
  • True measure of financial growth
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