Farm Management SI Session 9

An overview of Chapter 5: Income Statement

Income statement is a(n)

Summary of revenues and expenses as recorded over a period of time.

Revenue is

payments received from the sale of products and services, or from miscellaneous sources of income

Expenses are

costs incurred in the process of producing a commodity

Net Farm Income from Operations

Amount by which revenue exceeds expenses

Gain or Loss on Sale of Capital Assets is knows as

the difference between the selling price and the book value

Net Farm Income

Amount by which revenue exceeds expenses, plus any gain or loss on the sale of capital assets

(True/False) Revenue is the same thing as income.

False

Income Statement Format

Total Revenue
- Total Expenses

= Net Farm Income from Operations

± gain/loss on sale of capital assets

= Net Farm Income

Adjusted Net Farm Income

Net farm income from operations + interest expense = adjusted net farm income from operations

Opportunity Cost

the income that could be received by employing a resource in its most profitable alternative use

Classify this line item on the income statement:

Change in Crop Inventory

Revenue

Classify this line item on the income statement:

Increase (Decrease) in other accounts receivable

Revenue

Classify this line item on the income statement:

Purchased Market Livestock

Expenses

Classify this line item on the income statement:

Changes in accounts payable

Expenses: Adjustments

Classify this line item on the income statement:

Cash Interest Paid on Current Loans

Other Revenue & Expenses