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Understanding Net Worth, Cash Flow, Income Statements and Computerized Record Keeping
Next Generation Science / Common Core Standards Addressed!
CCSS. Math .Content. HSSID.A.2 Use statistics appropriate to the shape of the data distribution to compare center (median, mean) and spread (interquartile range, standard deviation) of two or more different data sets.
CCSS. ELA Literacy. WHST.11‐12.9 Draw evidence from informational texts to support analysis, reflection, and research
Student Learning Objectives Develop a net worth statement for an
agricultural business. Develop an income statement for an
agricultural business. Develop a cash flow statement for an
agricultural business. Understand computerized record keeping. Understand the AET Tracker Record
keeping system.
Terms Accrual accounting Assets Cash accounting Cash flow
statement Current assets Current liabilities Expenditures
Income statement Liabilities Net income Net worth
statement Non-current assets Non-current
liabilities Revenue
Interest Approach
Have students total the value of items currently in their possession.
Ask them what happens to their financial position if you owe them $20.
Are they now worth more or less? Net worth looks at situations like this.
Net Worth Statement
Shows the financial health of a business at a given point in time.
Assets
Items that are owned by the business and have value.
Assets Current assets - items owned that
will be used or turned to cash within one year.
Non-current assets - items whose useful life is greater than one year.
Examples of Current Assets Cash Checking
Account Savings Account Feeder Animals Feed Crops growing in
the field
Supplies Prepaid
Expenses Accounts
Receivable Crops in storage
Non Current Assets Equipment Buildings Land Breeding Livestock Improvements Vehicles
Liabilities
Debt obligations. Something owed to someone else.
Liabilities Current liabilities — debts due
within one year
Non-current liabilities — debts due after one year
Current Liabilities
Accounts payable Loans due within one year Accrued Interest Current portion of long term debt
Non-Current Liabilities
Long Term Debt (not due within one year)
Mortgage (house or land loan)
Components of a Net Worth Statement
Total assets = current assets + non-current assets.
Total liabilities = current liabilities + non- current liabilities.
Net worth or equity = total assets – total liabilities.
Assets Liabilities
Current Assets Current Liabilities
Non Current Assets Non Current Liabilities
Total Assets Total Liabilities
Net Worth
Income Statements Income statement
— a financial instrument that shows the profits or losses of a business over a period of time.
Cash vs. Accrual Accounting
Cash accounting — income and expenditures are recorded when they are received or paid.
Cash vs. Accrual Accounting Accrual accounting — income and
expenditures are recorded when the service or product is delivered or received.
Accrual accounting also shows changes in assets and liabilities (inventories).
Income Statement Components
Revenue - cash receipts from services performed, products sold, etc.
Expenditures - cash paid for services, inputs purchased, etc.
Net income = revenue - expenditures
Uses of Computerized Records
Monitor feed rations. Plan changes in enterprises and whole
business. Record tax and accounting
information. Help in marketing of products through
price analysis and market trends.
Uses of Computerized Records
Schedule workloads for employees.
Provide financial statements. Track inventories.
The End!