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INCOME STATEMENTS. Ag Business Management Spring 1999. Original PowerPoint Created by Mike White Modified by Georgia Agricultural Education Curriculum Office June, 2002. How do you measure performance?. Your school work Basketball team Restaurant Greenhouse. Objectives.
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INCOME STATEMENTS Ag Business Management Spring 1999 Original PowerPoint Created byMike White Modified by Georgia Agricultural Education Curriculum OfficeJune, 2002
How do you measure performance? • Your school work • Basketball team • Restaurant • Greenhouse
Objectives • Describe the importance of income statements. • Identify sources of revenue and expenses. • Given a list of transactions, categorize revenues and expenses.
Importance of an Income Statement • Did the business end the year with a profit or loss? • How much was the profit/loss?
Uses of Income Statement • Summarize revenues & expenses • Determine profit/loss • Explain changes in owner equity
Uses of Income Statement • Calculate financial measures • Support loan application
Summary of Revenue & Expenses • Revenue = cash receipts from product sales or dividends on interest income. • Short or long term asset sales • Inventory adjustments
Examples of Revenues • Cash Revenues • Cash sales • Government payments • Custom work receipts
Examples of Revenues • Non-cash Revenues • Acct. Receivable • Changes in inventory
Summary of Revenue & Expenses • Expenses • operating • interest • non-cash expense adjustment
Examples of Expenses • Cash operating • seed • fertilizer • chemicals
Examples of Expenses • Non-cash expenses • depreciation • changes in unused supp., acct. pay., accrued int., accrued taxes
Net Income • Net income = revenue - expenses • Net income calculated annually • Corresponds with income tax reporting dates
Cash Accounting - Income St. cash revenue - cash expenses = net cash income
Cash Accounting - Income St. net cash income - depreciation = net income from operations
Cash Accounting - Income St. net income from operation • gain/loss on sale of capital assets = net income
Accrual Accounting Income Statement gross revenue - cash expenses - depreciation non-cash expense adjustment = net income from operation
Accrual AccountingIncome Statement net income from operations • gain/loss on sale of capital assets = net income