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Cash and Accrual Records with Quicken Tags

Cash and Accrual Records with Quicken Tags. Wm. Bruce Clevenger OSU Extension Educator and Assistant Professor Agriculture and Natural Resources. Is Farming Accrual?. Did all activity about the 2012 crop occur in 2012?. Objectives.

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Cash and Accrual Records with Quicken Tags

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  1. Cash and Accrual Records with Quicken Tags Wm. Bruce Clevenger OSU Extension Educator and Assistant Professor Agriculture and Natural Resources

  2. Is Farming Accrual? • Did all activity about the 2012 crop occur in 2012?

  3. Objectives • To demonstrate how Quicken Tags can improve cash accounting records • for enterprise analysis across calendar years • to track income and expenses by • Farm • Landlord

  4. Why Keep Records? • #1 - Tax Reporting • #2 - Other “better” reasons • Evaluate enterprises, financial reports, business analysis • Cash Systems • Accrual Systems

  5. Pitfalls of Cash Accounting • Positive cash basis income “may” be a false sense of security • Studies show a 2+ year lag in recognizing profit problems • 151 cash grain farms over 6-years • Cash basis net farm income differed by 85% compared to accrual adjusted

  6. Quicken Workshop • Ohio State University and Quicken since the early 1990’s. • Recently, using the Oklahoma State University training manual. • http://agecon.okstate.edu/quicken/ • Dr. DAMONA DOYE • Acting Department Head, Regents Professor & Sarkeys Distinguished Professorship in Agriculture, (405) 744-9813, damona.doye@okstate.edu • Ohio Farmers asked me, “Can Quicken do…?”

  7. What’s the Solution? • Quicken Tags! • Quicken Terminology • Transaction – Income or Expense • Date • Check Number or Electronic • Payee • Amount • Category • Tag (enterprise, commodity, landlord, farm, etc.) Can Use Double Tags Too!

  8. Quicken Categories

  9. Quicken Sub-Categories

  10. Tags • Year Specific Tags: reports pull income and expenses by enterprise or commodity over multiple calendar year dates • Examples: Pre-paid expenses, In-season expenses, commodity sales. • Using Double Tags: adds location • Examples: Report all Corn across all acres in 2012, Corn at each farm in 2012

  11. Quicken Tags

  12. Pre-Paid Expenses

  13. Tags in Quicken Reports • Tags are Independent of… • Date • Category • Sub-Category • Tax Year Reports – Calendar Year • Enterprise Analysis – All Dates • Landlord Reports – Calendar or All

  14. Tax Schedule Report

  15. Report: Corn 2012 & 2013

  16. Quicken • Not necessarily a replacement for FINPACK Income Statement and two balance sheets. • Can be very accurate for determining accrual cost of production

  17. Accrual Adjustment gives you… • Simplicity of cash basis accounting • Only once per year adjustment • Measurement against farm financial standards • 16 to 21 standards

  18. Conclusion • The farm accounting system should help with decision making in a risky environment • Investing in a “once a year” adjustment will yield an accrual adjusted income statement • If you don’t measure anything, you don’t know what to fix.

  19. Contact Information Wm. Bruce Clevenger OSU Assistant Professor & Extension Educator, Defiance County, Agriculture and Natural Resources 06879 Evansport Road, Suite B Defiance, OH 43512 419-782-4771 clevenger.10@osu.edu

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