Keeping and Using SAE Records

1. Keeping and Using SAE Records

2. Bell Ringer • Why is record keeping important?

3. Student Learning Target. Instruction in this lesson should result in students achieving the following objectives: • 1 I can explain how SAE records are organized. • 2 I can identify the procedures for making entries in SAE records. • 3 I can explain how to summarize and analyze SAE records.

4. Complete the FFA Activity form and the front page of the record book as a class.

5. LT 1: Explain how SAE records are organized. • Anticipated Problem: How are records organized for SAE programs? • I. Understanding some basic principles and procedures of agricultural accounting will help in setting up SAE records.

6. LT 1 continued • A. A complete record system will provide the necessary information to accomplish the following tasks: • 1. Report information for taxes. • 2. Develop an annual profit/loss statement. • 3. Account for strengths and weaknesses of a business.

7. LT 1 continued • B. A complete record system should have the following components: • 1. An inventory • 2. A depreciation schedule • 3. A financial statement • 4. A record of receipts • 5. An expense record • 6. A profit/loss statement • 7. A cash flow statement • 8. Production records • 9. Records of accounts payable and accounts receivable

8. LT 1 continued • C. An inventory is a list of assets on hand and their values at a particular time. • 1. Taking and recording inventories is one of the first steps in starting a record system. • 2. A complete inventory includes both quantities and values.

9. LT 1 continued • D. A depreciation schedule is a method of distributing the cost of capital items over the life of an asset. • E. A financial statement is a listing of the assets, liabilities, and net worth of a business. • 1. It is a picture of the financial position of a business at any time. • 2. It is also called a “balance sheet” or a “net worth statement.”

10. LT 1 continued • F. A record of receipts is a record of cash sales and other receipts that came into a business during the year. • G. An expense record is a record of cash expenses paid during the year. • H. A profit/loss statement shows how a business has performed financially.

11. LT 1 continued • I. A cash flow statement is a record of the cash generated to meet the demands of a business. • J. Production records analyze specific enterprises within a business to identify strengths and weaknesses. • K. Accounts payable are records of short-term credit used. Accounts receivable are records of short-term credit extended.

12. OBJECTIVE 2: Identify the procedures for making entries in SAE records. • Anticipated Problem: What are the proper procedures to follow when making entries in SAE records? • II. Several steps should be followed when making entries in SAE records.

13. OBJECTIVE 2 continued • A. Become familiar with the record book before starting to use it. • B. Read carefully all directions and instructions given in the record book. • C. Use bookmarkers to help identify key pages. • D. Always use a sharp pencil with medium to hard lead.

14. OBJECTIVE 2 continued • E. Develop good recordkeeping habits. • 1. Make entries regularly. • 2. Set aside time on a regular basis. • 3. Keep records up to date. • 4. Keep entries on a to your record books. calendar and transfer them • 5. Enter complete information for all items.

15. OBJECTIVE 2 continued • F. Five steps should be followed when making entries in a record book during the year. • 1. Set up a depreciation schedule. • 2. Enter the beginning inventory. After the first year, the end-of-year inventory becomes the beginning-of-the-year inventory for the next year. • 3. Enter records of receipts, expenses, and production. • a. Enter these records as they occur. • b. Most record books provide two columns for entering each receipt and expense item. One is a total column in which receipts of all expenses are entered. The other column classifies each entry as to the kind of receipt or expense.

16. OBJECTIVE 2 continued • 4. Complete the depreciation schedule for the year. • a. Bring the depreciation schedule up to date at the end of the year. • b. Check the “Sales of capital items” for depreciable items that have been sold. • c. Transfer items in “Purchase of capital items” and “Purchase of breeding stock” to the depreciation schedule. • d. Calculate the depreciation for the year. • e. Calculate the remaining cost at the end of the year.

17. OBJECTIVE 2 continued • 5. Enter the end-of-year inventory. • a. After making all entries of receipts, expenses, and production for the year, complete the records. • b. The end-of-year inventory is a record of all items on hand at the end of the year (usually December 31).

18. OBJECTIVE 3: Explain how to summarize and analyze SAE records. • Anticipated Problem: How is the information in SAE records summarized and analyzed? • III. In completing and summarizing records, check for completeness and accuracy.

19. OBJECTIVE 3 continued • A. Check the livestock numbers and feed and grain quantities. • 1. Check numbers appearing as purchases, sales, and beginning and ending inventories, along with birth, weaning, and death loss records. • 2. Similarly, quantities of feed and grain fed, purchased, sold, and used for seed must be totaled.

20. OBJECTIVE 3 continued • B. Total and check the receipt columns. • 1. Since most receipt items are entered in two places—an “Amount received” column and a separate classifying column—these items can be cross-checked. • 2. The sum of the totals of the classifying columns must equal the total amount received. • 3. A check should be made on each receipt page, as well as on the final receipt page.

21. OBJECTIVE 3 continued • C. Total and check the expense columns. • 1. The totals of the classifying columns should equal the total in the “Amount paid out” column. • 2. If hired labor expenses are recorded separately from other expenses, these figures need to be totaled and checked.

22. OBJECTIVE 3 continued • D. Complete and check inventories. • E. Check the depreciation schedules. • 1. All items in the depreciation schedules should be completed through the “Remaining costs at the end of the year” columns. • 2. Total the columns for the “Remaining cost at the beginning of the year,” the “Depreciation this year,” and the “Remaining cost at the end of the year.”

23. OBJECTIVE 3 continued • F. Total the columns for beginning and ending inventories. • G. Complete a farm business summary to indicate the profitability of the business. • H. Complete the various business analysis records to determine the measures of efficiency of the operation.

24. REVIEW • 1. How are records organized for SAE programs? • 2. What are the proper procedures to follow when making entries in SAE records? • 3. How is the information in SAE records summarized and analyzed?