finances in the animal science industry. what kinds of records should businesses keep? assets...
TRANSCRIPT
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Finances in the Animal Finances in the Animal Science IndustryScience Industry
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What kinds of records should businesses keep?
• Assets
• Liabilities
• Net worth
• Profit and loss statement
• Cash receipts
• Non-cash receipts
• Invoice
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Assets
• Things that one owns and completely pays for
• Tangible in value– Example: A car after all payments have been
made.
• Two types of assets– Current and non-current
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Assets
Current Assets• Items quickly converted to cash or that will be
sold within 12 months– cash– checking– savings– stocks or bonds– non-depreciable inventory of crops and
livestock
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Assets
Non-current Assets
• Items that have a useful life or more than one year– land– machinery– breeding livestock
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Liabilities
• Things that you owe money to other people for or debts– Example: credit cards
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Liabilities
• Current-debts that are due to be paid this year– fertilizer and feed bills– tractor and building payments– part of the mortgage due this year
• Non-Current-debts not due this year– mortgages not due this year
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Net Worth
• Total assets minus total liabilities.
• Current Assets + Non-Current Assets=Total Assets
• Current Liabilities + Non-Current Liabilities=Total Liabilities
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Inventory
• An itemized list of things owned by a business with the beginning value and depreciated value
• Two types of inventory– Non-depreciable– Depreciable
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Inventory
• Non-depreciable-items that will be used or sold within a year– feed– supplies
• Depreciable-items that have a useful life of more than one year and lose value because of age, wear or becoming out-of date because of technology advancements.
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Inventory
• Land is NOT depreciable property
• Depreciable property examples:– tractor– computer– chainsaw
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Profit and Loss Statement
• A financial statement of a business that reports the profit made by the business or the losses incurred.
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Receipts
• Cash Receipts– Cash that is paid for services or merchandise.
• Non-Cash Receipts– Payment for services in other ways than cash.
• Food
• Services
• Gifts
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Invoice
• Shows items and prices for things that have been bought from a certain business.
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Debt-to-Equity Ratio
• Used by banks and lending institutions to decide whether or not to lend money to specific people or businesses
Debt-to-Equity Ratio = Total Liability
Net Worth
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Pop Quiz
1. If a beef farmer has 200 head of cow valued at $400 each, 20 tons of feed worth $200 per ton, 2 tractors worth $50,000 each, a manure spreader worth $4,000, and 10 acres of land worth $5,000 per acre, what amount should be entered on the total value of non-depreciable items line of the inventory page?
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Pop Quiz
2. A swine farmer has current assets listed at $30,000 and non-current assets listed at $150,000, he also has current liabilities listed at $10,000 and non-current liabilities listed at $50,000. Calculated the farmer’s net worth.