University of Maryland Extension

Recordkeeping

Author: 
Dale M. Johnson, Extension Specialist, Farm Management

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A manager of a farm needs a good record keeping system to analyze profit and cash flow. Many businesses will contract out their accounting to an accounting firm. These firms typically use generally accepted accounting principles and produce standardized financial statements including the income statement and statement of cash flow. However, it is too often the case that the main reason a farm hires an accounting firm is to file tax reports. While this is an important job of the accountant, managers who fail to use financial statements produced by the accountant may make poor financial decisions. Many small farms do not generate sufficient income to hire an accountant or bookkeeping. If this is your situation, then you must do the record keeping yourself. You can then turn the books over to the accountant at the end of the year to have tax reports filed. Some farmers even do their own tax reports to save money.


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Recording financial transactions

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