University of Maryland Extension

expenses

Summary

Urban Ag home | Table of contents Understand profit and cash flow is paramount to the success of the business. Profitability measures the amount of farm income generated from sales of goods and services over and above the expenses required to generate that income. An income statement is used to...

Which computer accounting program should I use?

Urban Ag home | Table of contents Some farmers record incomes and expenses in a ledger book. However, many farmers now have computers that simplify the bookkeeping. Even inexpensive computer tablets have the capacity to do record keeping. Computer accounting programs range from inexpensive to...

Recording financial transactions

Urban Ag home | Table of contents All income & expenses and inflows & outflows need to be recorded in a bookkeeping system. Farmers should set aside time each week and sometimes daily to do this. Each transaction should be recorded including the date, the amount, and the type of transaction...

Example farm cash flow

Urban Ag home | Table of contents Figure 4 illustrates the cash flow for the farm in the previous example. A link to download editiable versions of these spreadsheets is at the bottom of this page. The income statement is also included to contrast the similarities and the differences in these two...

Income & expenses versus inflow & outflows

Urban Ag home | Table of contents Figure 3: The calculations to determine profit and cash are similar, but include different kinds of income and expenses. The text of this section explains these differences, marked by numbers in the figure and the text to help you refer back and forth. A cash flow...

What is cash flow?

Urban Ag home | Table of contents Another important economic measurement is cash flow. Cash flow is closely related to profitability but there are significant differences. While profit is concerned with the income versus expenses for a production period such as a calendar year, cash flow is...

Example farm income statement

Urban Ag home | Table of contents The example farm is a part time small urban farm where the owner works nights and weekends on a 10,000 square foot plot (a little smaller than ¼ acre) in the city. The plot is intensely cultivated with a variety of vegetables produced in high tunnels and raised...

Fixed/Overhead expenses

Urban Ag home | Table of contents You incur some fixed/overhead expenses that are not directly associated with the amount of agricultural products you produce. For example, expenses like property taxes, insurance, loan interest, utilities, and office supplies do not vary with the amount of crops...

Variable/Operating expenses

Urban Ag home | Table of contents Variable/Operating expenses are directly tied to producing crops and livestock and usually increase or decrease proportionately to the increase or decrease in production. For example, if you decide to produce more crops, you will need to purchase more seed,...

Calculating expenses

Urban Ag home | Table of contents The other factor that affects profit goals is expenses. As mentioned before, expenses are associated with the inputs required for producing agricultural products. Income minus expenses equals profit. Expenses can be described in different ways but here we will...

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