Income Statement Record Keeping Curriculum Georgia Department of Education Agricultural Education Written by Jimmy Scott Georgia Ag Ed Curriculum

Uses of an Income Statement Summarizing revenues and expenses Determining profit or loss Explaining changes in owner equity Calculating financial measures Profitability Financial efficiency Repayment capacity Supporting loan application for refinancing 1

Operating Revenue Cash examples of revenue: Cash sales Plants/crops Livestock Services Government payments Custom work receipts Non-cash examples of revenue: Changes in accounts receivable Changes in inventory Crops/plants Supplies 2

Operating Expenses Examples of cash operating expenses: Seed Fertilizer Chemicals Examples of non-cash expenses: Depreciation Changes in Operating Inventory 3

Income Statement + Change in Operating Inventory + Cash Revenues Cash Expenses = Net Operating Income Depreciation + Gain/Loss sale of capital assets = Return to Capital, Labor, & Mgt 4

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