Money Grows on Trees, Right? Cash Flow Statement

True or False? Cash income and expenses tell the entire story of the business. Profits and cash generated are essentially the same thing.

Cash Flow Statement Cash Inflows Operating receipts Capital sales Crop and livestock sales, government payments, other farm income Capital sales Contributed capital

Cash Flow Statement Cash Outflows Operating expenses (feed, fertilizer, etc.) Capital purchases Family living and other withdrawals

True or False? A cash flow statement contains the same information as an income statement, except the information is broken down into the actual months transactions occurred. Capital purchases are for items that have a useful life of more than one year.

Developing a Cash Flow Plan Establishes target levels for income and expenses which can be used in monitoring progress towards goals Points out potential problems in meeting financial obligations Indicates when cash is available for new investments

Developing a Cash Flow Plan Sources of information Records Debt schedule Plans for purchases, sales

Cash Flow Plan Beginning cash balance Inflows - outflows Cash position New borrowing Cash paid for interest on operating loan Principal payments on operating loans Ending cash balance

Accrued Interest Use cash flow plan line of credit balance to demonstrate calculation of accrued interest.