Financial Records 9.0 Class Notes

Objectives: AM09.01 Define the terminology used in financial record-keeping systems, such as asset, liability, inventory, net worth

A. Asset – things a person owns that have value or can be seen. I. Terms A. Asset – things a person owns that have value or can be seen. 1-. Current Assets a. Cash or other assets which can be converted to cash through normal operations b. Current assets are: Checking and/or savings accounts -Inventory held for resale 2. Non-Current Assets a. Assets used in producing a product or are not sold and not converted into cash within one year. b. Non-Current assets are: Tractors Barns Breeding Stock 3. Total assets= Current assets + non-current assets

2. Liabilities-what you owe a. Current Liabilities ( 12 months) 1). Debts due within the operating year. 2). Current liabilities are: - Accounts payable - Rents - Notes payable – current portion b. Non-Current Liabilities 1).Debts due in more than one year. 2). Non-Current liabilities are: - Notes payable – non-current portion c. Total liabilities= Current liabilities + non- current liabilities

3. Net worth = total assets minus total 3. Net worth = total assets minus total liabilities, also known as equity

4. Inventory—an itemized list of things. owned by a business with the 4. Inventory—an itemized list of things owned by a business with the beginning value and depreciated value. a. Non-depreciable—items that will be used up or sold within a year— Example: Feed, supplies, etc. b. Depreciable—Items that have a useful life of more than one year and lose value because of age, wear or becoming out-of-date because of technology advancements. Land is NOT depreciable property. Example- Equipment- livestock houses