1. Ag & Resource Economics
Farm Record-Keeping
Written by
Annette Dunlap, MBA
Extension Associate
Ag & Resource Economics
NC State University

2. The Value-Added & Alternative Agriculture Start-up Toolkit
Program Outline
The importance of record-keeping
Transactions to record
Record-keeping methods
Production and Financial Record
Financial Statement Basics
Resources
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3. The Importance of Record-Keeping
Provide proof of income and expenses to government agencies (IRS, NC Dept. of Revenue)
Use for decision-making
Show regulatory compliance
Obtain and maintain financing
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4. Transactions to Record
Business checking to keep personal and business funds separate
Monthly income and expense ledger
Inventory ledger
Depreciation schedule
Pro forma statements (balance sheet, income statement, cash flow statement)
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5. Record-keeping Methods
Cash method: January 1 to December 31
Records income as received and expenses as paid
Accrual method: fiscal year determined by the enterprise
Records income as earned (but not necessarily received) and expenses when deducted or capitalized
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6. The Value-Added & Alternative Agriculture Start-up Toolkit
Production Records
Production records:
inputs and outputs
crop yields
plant populations
livestock births and deaths
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7. The Value-Added & Alternative Agriculture Start-up Toolkit
Financial Records
Financial records:
operating expenses
equipment, feed and seed expense
fertility costs
wages and salaries
depreciation expense
loan interest and payments
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8. Decisions aided by financial records
Where income was produced
Strengths and weaknesses of the enterprise
Returns on labor and management
Trends in net worth
Production efficiencies
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9. Financial Statement Basics
Balance sheet:
Assets = Liabilities + Owner’s Equity
Income statement:
Revenue - Expenses = Profit (loss)
Cash flow: Sources and Uses of funds
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10. The Value-Added & Alternative Agriculture Start-up Toolkit
Next Step Resources
For a more detailed discussion of record-keeping basics, visit:
pbfiles/pb1540.pdf
ExEx5054.pdf
US Internal Revenue Service:
The IRS web site contains a special section on tips for farmers, located at:
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