3. What kinds of records should businesses keep?  Assets  Liabilities  Net worth  Profit and loss statement  Cash receipts  Non-cash receipts  Invoice

4. Assets  Things that one owns and completely pays for.  Example: Your car after all payments have been made.

5. Assets  Current Assets-items quickly converted to cash or that will be sold within 12 months  cash  checking  savings  stocks or bonds

6. Assets  Non-current-items that have a useful life or more than one year  land  machinery  breeding livestock

7. Liabilities  Things that you owe money to other people for or debts  Example: My Visa

8. Liabilities  Current-debts that are due to be paid this year  fertilizer and feed bills  tractor and building payments  part of the mortgage due this year  Non-Current-debts not due this year  mortgages not due this year

9. Net Worth  One’s assets minus their liabilities.  You have $3000 in the bank, but you owe $1750 for your bills. Your net worth is $1250.00.

10. Net Worth  Current Assets + Non-Current Assets=Total Assets  Current Liabilities + Non-Current Liabilities=Total Liabilities

11. Inventory  An itemized list of things owned by a business with the beginning value and depreciated value

12. Inventory  Non-depreciable-items that will be used or sold within a year  feed  supplies

13. Inventory  Depreciable-items that have a useful life of more than one year and lose value because of age, wear or becoming out-of date because of technology advancements.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  tractor  computer  chainsaw

14. Profit and loss statement  A financial statement of a business that reports the profit made by the business or the losses incurred.

15. Cash receipts  Cash that is paid for services or merchandise.

16. Non-Cash receipts  Payment for services in other ways than cash.

17. Invoice  Shows items and prices for things that have been bought from a certain business.

18. Other business records  Labor  Materials  Travel

19. Debt-to-Equity Ratio  Used by banks and lending institutions to decide whether or not to lend money to specific people or businesses Debt-to-Equity Ratio = Total Liability Net Worth