1. EMPOWERMENT THROUGH EDUCATION Cash and Accrual Records with Quicken Tags Wm. Bruce Clevenger OSU Extension Educator and Assistant Professor Agriculture and Natural Resources

2. Is Farming Accrual? Did all activity about the 2012 crop occur in 2012?

3. Objectives To demonstrate how Quicken Tags can improve cash accounting records –for enterprise analysis across calendar years –to track income and expenses by Farm Landlord

4. Why Keep Records? #1 - Tax Reporting #2 - Other “better” reasons Evaluate enterprises, financial reports, business analysis Cash Systems Accrual Systems

5. Pitfalls of Cash Accounting Positive cash basis income “may” be a false sense of security Studies show a 2+ year lag in recognizing profit problems 151 cash grain farms over 6-years –Cash basis net farm income differed by 85% compared to accrual adjusted

6. Quicken Workshop Ohio State University and Quicken since the early 1990’s. Recently, using the Oklahoma State University training manual. –http://agecon.okstate.edu/quicken/http://agecon.okstate.edu/quicken/ –Dr. DAMONA DOYE Acting Department Head, Regents Professor & Sarkeys Distinguished Professorship in Agriculture, (405) 744-9813, damona.doye@okstate.edu Ohio Farmers asked me, “Can Quicken do…?”

7. What’s the Solution? Quicken Tags! Quicken Terminology –Transaction – Income or Expense Date Check Number or Electronic Payee Amount Category Tag (enterprise, commodity, landlord, farm, etc.) Can Use Double Tags Too!

8. Quicken Categories

9. Quicken Sub-Categories

10. Tags Year Specific Tags: reports pull income and expenses by enterprise or commodity over multiple calendar year dates –Examples: Pre-paid expenses, In- season expenses, commodity sales. Using Double Tags: adds location –Examples: Report all Corn across all acres in 2012, Corn at each farm in 2012

11. Quicken Tags

12. Pre-Paid Expenses

13. Tags in Quicken Reports Tags are Independent of… –Date –Category –Sub-Category Tax Year Reports – Calendar Year Enterprise Analysis – All Dates Landlord Reports – Calendar or All

14. Tax Schedule Report

15. Report: Corn 2012 & 2013

16. Quicken Not necessarily a replacement for FINPACK Income Statement and two balance sheets. Can be very accurate for determining accrual cost of production

17. Accrual Adjustment gives you… Simplicity of cash basis accounting Only once per year adjustment Measurement against farm financial standards –16 to 21 standards

18. Conclusion The farm accounting system should help with decision making in a risky environment Investing in a “once a year” adjustment will yield an accrual adjusted income statement If you don’t measure anything, you don’t know what to fix.

19. Contact Information Wm. Bruce Clevenger OSU Assistant Professor & Extension Educator, Defiance County, Agriculture and Natural Resources 06879 Evansport Road, Suite B Defiance, OH 43512 419-782-4771 clevenger.10@osu.edu