2. Chart of Accounts

3. Rancher Joe needs your help!!! After the recent billiards Rancher Joe realizes that he will not have enough feed for his entire herd for the remainder for the winter. He has two options: sell his cows or buy more feed. The rancher knows that the local sale barn is getting _$1000_ for bred cows and he also knows that sorghum hay is priced at __$70__per ton. Help Rancher Joe decide what to do!!!

4. Rancher Joe needs your help!!! Can Rancher Joe still make a profit? Can Rancher Joe still make a profit? Can Rancher Joe still be profitable? Can Rancher Joe still be profitable?

5. What is the difference between profit and profitable? Profit- All costs-All income=profit Profit- All costs-All income=profit Profitability-The degree at which a business is making a profit Profitability-The degree at which a business is making a profit

6. Degrees in the FFA In the FFA, it is not acceptable to just make a profit, to receive the Chapter, State, and American FFA Degree. To receive these degrees you must have a profitable Supervised Agriculture Experience Program and earn a specific amount of money.

7. Farm and Ranch Records To determine a profit, farm/ranch records must be kept. To determine a profit, farm/ranch records must be kept. After creating a record keeping system your records may be used to: After creating a record keeping system your records may be used to: Measure financial condition Measure financial condition Provide data over the business Provide data over the business Assist in obtaining loans Assist in obtaining loans Measure the profitability of each individual enterprise Measure the profitability of each individual enterprise Assist in deciding on new investments Assist in deciding on new investments Income tax purposes Income tax purposes Prepare a repayment schedule Prepare a repayment schedule

8. Cash Flow One very important element of record keeping is a cash flow statement. One very important element of record keeping is a cash flow statement. A Cash flow statement incorporates financial records and farm data A Cash flow statement incorporates financial records and farm data A Cash flow is a map to the entire years farm/ranch production A Cash flow is a map to the entire years farm/ranch production A Cash flow is: A Cash flow is: Divided into months Divided into months Divided into enterprises Divided into enterprises Divided into income and expenses Divided into income and expenses Includes several different types of loans Includes several different types of loans

9. CASH FLOW PROJECTED EXPENSES BY MONTH JanFeb.MarchAprilMayJuneJulyAug.Sept.Oct.Nov.Dec.TOTALACTUAL Cash Balance--Beginning 00000000000XXXXX0 SALE OF CURRENT ITEMS Crops 0 Market Livestock 0 Other (List) 0 0 0 0 TOTAL SALES 00000000000000 CAPITAL SALES XXXXX Breeding Livestock 0 Machinery 0 Other (List) 0 0 0 TOTAL CAPITAL SALES 00000000000000 TOTAL INCOME 00000000000000

10. OPERATING EXPENSES JanFebMarAprMayJunJulAugSepOctNovDec Total Total Actua l Feed 0 Seed 0 Machine Hire 0 Fertilizer 0 Chemicals 0 Repairs 0 Gas & Oil 0 Medicine and Supplies 0 Market Livestock 0 Misc. 0 Other (List) 0 0 0 0 0 0 TOTAL OPERATING EXPENSE 00000000000000

11. CAPITAL PURCHASES JanFebMarAprMayJunJulAugSepOctNovDecTotal Actua l Livestock 0 Machinery 0 Building, Fence 0 Other (List) 0 0 0 TOTAL CAPITAL PURCHASES 00000000000000 TOTAL EXPENDITURES 00000000000000 Cash Difference 000000000000 XXXX X Money borrowed this month 0 Payments on Loan(s) 0 Interest 0 Cash Balance--Ending 000000000000 XXXX X

12. Management with Cash Flows Show a profit/loss for individual enterprises Show a profit/loss for individual enterprises Estimate expenses for each month Estimate expenses for each month Help determine a production plan for the next year Help determine a production plan for the next year Plan when to repay loans Plan when to repay loans Plan when loans are needed Plan when loans are needed Estimate the timing of purchases and capital sales Estimate the timing of purchases and capital sales

13. Why is it important to keep accurate records? It allows the owner / operator to look at a picture of each enterprise at any given moment in time. It allows the owner / operator to look at a picture of each enterprise at any given moment in time. It allows the owner / operator to track all income and expenses to make wise management decisions based on good financial insight. It allows the owner / operator to track all income and expenses to make wise management decisions based on good financial insight. It allows for financial documentation when needed by accountants, bankers, and lawyers. It allows for financial documentation when needed by accountants, bankers, and lawyers.

14. Why should you organize your records? The ability to organize financial data into charts and spreadsheets allows the owner / operator to make sound financial decisions based on facts and figures. The ability to organize financial data into charts and spreadsheets allows the owner / operator to make sound financial decisions based on facts and figures. When this data is transformed into a readable printout, any person involved with the operation can see where the strengths and weaknesses are located. When this data is transformed into a readable printout, any person involved with the operation can see where the strengths and weaknesses are located. The ability to track the progress of an operation allows the owner / operator to take action to improve specific portions of the operation such as specific expenses or income. The ability to track the progress of an operation allows the owner / operator to take action to improve specific portions of the operation such as specific expenses or income.