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How do you measure performance?

How do you measure performance?. Your school work Basketball team Restaurant Greenhouse. INCOME STATEMENTS. Ag Business Management Spring 1999. Objectives. Describe the importance of income statements. Identify sources of revenue and expenses.

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How do you measure performance?

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  1. How do you measure performance? • Your school work • Basketball team • Restaurant • Greenhouse

  2. INCOME STATEMENTS Ag Business Management Spring 1999

  3. Objectives • Describe the importance of income statements. • Identify sources of revenue and expenses. • Given a list of transactions, categorize revenues and expenses.

  4. Importance of an Income Statement • Did the business end the year with a profit or loss? • How much was the profit/loss?

  5. Uses of Income Statement • Summarize revenues & expenses • Determine profit/loss • Explain changes in owner equity • Calculate financial measures • Support loan application

  6. Summary of Revenue & Expenses • Revenue = cash receipts from product sales or dividends on interest income. • Short or long term asset sales • Inventory adjustments

  7. Examples of Revenues • Cash Revenues • Cash sales • Government payments • Custom work receipts • Non-cash Revenues • Acct. Receivable • Changes in inventory

  8. Summary of Revenue & Expenses • Expenses • operating • interest • non-cash expense adjustment

  9. Examples of Expenses • Cash operating • seed • fertilizer • chemicals • Non-cash expenses • depreciation • changes in unused supp., acct. pay., accrued int., accrued taxes

  10. Net Income • Net income = revenue - expenses • Net income calculated annually • Corresponds with income tax reporting dates

  11. Cash Accounting - Income St. • Cash revenue - cash expenses = net cash income • Net cash income - depreciation = net income from operations • Net income from operation  gain/loss on sale of capital assets = net income

  12. Accrual Accounting Income Statement • Gross revenue - cash expenses - depreciation  non-cash expense adjustment = net income from operation • Net income from operations  gain/loss on sale of capital assets = net income

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