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Keeping and Using SAE Records

Keeping and Using SAE Records. Interest Approach.

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Keeping and Using SAE Records

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  1. Keeping and Using SAE Records

  2. Interest Approach • Invite to class a successful businessperson or area farmer who had an SAE when he or she was an agriculture student. Have the guest speaker discuss how the recordkeeping skills developed through an SAE prepare a person for success. Have a local financial manager come to class to discuss the value of good records when establishing credit.

  3. Student Learning Objectives. Instruction in this lesson should result in students achieving the following objectives: • 1 Explain how SAE records are organized. • 2 Identify the procedures for making entries in SAE records. • 3 Explain how to summarize and analyze SAE records.

  4. Terms. The following terms are presented in this lesson (shown in bold italics): • accounts payable • accounts receivable • cash flow statement • depreciation schedule • expense record • financial statement • inventory • production records • profit/loss statement • record of receipts

  5. OBJECTIVE 1: Explain how SAE records are organized. • Anticipated Problem: How are records organized for SAE programs? • I. Understanding some basic principles and procedures of agricultural accounting will help in setting up SAE records.

  6. OBJECTIVE 1 continued • A. A complete record system will provide the necessary information to accomplish the following tasks: • 1. Report information for taxes. • 2. Develop an annual profit/loss statement. • 3. Account for strengths and weaknesses of a business.

  7. OBJECTIVE 1 continued • B. A complete record system should have the following components: • 1. An inventory • 2. A depreciation schedule • 3. A financial statement • 4. A record of receipts • 5. An expense record • 6. A profit/loss statement • 7. A cash flow statement • 8. Production records • 9. Records of accounts payable and accounts receivable

  8. OBJECTIVE 1 continued • C. An inventory is a list of assets on hand and their values at a particular time. • 1. Taking and recording inventories is one of the first steps in starting a record system. • 2. A complete inventory includes both quantities and values.

  9. OBJECTIVE 1 continued • D. A depreciation schedule is a method of distributing the cost of capital items over the life of an asset. • E. A financial statement is a listing of the assets, liabilities, and net worth of a business. • 1. It is a picture of the financial position of a business at any time. • 2. It is also called a “balance sheet” or a “net worth statement.”

  10. OBJECTIVE 1 continued • F. A record of receipts is a record of cash sales and other receipts that came into a business during the year. • G. An expense record is a record of cash expenses paid during the year. • H. A profit/loss statement shows how a business has performed financially.

  11. OBJECTIVE 1 continued • I. A cash flow statement is a record of the cash generated to meet the demands of a business. • J. Production records analyze specific enterprises within a business to identify strengths and weaknesses. • K. Accounts payable are records of short-term credit used. Accounts receivable are records of short-term credit extended.

  12. OBJECTIVE 2: Identify the procedures for making entries in SAE records. • Anticipated Problem: What are the proper procedures to follow when making entries in SAE records? • II. Several steps should be followed when making entries in SAE records.

  13. OBJECTIVE 2 continued • A. Become familiar with the record book before starting to use it. • B. Read carefully all directions and instructions given in the record book. • C. Use bookmarkers to help identify key pages. • D. Always use a sharp pencil with medium to hard lead.

  14. OBJECTIVE 2 continued • E. Develop good recordkeeping habits. • 1. Make entries regularly. • 2. Set aside time on a regular basis. • 3. Keep records up to date. • 4. Keep entries on a to your record books. calendar and transfer them • 5. Enter complete information for all items.

  15. OBJECTIVE 2 continued • F. Five steps should be followed when making entries in a record book during the year. • 1. Set up a depreciation schedule. • 2. Enter the beginning inventory. After the first year, the end-of-year inventory becomes the beginning-of-the-year inventory for the next year. • 3. Enter records of receipts, expenses, and production. • a. Enter these records as they occur. • b. Most record books provide two columns for entering each receipt and expense item. One is a total column in which receipts of all expenses are entered. The other column classifies each entry as to the kind of receipt or expense.

  16. OBJECTIVE 2 continued • 4. Complete the depreciation schedule for the year. • a. Bring the depreciation schedule up to date at the end of the year. • b. Check the “Sales of capital items” for depreciable items that have been sold. • c. Transfer items in “Purchase of capital items” and “Purchase of breeding stock” to the depreciation schedule. • d. Calculate the depreciation for the year. • e. Calculate the remaining cost at the end of the year.

  17. OBJECTIVE 2 continued • 5. Enter the end-of-year inventory. • a. After making all entries of receipts, expenses, and production for the year, complete the records. • b. The end-of-year inventory is a record of all items on hand at the end of the year (usually December 31).

  18. OBJECTIVE 3: Explain how to summarize and analyze SAE records. • Anticipated Problem: How is the information in SAE records summarized and analyzed? • III. In completing and summarizing records, check for completeness and accuracy.

  19. OBJECTIVE 3 continued • A. Check the livestock numbers and feed and grain quantities. • 1. Check numbers appearing as purchases, sales, and beginning and ending inventories, along with birth, weaning, and death loss records. • 2. Similarly, quantities of feed and grain fed, purchased, sold, and used for seed must be totaled.

  20. OBJECTIVE 3 continued • B. Total and check the receipt columns. • 1. Since most receipt items are entered in two places—an “Amount received” column and a separate classifying column—these items can be cross-checked. • 2. The sum of the totals of the classifying columns must equal the total amount received. • 3. A check should be made on each receipt page, as well as on the final receipt page.

  21. OBJECTIVE 3 continued • C. Total and check the expense columns. • 1. The totals of the classifying columns should equal the total in the “Amount paid out” column. • 2. If hired labor expenses are recorded separately from other expenses, these figures need to be totaled and checked.

  22. OBJECTIVE 3 continued • D. Complete and check inventories. • E. Check the depreciation schedules. • 1. All items in the depreciation schedules should be completed through the “Remaining costs at the end of the year” columns. • 2. Total the columns for the “Remaining cost at the beginning of the year,” the “Depreciation this year,” and the “Remaining cost at the end of the year.”

  23. OBJECTIVE 3 continued • F. Total the columns for beginning and ending inventories. • G. Complete a farm business summary to indicate the profitability of the business. • H. Complete the various business analysis records to determine the measures of efficiency of the operation.

  24. REVIEW • 1. How are records organized for SAE programs? • 2. What are the proper procedures to follow when making entries in SAE records? • 3. How is the information in SAE records summarized and analyzed?

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