New Resource: Financial Record Keeping Level 2
Editor’s Note: release of the Level 2 Financial record keeping module adds to the previously released content focused on Animal Health & Performance, Forage & Grasslands, and Genetics. Stay tuned for Level 3 Record Keeping modules to be available in the coming weeks.
In agriculture there are many areas of risk and uncertainty. Sectors with tight margins, such as the beef sector, can greatly benefit from having a better understanding of their operation’s finances. Understanding where the strengths and weaknesses occur is one way to reduce the stress that comes with uncertainty and provide financial resiliency to help your operation adapt to challenges.
Understanding the Four Quadrants of Financial Management begins with understanding what financial management looks like in order to ultimately reach your financial goals:
Know it: Knowing what financial management is, what the various types of accounting sheets are, and how to enter data
Do it: Enter the data, make the calculations for the financial statements
Understand it: Understanding what the information is telling you
Apply it: How to use this information from financial statements to reach your goals
Depending on the structure of your farm business, your operation may be set up as a sole proprietorship, partnership or as an incorporated company. The structure will impact whether your operation needs to maintain a balance sheet. When your farm is incorporated, you are required to file a balance sheet with your tax return (T2). A sole proprietor or partnership that is not incorporated is not required to maintain a balance sheet.
The Level 2 financial module will introduce financial statements including:
- Balance sheet
- Net worth statement
- Income statement
- Cash flow statement
- Cash and accrual accounting income statements
The module also provides a starting point for calculating cost of production (COP) including per unit COP.
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