Consequently, you need to have a clear understanding of the purpose of an income statement, the information needed to prepare the statement, and the way in which it is summarized. Values from the tax return, however, may not accurately measure the economic performance of the farm.
Most farm families do a good job of keeping records of income and expenses for the purpose of filing income tax returns. It offers a capsule view of the value of what your farm produced for the time period covered and what it cost to produce it.
It is a measure of input and output in dollar values. How much did your farm business earn last year? Was it profitable? There are many ways to answer these questions.Ī farm income statement (sometimes called a profit and loss statement) is a summary of income and expenses that occurred during a specified accounting period, usually the calendar year for farmers. Teaching activity Your Farm Income Statement
