1. IN C O M E
S TA TE M E N TS
A g B u s in e s s
Ma na g e me nt
Original PowerPoint Created by
S p r i n g 19 9 9
Mike White
Modified by
Georgia Agricultural Education
Curriculum Office
June, 2002

2. How do you measure
performance?
a Your school work
a Basketball team
a Restaurant
a Greenhouse

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

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

5. Uses of Income Statement
a Summarize revenues & expenses
a Determine profit/loss
a Explain changes in owner equity

6. Uses of Income Statement
a Calculate financial measures
a Support loan application

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

8. Examples of Revenues
a Cash Revenues
• Cash sales
• Government payments
• Custom work receipts

9. Examples of Revenues
a Non-cash Revenues
• Acct. Receivable
• Changes in inventory

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

11. Examples of Expenses
a Cash operating
• seed
• fertilizer
• chemicals

12. Examples of Expenses
a Non-cash expenses
• depreciation
• changes in unused supp., acct. pay., accrued
int., accrued taxes

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

14. Cash Accounting - Income St.
cash revenue - cash expenses
= net cash income

15. Cash Accounting - Income St.
net cash income - depreciation
= net income from operations

16. Cash Accounting - Income St.
net income from operation
± gain/loss on sale of capital assets
= net income

17. Accrual Accounting Income
Statement
gross revenue
- cash expenses
- depreciation
± non-cash expense adjustment
= net income from operation

18. Accrual Accounting
Income Statement
net income from operations
± gain/loss on sale of capital assets
= net income