Theory question 110
Farm Management and RecordsExplain briefly the following terms in farm management:
(a) farm valuation.
(b) cash analysis account
(c) profit and loss account.
(d) balance sheet.
Show the model answer
(a) Farm valuation: assessing the money value of farm assets (land, buildings, machines, livestock, stores) at a given time, e.g. opening and closing valuations
(b) Cash analysis account: record of all cash received and paid out, arranged under headings (enterprises/items) so that income and expenses of each can be analysed
(c) Profit and loss account: statement of income (sales, closing valuation) and expenses (costs, opening valuation) over a period, showing whether the farm made a profit or loss
(d) Balance sheet: statement of the farm's assets and liabilities at a particular date, showing its net worth
One clear definition for each.