Your Farm Financial Reporting Scorecard?
I will be speaking at the Ag Financial Boot Camp today in Bettendorf, Iowa and thought I would ask a few questions of our readers to see how they “score” on their financial reporting. Here are some of the questions:
- Are you using a computerized accounting system?
- Do you record your income and expenses on some type of accrual system?
- Do you print out your balance sheet, income statement and statement of cash flows on a monthly basis and use it in your farm operation?
- Do you know more about your farm finances than your banker does?
- Do you book crop inventories on your balance sheet?
- Do you calculate your deferred tax liability and know what that means?
- Do you calculate depreciation based on some type of economic depreciation or book depreciation?
- Do you prepare both historical and fair market value balance sheets?
If you do at least 6 out of 8, give yourself an A. If you do 4-5, give yourself a B-. Less than 4 is likely a failing grade on your farm financial reporting. For those farmers with a failing grade, I would suggest looking at the guidelines at the Farm Financial Standards Council website. They can help you get a passing grade.