The section offers an overview of basic business concepts that are important for farmers as they build their record keeping systems and plan for growth. Many of the concepts discussed in this section will come up throughout the program.
At the end of this section, participants will understand:
Accrual vs. cash accounting, and why it’s important for understanding the profitability of a farm business.
The three financial statements, what they tell a farmer about their business, and how they interact together.
Julia Shanks consults with food and agricultural entrepreneurs to achieve financial and operational sustainability. Working with a range of beginning and established farmers, she provides technical assistance and business coaching that empowers them to launch, stabilize, and grow their ventures.
Could you please explain why the terms “debit” and “credit” have different meanings in accounting? A debit to me is a deduction from my account and a credit would be a deposit into my account. It’s my understanding that they are actually the opposite in accounting. Thanks!
Great question! And it is definitely confusing. Debits and credits in accounting reference “double entry accounting” and reflect movement between the various accounts. For liability and equity accounts – it goes with your intuition – a debit is a decrease and a credit is an increase. For asset accounts, it’s the opposite.
As an example, if you “credit” a bank account (an asset) you are actually reducing the amount in that account. If you “credit” a loan account (a liability) you are increasing the amount in that account.
It’s super confusing, and the only time it’s really important for most farmers and small business owners is when they’re doing journal entries in QB.
Feel free to join me during office hours if you’d like to chat more!
I very much appreciate this course; thank you. I am not understanding, fully, how feed for layers counts on income. Is it because of the product received from those layers? And I might have missed it, I hope not; What does NOT impact the balance sheet?
Great questions. Feed for layers would be an operating expense; not an income.
“Impact the balance sheet” means… every transactions will somehow show up on the balance sheet report. For example, if you enter an expense in QuickBooks, you will see that expense on your profit and loss. It may not be specifically there, but it will be grouped with other expenses. You will see a decrease in net income as the result of that expense. If you look on the balance sheet – in the equity section, you’ll see a line items for “net income.” So if you enter an expense, you’ll see a decrease in net income on the balance sheet. The balance sheet will have different numbers on it as the result of all transactions.
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Hi, I’ve already completed the Basic Quickbooks lesson and quiz, but it isn’t saying I’ve completed it. What’s wrong?
Hi Donna,
On my end it looks like you completed it and got 100%! Congrats! 🙂
Hello,
Could you please explain why the terms “debit” and “credit” have different meanings in accounting? A debit to me is a deduction from my account and a credit would be a deposit into my account. It’s my understanding that they are actually the opposite in accounting. Thanks!
Hi Jill,
Great question! And it is definitely confusing. Debits and credits in accounting reference “double entry accounting” and reflect movement between the various accounts. For liability and equity accounts – it goes with your intuition – a debit is a decrease and a credit is an increase. For asset accounts, it’s the opposite.
As an example, if you “credit” a bank account (an asset) you are actually reducing the amount in that account. If you “credit” a loan account (a liability) you are increasing the amount in that account.
It’s super confusing, and the only time it’s really important for most farmers and small business owners is when they’re doing journal entries in QB.
Feel free to join me during office hours if you’d like to chat more!
It was a very good course
I very much appreciate this course; thank you. I am not understanding, fully, how feed for layers counts on income. Is it because of the product received from those layers? And I might have missed it, I hope not; What does NOT impact the balance sheet?
Great questions. Feed for layers would be an operating expense; not an income.
“Impact the balance sheet” means… every transactions will somehow show up on the balance sheet report. For example, if you enter an expense in QuickBooks, you will see that expense on your profit and loss. It may not be specifically there, but it will be grouped with other expenses. You will see a decrease in net income as the result of that expense. If you look on the balance sheet – in the equity section, you’ll see a line items for “net income.” So if you enter an expense, you’ll see a decrease in net income on the balance sheet. The balance sheet will have different numbers on it as the result of all transactions.
Great question, and I hope this makes sense.