Purchasing Resources for Farm Management Accounting Software

Farm Management Accounting Software Key Terms

Understand the terms companies use in farm management accounting software to choose the best
By Shannon Tani Farm managers looking for an accounting software program to help manage expenses have several from which to choose. Before choosing a software program, farm managers need to make a list of the things that they require in a software program and then make sure that the software has those capabilities. If they want to make the best decision, managers should know certain terms to better understand the software features.

Equipment depreciation

Equipment depreciation occurs as farmers use their equipment. Over time, the value and usefulness of machinery depreciates due to use, rust and general wear and tear. It's important for farmers to track equipment depreciation because they may be able to use it as a tax deduction.
Try:  The University of North Carolina offers an extensive article on farm equipment depreciation.

Cash flow statement

A cash flow statement, or cash flow plan, allows you to see where your money comes from and goes to over a period of time. This helps you to plan for large purchases or to better manage your money. Farm accounting programs should be able to create this automatically from data you enter.
Try:  For a lengthier description of a cash flow statement, check out the Business Owners Toolkit.

Accrual and cash methods

The accrual and cash methods are two different ways that you can handle your accounting. In the more popular accrual method, business owners count their income at the time that the transaction occurs. In the cash method, they do not count the income until the customer pays the cash.
Try:  Look to Nolo for descriptions and examples of the cash and accrual methods.

P&L statement

A profit and loss statement, also known as a P&L statement, is essential for any business. It shows the business owner where he or she made profits and where there were losses.
Try:  eSmallOffice gives business owners step-by-step instructions on how to create a P&L statement, including an example.

Inventory management

Any good farm management accounting software should provide inventory management capabilities. Inventory management is keeping track of a company's inventory, including when new stock comes in or goes out.
Try:  Look to InventoryManagement.com for a more detailed description of inventory management and a discussion about what inventory management software should do.

Schedule F

The schedule F is a profit-and-loss statement for farms that must be submitted along with taxes. Many farm management accounting software programs allow farmers to easily print out this information.
Try:  Download a PDF file from FedForms.gov (the official site for federal government forms), which offers the instructions for filling out the schedule F.

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