CALIFORNIA AGRICULTURAL EDUCATION
RECORD BOOK
INSTRUCTIONAL
MANUAL
OCTOBER 2010
TABLE OF CONTENTS
Page
Introduction
This section introduces you to the Record Book
3
Cover and First Page
Here you record general information about yourself and list your specific enterprises.
4
Calendar of Events and Operations
Here you record enterprise activities and important dates.
10
Business Agreements
Here you record details of agreements between parties involved in the enterprise.
13
Budget
This is used to estimate the expenses, receipts, and net income for the planned
enterprise.
19
Journal
Here you record enterprise receipts, expenses, and hours worked.
22
Enterprise Loan Payment Summary
Here you keep track of loans (over 60 days).
29
Enterprise Accounts Receivable
Used at the beginning and end of the year to record monies owed to you.
34
Enterprise Accounts Payable
Used at the beginning and end of the year to record monies that you owe others,
excluding loans.
36
Current/Operating Inventory
This is where you keep track of the value of all property you own that will be
consumed or sold within one year.
38
Non-Current/Capital Non-Depreciable Inventory
This is where you keep track of the value of all breeding livestock raised and land.
42
Non-Current/Capital Depreciable Inventory
This is where you keep track of the value of all property you own that has a usable
life of more than one year.
46
Financial Statement
This is a summary of your Total Net Worth, including Personal and Enterprise Net
Worth.
53
Income Summary
Here, at the end of the year, you summarize the expenses, receipts, and net income
for the overall enterprise program.
59
Contribution to Support of Family
Keeps records of earnings from your enterprise that were spent to support your
family, rather than invested.
65
Expenses for Educational Purposes
Records enterprise earnings that were spent for educational purposes.
66
FFA Activities
Keep records here of your participation in FFA activities.
68
Community Service and School Activities
This is a record of other activities in which you are involved in your community and
school, other than FFA.
74
Transferring Existing Projects to FFA
This is information about how to record the transfer of a exisitng project to an FFA
project upon entering Agriculture Education
77
Glossary
Definitions of many of the words and concepts used in the Record Book.
78
INTRODUCTION
As a student of agriculture education you are required to develop a Supervised Agricultural
Experience Program. A Supervised Agricultural Experience Program (SAE) is a sequence of
practical agricultural activities that occur outside of the classroom. These activities help
develop competencies related to the agricultural career selected by you and are supervised by a
qualified vocational agriculture teacher. An easier way to think of a SAE is to consider it a
four-year program of practical out-of-class learning experiences related to your career goal. It
will consist of some sort of enterprise or enterprises.
For purposes of this record book the term enterprise will be used when referring to your SAE.
The term project is not used in this book. There are two types of enterprises that you may
choose: ownership and placement. An ownership enterprise is one that you own and manage;
while a placement enterprise is one in which you work for someone else, either for pay or no
pay. Placement enterprises are usually considered work experience. One important part of a
successful enterprise program is the keeping of accurate records. The California Agricultural
Education Record Book has been developed for that purpose.
This manual will guide you through the Record Book. Each section of the Record Book will be
examined in detail. The chapters of this manual are divided according to the sections of the
Record Book. Each chapter contains a purpose, instructions about how to complete the section,
and an example.
The Record Book will allow you to keep track of all the pertinent information needed for
financial planning. The Record Book is a single entry, accrual-based accounting system. In the
accrual system, income and expenses are recorded when the transactions occur, not necessarily
when the money changes hands.
The number of months of enterprise records included in the book is an important consideration.
You may use either a calendar year, or a fiscal year. The calendar year begins on January 1 and
ends on December 31. A fiscal year begins on the first day of any month and runs for one year.
Often it is easier to start your first book in September and run it for sixteen months, ending the
book the following December 31. If the book begins earlier in the summer (if you have an
enterprise start in the summer before the first year in a agriculture education class), then it is
recommended that complete the book for the months of activity during that calendar year and
you close out the first book at the end of the year.
3
Record Keeping is Easy
Here are some tips that will help:
1. Be Neat
Neatness gives others their first impression of your Record Book. Most sections will
require you to use a pencil. In these cases a hard lead pencil (#2.5) should be used, as
softer pencils will smudge. Only use a pen on the cover and business agreements.
2. Keep Your Records Current
This is the only way to insure that all the information is included and accurate. If you do
not have all the information to make a complete entry, enter the information that you
have and correct it later. Do not delay your other entries. Waiting will put you further
behind and increase your chances of making errors.
3. Add Pages As You Need Them
Pages may be photocopied from a blank Record Book and attached by keeping the whole
Record Book bound in a folder or in a loose-leaf binder.
4. Be Thorough
You must provide enough detail so that a person who is not familiar with your enterprise
could find their way through your Record Book and understand it.
REFERENCE GUIDE TO COMPLETING THE RECORD BOOK
Record Book Section
Cover
First Page
Calendar of Events and
Operations
Business Agreements
Budget
Journal
Enterprise Loan
Payment Summary
Enterprise Accounts
Receivable
Enterprise Accounts
Payable
When to Complete
Beginning of the year
Beginning of the year, and
whenever new enterprises are
added.
Beginning of the year, with
updates as events are planned or
occur.
Prior to starting new enterprises
Prior to starting new enterprises
Update regularly, throughout the
year, at least on a weekly basis
Use
Pen
Pencil
Pencil
Pen
Pencil
Pencil
Update as loans are granted
Pencil
Beginning and end of the year
Pencil
Beginning and end of the year
Pencil
4
Current/Operating
Inventory
Non Current/Capital
Non-Depreciable
Inventory
Non Current/Capital
Depreciable Inventory
Financial Statement
Income summary
Contribution to Support
of Family
Educational Expenses
FFA Activities
Community Service and
School Activities
Beginning and end of the year
Pencil
Beginning and end of the year,
and as items are acquired
Beginning and end of the year,
and as items are acquired
Beginning and end of the year
End of the year
Pencil
Pencil
Pencil
Throughout the year
Throughout the year
Throughout the year
Pencil
Pencil
Pencil
Throughout the year
Pencil
5
Pencil
COVER AND FIRST PAGE
Purpose:
The cover and first page are important parts of your Record Book for two reasons. First, it
gives people their first indication of your records; and secondly, it gives vital information about
you. The information on the cover and first page is important and must be accurate.
If the cover of your Record Book is neat and attractive, people get a good first impression. If
your cover is dirty and messy, people get a poor first impression. Avoid taking the Record
Book to places where it will get dirty.
The first page lists the specific enterprises included in the Record Book. Throughout the entire
record Book you will be referring to these enterprises according to the way they are listed here.
How to Complete The Cover:
1.
Use a pen to complete the cover.
2.
Print all information as neatly as possible.
3.
Fill in all the required information, spelling correctly:
ƒ Your full name
ƒ The name of your school
ƒ The name of your FFA Chapter
ƒ Your year in Agriculture Education
(Do not use numerals 1, 2, 3, … - Print the word “first”, “second”, “third”, etc.)
ƒ The name(s) of your agriculture instructor(s)
How To Complete The First Page:
1.
Use a pencil to complete the first page.
2.
Print all information as neatly as possible.
3.
Fill in all the required information, spelling correctly.
4.
Fill in the names of your enterprises on lines A through D.
ƒ If you have more than one enterprise, list them separately. Write your second
enterprise on Line B. Write your third enterprise on Line C. Write your fourth
enterprise on Line D.
6
Additional Information
As you fill out the cover and first page, take a minute to look at the drawings on them.
On the cover the State of California is represented with pictures of many of this state’s
agricultural products. California is the number one agricultural state in the nation, producing
over 200 different agricultural products. It is estimated that one in four jobs in the state are
related to agriculture and agricultural industries.
7
EXAMPLE
CALIFORNIA AGRICULTURAL EDUCATION
RECORD BOOK
Name
_Barbara Rose __ ___ _ _________________
School __ Approval High School __________________
Chapter __ Approval FFA
__________________
Year in Agriculture __ Second ____________________
Record Book for Year Beginning
Jan. 1 _ , 20 _ 03___
__ , 20 _ 03___
Ending _ Dec. 31
Instructor(s) _ Mr. Goodperson
___ ____ ______ __
__Ms. Care ________________________
REVISED August 12,
8
EXAMPLE
CALIFORNIA AGRICULTURAL EDUCATION RECORD BOOK
Contains Information for the Following Enterprises:
((A)) Market Swine
(B) Landscape Maintenance
(C) Breeding Swine
(D) Jones Nursery
9
CALENDAR OF EVENTS AND OPERATIONS
Purpose
The Calendar of Events and Operations is a tool that helps you keep track of dates and
activities that are important to you. The information you include in your calendar may be
related to your enterprise, to school, or to your personal life. This is where you may write
information that you want to remember that does not fit anywhere else in the Record Book.
Examples of entries include such things as meetings, field days, athletic events, concerts, etc.
It may be used in a variety of ways and your instructor can give you ideas about what should be
recorded.
The Calendar of Events and Operations will become a record of your enterprise activities for
the future. Information should be clear enough to be understood if someone (such as a Record
Book judging official) were to read it. The calendar should be used for recording activities that
will help you make management decisions in the future. Activities such as breeding and
weaning dates, fertilizer applications, medical treatments, weights and yields are important to
include in this calendar.
How to Complete the Calendar of Events and Operations
1.
Use a pencil to complete the Calendar of Events and Operations.
2.
Prepare the calendar for use.
Write the name of each month at the top of each calendar, starting with the month
you begin your record Book. Write the correct year next to the name of the month
(make sure you have a total of twelve months – six pages with a month on each
side, exception: first book may be different depending on the number of months
records are kept).
Fill in the correct dates for each month. Refer to a current calendar to make sure
you are numbering correctly, beginning and ending each month on the correct
days. For certain months you may need to put two days into one square, depending
on how long the month is, and on what day of the week it begins. When this
happens, draw a diagonal line from the upper right corner to the lower left corner
of the square. The upper triangle will be used for the first date, and the lower one
for the later date. Draw a small box in the lower right corner and write the later
date in it.
3.
Enter your own enterprise information on the calendar.
10
Keep entries short and concise. You may need to make more than one entry on
some dates. Do not clutter the spaces with irrelevant information.
Be specific. The calendar is an important record that you will likely refer back
to in the future.
11
20
19
18
21
14
Finshed farrowing
crate at school shop
with Mr. Ramos
7
THURSDAY
12
31
25
26
Picked up new gilt
from Borba's
27
28
29
FFA Summer Ice
Cream Social 4:00 pm
at Park
30
Mom's Birthday
Sprayed hog for lice
23
Baled Straw with Tom
(10 ton)
16
Visited Hepper Farms
with Tom
9
Bred sow #1 to Duroc
boar
2
SATURDAY
, 20
24
22
15
8
1
FRIDAY
July
Cheerleading Camp - Cheerleading Camp - Cheerleading Camp - Cheerleading Camp - Summer FFA Meeting
7:30 pm Ag Dept at
Lake Tahoe
Lake Tahoe
Lake Tahoe
Lake Tahoe
school
19
Started work at Jones
Hardware Store in
Garden Shop
Went to talk about
Market steer loan
13
12
11
6
WEDNESDAY
Weaned #2's piglets
(7 piglets)
5
TUESDAY
March in Parade with
Girl Scouts
4
MONDAY
Month of
10
3
SUNDAY
EXAMPLE
CALENDAR OF EVENTS AND OPERATIONS
03
BUSINESS AGREEMENTS
Purpose
The business agreement is a written record of what each party agrees to give and what they
expect to receive in an enterprise. Anytime two or more parties agree to work together to
accomplish something, there is a need for a business agreement. A properly drafted business
agreement reduces the chance of misunderstandings between you and the people with whom
you do business. The business agreement is a legal document. As such, it may have a greater
effect on the success of your overall program than any other section of the record book.
There are two kinds of SAE business agreements: the Ownership and the Placement
Enterprise Agreement. For example, if your ownership enterprise is raising a market hog, you
will need to keep the hog somewhere. You might keep it at home, at the school lab, or at a
neighbor’s. In either case you will need to make an agreement with the party(s) whose property
you will be using as the place to raise your hog. In exchange for letting you use their space, you
might agree to pay the property owners some money, or perhaps they might want a piglet from
a farrowing sow you will raise. Your parents might only want you to agree to keep the barn
clean, or they may want a portion of the money you receive when you sell your hog. Whatever
terms you agree to, they must be clearly stated in the business agreement.
If your enterprise is paid work experience in nature, you will need a business agreement to
specify the terms of your agreement. Important information such as duration of employment,
pay rate, and job duties must be included in the Placement Enterprise Agreement. An Unpaid
Placement enterprise must have an agreement if enterprise will be over 50 hours of self-labor.
How To Complete A Business Agreement
Business agreements must be typed or written in ink before the enterprise or job begins.
There are several important reasons for doing this:
1. Whether you have a job or are starting an enterprise, more than one person is
involved. You should therefore consult the other parties involved, including your
instructor and parents or guardians, before beginning.
2. Advance planning is required so everyone knows exactly what is expected.
3. All parties to the agreement will have a better understanding of the program and each
other’s responsibilities.
4. If the agreement involves the production and marketing of crops or livestock, there is
a written record of each party’s input of land, building, equipment, or money. Also,
the business agreement will determine how the parties involved will share any profits.
13
5. If you are working for someone else, your job duties can be outlined and all details of
your pay understood by all parties.
6. All ownership enterprise agreements must address each of the 6 items written in bold
at the top of the agreement form: equipment, land, buildings, capital, management and
profit or loss.
Ownership Enterprise Agreement
This business agreement is to be used anytime you have your own productive enterprise.
Usually you will have a separate agreement for each enterprise, unless the agreement is between
the same parties and the terms are the same. For example, if your parents are letting you use the
barn for raising a steer and a pig, then one business agreement will probably suffice for both
enterprises. Any time the agreement is between two different parties, or has different terms, a
new agreement is needed.
The Ownership Enterprise Agreement is a legal document, as such, it must have no mistakes.
To avoid making any mistakes, it is best to make a copy of the blank agreement from your
record book and fill it out first. Only after your instructor has approved it should you transfer
all the information, in ink, to your record book. When you have a copy of the Ownership
Enterprise Agreement, begin completing each portion according to the following instructions:
1. Ownership Agreements must be typed or written in ink before the enterprise begins.
2. Fill in the first part of the agreement:
• Enter the day, and then the month and year the agreement is written.
• Enter the date the enterprise is to be terminated. If the ending date is unknown, write
“until either party terminates this agreement. If the agreement’s duration goes beyond
your current record books closing date, a copy of the agreement must be made and put
in the next record book or a new agreement written.
• Write in the student’s name.
• Write in the “Other party’s” name.
• Enter the name of the enterprise. Examples: Market swine, nursery stock, Breeding
beef.
3. Fill in the main body of the agreement:
• Write specifically all the responsibilities you and the other party will have and what
they will obtain from the enterprise. Be sure to address each of the six-bolded items:
equipment, land, buildings, capital (money), management, and profit or loss. Use
complete sentences. And be specific with details.
Examples of responsibilities: to feed and care for animals, to do all of the
tractor work on my enterprise, to pay all the bills incurred by my enterprise by
working for my family, etc… If you will receive all of the profits, state that
fact. If you are sharing with the other party, explain here, in detail, how you will
14
do this. List what the other party agrees to provide. This may be a place to keep
your animal or to raise a garden. Explain what it includes, such as tools,
irrigation supplies, financing, etc… If you are paying rent to the other party,
state how much it will be per month. If they are going to share in the produce
from your garden, state what portion of your harvest they will get. If you agree
to share the profits from your enterprise with the other party, state what amount
they will receive, or what percentage of the profit they will get.
4. Signatures of Parties Involved
Get your instructor’s approval.
Until now you should have been working on a copy of the Ownership Enterprise Agreement.
Copy the correct information, in ink, onto the original Ownership Enterprise
Agreement.
Get the signatures, in ink, of all parties involved.
You, the other party, and your instructor (when applicable), all must sign the business agreement.
5. If the conditions of the agreement change during the duration of the agreement, then it
should be terminated and a new agreement written.
You have now completed the Ownership Enterprise Agreement. If you have further
questions, refer to the example.
15
EXAMPLE
16
Placement Enterprise Agreement
This business agreement is to be used any time you work for someone else for pay or have
Unpaid Placement enterprises that will be over 50 hours of self-labor. Placement enterprises
are often referred to as “work experience.”
The Placement Enterprise Agreement is a legal document. As such, it must have no
mistakes. To avoid making any mistakes, it is best to make a copy of the blank agreement
from your record book and fill it out first. Only after your instructor has approved it should
you transfer all the information, in ink, to your record book. Once you have a copy of the
Placement Enterprise Agreement, begin completing each portion according to the following
instructions:
1. Placement Agreements must be typed or written in ink before the enterprise begins.
2. Unpaid Placement enterprises that will be over 50 hours of self-labor must have a
placement agreement.
3. Fill in Part 1:
• Enter the actual day, and then the month and year the agreement is written.
• Enter the date the work/training is to start.
• Enter the date the enterprise is to be completed. If the ending date is unknown, write
“until wither party terminates this agreement”. If the agreement’s duration goes
beyond your current record book’s closing date, a copy of the agreement must be
made and put in the next record book or a new agreement written.
4. Fill in Part 2:
• List the name of the business, the type of business.
5. Fill in Part 3
• List the name of the person directly responsible for supervising and/or training the
student. This will be the person who also signs the agreement.
6. Fill in Part 4
• List how much the students wages will be and what will the basis of pay. (i.e. hourly,
by the day, by the job, by the month)
• List how often they will be paid. (i.e. weekly, biweekly, monthly)
7. Fill in Part 5
• List the agricultural skills the student will be expected to perform.
8. Fill in Part 6
• Write specifically all the responsibilities the employer will have and what they will
obtain from the enterprise. Use complete sentences. And be specific with details.
9. Fill in Part 7
• Write specifically all the responsibilities the student will have and what they will
obtain from the enterprise. Use complete sentences. And be specific with details.
10. Part 8 – Obtain the signatures
• Both parties must sign in ink.
• Include the employer’s phone number so the student or teacher may contact the
employer as needed.
17
PLACEMENT ENTERPRISE AGREEMENT
(Paid and Unpaid Work Experience)
1
To provide a basis of understanding and to promote sound business relationships, this written agreement is established
on
January 2, 2007
This work/training will start on
January 5, 2007
and will end on or about
December 31, 2007 unless the arrangement becomes unsatisfactory to either party.
2
Business name and type
Jones Nursery, Retail Nursery
3
Person (employer/trainer) responsible for training:
4
Wages:
$8.00/hour
Larry Jones
Frequency of Payment
Weekly
5. Describe your placement experience to include your ag. skills performed
While working at Jones Nursery, I will be able to sort plants, identify shrubs and tree stock, fertilize the plants as needed,
irrigate the plant materials, and work the register. In addition to working at the Nursery, I will also install irrigation lines as well
as plants as part of the landscaping program.
6. IT IS UNDERSTOOD THAT THE EMPLOYER WILL (Use complete sentences):
The employer will provide a list of tasks to be completed as well as a timeline to be followed. The employer will provide
oversight as the assigned tasks are completed. The employer will also provide on-site training in identifying plants, weeds,
and in working with chemicals. Prior to operating any equipment or administering any chemicals, the employer will provide
access to training classes and certificate programs. Finally, the employer will provide weekly evaluations regarding my job
performance.
7.
THE STUDENT AGREES TO (Use complete sentences):
I agree to show up at the prescribed times ready to work. I agree to have a cooperating attitude with an eagerness to learn. I
agree to report any injuries immediately to my supervisor. I agree to maintain a ledger of work accomplished and time taken
to complete the tasks. I also agree to work with my fellow employees in an effort to ensure that the customers receive the
best service they can.
8
STUDENT'S SIGNATURE:
EMPLOYER/TRAINER'S SIGNATURE:
Business Telephone
999-999-9999
18
BUDGET
Purpose
The purpose of the Budget is to anticipate the cost factors of an enterprise, compare them to the
potential receipts, and determine which enterprises have the best possible chance for financial
success. Budgets are essential when going to the bank to borrow money.
Simply, the Budget is your best estimate of how much it will cost you to operate your
enterprise. It is important to consider all cost factors and to be as realistic as possible. You will
need to use many resources in order to have an accurate budget. For example, a telephone call
to a feed store or a nursery can give you an accurate estimate of certain expenses. Similarly,
you may refer to newspapers and newsletters when estimating selling prices. Just because
someone in your chapter once sold a lamb for $9 per pound doesn’t mean you will be able to
secure such a good price. Be as realistic as possible when estimating. Also, it is wise to always
estimate your expenses slightly higher and your receipts slightly lower than you think they will
actually be.
Budgets are most commonly used with ownership enterprises, but they should also be used with
placement enterprises. Your instructor and other experienced people will be important
resources as you estimate your budget.
After you complete a production cycle or a year of work experience, it is interesting to check
back and see how close your Budget estimates actually were. Do this to see how close you
were in your estimating, but never change your budget retroactively, no matter how far off from
reality it may be. Use the actual costs instead to help you better plan your next enterprise.
The Budget, along with the Business Agreements, must be completed before starting an
enterprise.
How To Complete The Budget
General Considerations
When making a budget, round off all entries to the nearest whole dollar. Take actual amounts
and round the value either up or down. If the cents value is greater than .50, then round up to
the next dollar. If the cents value is .49 or less, then round down. For example, write 100
dollars instead of 100.45; 42.49 becomes 42 dollars, but 42.50 becomes 43 dollars.
Budget items that are not applicable to your enterprise, or for which the answer is 0, must be
left blank. Do not write 0 in these places. Also, do not write in dollar signs ($).
19
The following steps will lead you through the budgeting process:
1. Enter the name of the enterprise to the right of the corresponding letter and column at the
top of the budget.
2. Complete the Estimated Expenses:
• On lines 1 –14, list the major categories of expenses required for the operation of
the enterprise. Examples include rent, purchase of materials, supplies, entry fees,
livestock, plant material; depreciation expense, interest on loans. Do not include
the purchase of Non-current/Capital Depreciable items.
• Record the estimated cost for each of the items listed under the appropriate
enterprise column. Remember to record in whole dollars only. Do not use cents.
3. Determine the Estimated Expenses:
• Add lines 1 – 14 and enter the total on line 15 and line 22.
4. Complete the Estimated Income:
• On lines 16 - 20 list all products the student will be selling or jobs they will be
receiving income from. The description of the product should indicate how the
amount of income was determined. Examples: Market hog 225 lbs @ $3.00/lb, Ranch
worker - 1000 hrs @ $6.50/hr, 500 plants @ $.50 ea, 5 lawns mowed @ $75/lawn, etc.
• In the appropriate enterprise column, record the estimated income for each item
listed on lines 16 – 20. Remember to record in whole dollars only. Do not use
cents.
5. Determine Estimated Income:
• For each enterprise add lines 16 – 20 and record the amount on line 21.
6. Determine Estimated Net income:
• Subtract line 22 from line 21 and enter the result on line 23.
For further information on the Budget, see the example.
20
EXAMPLE
BUDGET
The budget is your best estimate of income and expenses to determine net income. The budget is to be completed before
the start of the enterprise.
All numerical entries should be rounded to the nearest whole dollar. Do not record decimal or cents.
ESTIMATED EXPENSES
ENTERPRISES
(A) Market Swine
1 Pen Rent
(B) Landscape Mainte (C) Breeding Swine
25
(D) Jones Nursery
25
2 Equipment Rent
44
3 Interest on loans
6
4 Depreciation on shears and loppers
7
5 Depreciation on hedge shears
8
6 Misc. to maintain mower
40
7 Market pig purchase
160
8 Grooming and show supplies
45
75
9 Medical Supplies
15
75
8
24
100
250
10 Fair entry
11 Feed
12 Rubber boots and gloves
25
13
14
15
TOTAL ESTIMATED EXPENSES
(add 1 through 14)
ESTIMATED INCOME
16 2 Pigs (ave $1.20/lb 240 lbs
359
99
449
25
ENTERPRISES
(A)
(B)
(C)
(D)
504
17 Sale of 10 piglets @ $50 each
500
18 Work 18 hrs/wek @ $7.00/hr for 10 months
5,040
19 5 lawns maintained @ $100/lawn
500
20
21
TOTAL ESTIMATED INCOME
(add 16 through 20)
22
TOTAL ESTIMATED EXPENSES
(from line 15 above)
23
ESTIMATED NET INCOME
(Line 21 minus line 22)
504
500
500
5,040
359
99
449
25
145
401
51
5,015
21
JOURNAL
Purpose
The Journal is used to record actual income, expenses, and hours that you work on your
enterprise. It should be kept up-to-date on a weekly basis, at the very least. The Journal is
where you will record the majority of activities related to your enterprise program. Keep in
mind, only agriculturally related activities may be recorded in your Journal. Do not put
income, expenses, or hours for anything other than your enterprise into the Journal.
In addition to the hours you work on your own enterprise, you may also record in the Journal
any hours you work, whether paid or unpaid, that are agriculturally related. For instance, you
might help plant the chapter crop. On the other hand, activities such as judging teams and
working on the banquet are not part of an SAE and therefore are not to be listed in the Journal.
The information recorded in the Journal will be used at the end of the year in completing your
Income Summary. In addition, your Journal will be reviewed by many people, including your
instructor and judges when you apply for degrees or awards. Even you will be referring back to
your Journal in the years to come, as you plan other enterprise activities. Therefore, it is
extremely important that the information you record in the Journal be accurate and concise.
HOW TO COMPLETE THE JOURNAL
Record Keeping Tips For the Journal
1.
2.
The Journal is to be completed in pencil.
Make Journal entries as frequently as possible.
Small bits of information are easy to forget. Write transactions down as soon as they occur.
3.
Keep your Journal neat.
Because others will be reading it, you must write legibly and consistently.
4.
Use a separate page for each month.
If you need more pages than are provided, additional pages can be duplicated and added as needed.
5.
Every entry of income, expenses, or hours must appear in your Journal twice on the
same line – first on page 5a and then on page 5b.
Each month you will “balance” your Journal entries by adding the numbers on each page. The totals must be
equal. Example: Add the income columns on page 5B and that number must equal the income column on
page 5a.
This system provides for enterprise cost analysis and is method for checking accuracy as each month is
completed.
6.
Add more columns if you have more than four enterprises in the following way:
22
Duplicate page 5b and cut off the top of the page, change column name (A) to (E), column (B) to (F), column
(C) to (G) and column (D) to (H). Tape this page in your book so that column D on the new page covers
column D on the original page 5B, so when it is folded out you will have six enterprise columns. Repeat the
process if you have more than eight ownership enterprises.
7.
Add more lines, if you need more than the twenty provided, by doing either of the
following (ask for your instructor’s preference):
Combine entries. Instead of entering “labor feeding lamb” everyday, make this an entry once a week, or once
a month.
Duplicate page 5a and 5b. Cut off the top of each page above line 1. Tape these pages under line 20 so when
folded downward, you have 20 additional lines.
Making Entries
1. Fill in the month and year at the top of page 5a.
2. Date (column 1) – Indicate the date(s) the Activity took place.
Write only the days of the month, not the month itself, nor year, as these are already indicated at the top of the
page.
3. “Description” (column 2) – Describe what occurred.
Be specific. If you worked, list what kind of work. If you sold plants, list what kinds of plants. If you bought
feed, list type and what species it was intended for. If you bought medicine, list what type.
All entries must include a verb and a noun (object) in the description.
4. “Units”
“No.” (column 3) – List the quantity (number) for which you made or received
payment.
Perhaps you worked 6 hours, bought 50 pounds of feed, sold 100 plants, etc. These entries must have units.
Example abbreviations for units include: hrs. (hours), lbs. (pounds), cwt. (hundred weight), ea. (each). If you
receive payment for a whole job and there are no quantities, you may leave this column blank.
“Price” (column 4) – How much you received or expended for each unit.
If you made a quantity entry in column 3, then list in column 4 how much you paid or received per unit.
Examples include $10.00/hr., 25¢/lb., or $1.20/ea.
If you make an entry in either column 3 or 4, an entry must appear in both columns. The units in each
column must be the same. Do not use “$” in one column, and “¢” in the other.
5. “Income” (column 5) – Indicate the amount you have received.
Be certain to include the complete selling price (then enter selling expenses such as commission, yardage,
trucking, etc. in the EXPENSES part of your Journal). Exact sales dates are necessary in order to calculate
efficiency factors such as gain per day. In case of paid work experience, you must record your gross wages, not
your net pay (deductions are not listed as an expense). This corresponds to the method used in calculating income
tax. The income information generated during the year will be used at the end of the year to evaluate how well
you have done with your enterprises. You will also be using this information to determine how efficient your
enterprises have been and to compare your progress over the years.
Every amount you enter in column 5 on page 5a must also be entered on the same line on page 5b under
the appropriate enterprise column (8).
Keep your entries from page 5a to 5b on the same line.
23
6. “Expenses” (column 6) – Indicate the total amount you paid.
Keep expense entries current at all times. In the case of paid labor, either paid out or received, record gross
wages, not net pay. This corresponds to the method used in calculating income tax.
Also, record any expense you have incurred as a result of a job. Items that are needed for your work experience,
but not provided, such as tools and special clothing should be recorded.
Vehicle expenses such as gas, oil, and maintenance, that are incurred in getting either to or from your work place
are not legal expenses and cannot be recorded as such in the Journal. However, normal operating vehicle
expenses incurred while conducting the enterprise are considered legal expenses and therefore can be listed in the
journal.
Example 1: You drive to work each day and your car is parked while you are there. The expenses incurred here
may not be recorded. Example 2: While at work, you use your car to check a field for mites. The expenses
incurred while working would be listed in the Journal.
Keep your entries from page 5a to 5b on the same line!
7. “Hours Self-Labor” (column 7) – Enter all the hours you worked on any of your
enterprises.
Record whole hours only, not partial hours or minutes. Round up to the nearest whole hour.
First, enter the total hours you worked in column 7 on page 5a. Then, on page 5b, enter the hours as they apply to
each specific enterprise in column 10 under that enterprise or under unpaid hours in column 11.
In some cases entries on page 5a may be separated when entered on page 5b. For example, if you worked a total
of 8 hours on a given day, in which 2 hours was spent on your market swine enterprise and 6 hours on your
breeding swine project, those hours may be entered on one line in the journal, with the 8 hours entered on page 5a
and the 2 hours entered under the market swine enterprise and 6 hours under breeding swine enterprise on page 5b
on the same line.
Only enter hours that are RELATED TO YOUR ENTERPRISE and agricultural in nature.
You may group regular duties and enter them once a week or every two weeks. If you do this, time yourself
occasionally to get an accurate estimate of the actual time you spend. Include routine chores that you do every
day, such as feeding and watering.
At the End of Each Month
At the end of each month complete the bottom of each Journal page by following these steps:
1. “Total For Month” (line 21) – Add values in each column.
Add values in columns for income, expenses, and hours on page 5a (columns 5, 6, and 7).
Add values in columns for each enterprise on page 5b (columns 8-11).
2. “Total Brought Forward” (line 22) – Transfer values from “Total to Date” (line 23) from
previous month.
Keep information in the correct columns when transferring from last month to the current month.
24
If this is the first month you are recording activities, then nothing will appear on line 22 (remember, do not
write in 0). This will always be true regardless if this is your first, second, third, fourth, or fifth book.
If an enterprise is completed before the end of the year, the “Total to Date” from the previous month is still
brought forward until the end of the year.
3. “Total to Date” (line 23 – add Total for Month (line 21) to Total Brought Forward (line
22).
Add totals for each column on both page 5a and 5b.
4. Balance your Books. Compare totals on page 5a to totals on page 5b.
Your “income” total on line 23, column 5, should equal the sum of values on line 23 in “income” of all
column 8s.
Your “expenses” total on line 23, column 6, should equal the sum of values on line 23 in “expenses” of all
column 9s.
Your “hours” total on line 23, column 7, should equal the sum of values on line 23 in “hours” of all column
10s and column 11.
Do not move to the next month without balancing your Journal.
Additional Information
“Gifts”
In business, nothing is free! A gift that you receive is listed as an expense while a gift that you
give is listed as income. For example, a gift of a feeder pig for your market swine enterprise,
from your grandparents, is recorded as an expense. You must determine a value for it – the
actual amount paid if purchased, or if raised, what they are selling for at a local sales yard or
from the market report in the newspaper.
If the gift is a depreciable Asset, be sure to include it in your inventory, and do not include it in
the Journal. On the Depreciable property Inventory indicate that it was a gift when you record
it at year’s end.
A “gift” from you to your brother, of bedding plants he might use in his enterprise, is recorded
as income. The value of the flats might be what you would charge customers, what a local
nursery would pay you for them, or what a local nursery would charge your brother. Another
example would be the vegetables given to your parents from your garden. These should be
listed as income to your vegetable enterprise.
“Exchanges”
Anything you exchange must be given a dollar value in your Journal, even if a payment in
money is never made. For example, if you are trading your labor for feed, you must include the
25
value of the feed and the value of the labor you traded. This is very important so that you can
get a true indication of how your enterprise did. Otherwise, your Journal would indicate that
you produced pigs without any expense. This not true, as the labor you traded had a value, and
that is what you “paid” for the feed. Any exchange should be handled the same as gifts “from”
and “to” each party.
EXAMPLE: You work at the school farm in exchange for feed for your market animal. You
would place a value for your labor at the school farm (usually an hourly rate). This exchange
can be recorded in one of two ways. You would either use one line and show both the income
and expense on the same line and then on page 5b show the income to a Placement enterprise
and the expense of the feed to your market animal enterprise. Or you would use two entries,
showing you produced income by working at the school farm on one line and on another line
you would record the expense of your feed for your market animal.
The same is true when you raise a crop and use it as food for your market hogs. It is income for
your corn enterprise and it is an expense for your hog enterprise. There are different ways to
indicate exchanges in your Journal. Check with your instructor.
EXAMPLE: You use two yards of manure, from your pig enterprise, in your landscape
maintenance enterprise. You place a value on the manure of $5/yard. This exchange can be
recorded in one of two ways. You would either use one line and show both the income and
expense on the same line and then on page 5b show the income to your market hogs and the
expense to your landscape maintenance enterprise. Or you would use two entries, showing you
sold manure and produced income for your market hog on one line and on another line you
would record the expense of buying the manure from your market hog project for your
landscape maintenance enterprise.
26
EXAMPLE
JOURNAL
Record for the month of
December
, 20
03
Units
(1)
Date
1
2
3
4
5
6
7
(2) Description
(3)
No.
(4)
Price
4
Purchased Grow Mix
1 ton
$280/ton
10
Pruned shrub's at Camp's
4 hrs
6.25/hr
15
Water, weeded at Jones Nursery
36 hrs
18
Transferred feeders to market project
22
Sold pig at fair
31
Feed and care of animals for month
31
Potted plants, assisted customers at Nursery
(5)
Income
(6)
Expenses
280
(7)
Hours
Self
Labor
00
25
00
4
$7.00/hr
252
00
36
10 hd
$35/hd
350
00
1 hd
$140/hd
140
00
350
00
62
252
00
21 Total for month
1,019
00
630
00
22 Total Brought forward from previous month, line 23
4,148
58 1,521
16
23 Total to date
5,167
58 2,151
16
36hrs
$7.00/hr
36
8
9
10
11
12
13
14
15
16
17
18
19
20
Column 5 must equal the sum of columns A8, B8, C8, D8
Column 6 must equal the sum of columns A9, B9, C9. D9
Column 7 must equal the sum of columns A10, B10, C10, D10, 11
27
138
1,389
1,527
EXAMPLE
JOURNAL (continued)
December
Record for the month of
Enterprise
(A)
(8)
Income
, 20
Enterprise
(B)
Market Swine
(9)
(10)
Expense Hours
Enterprise
Enterprise
Landscape Maintenance
(8)
Income
03
(9)
(10)
Expense Hours
(C)
(8)
Income
Breeding Swine
(D)
(9)
(10)
Expense Hours
(8)
Income
Jones Nursery
(9)
(10)
Expense Hours
(11)
Unpd.
Hours
1
280 00
25 00
2
4
252 00
350 00
3
36
4
350 00
5
140 00
39
6
23
252 00
7
36
8
9
10
11
12
13
14
15
16
17
18
19
20
140 00
630 00
39
25 00
1,593 64
584 73
184
420 94
1,733 64 1,214 73
223
445 94
4
350 00
37 63
86
190 00
37 63
93
540 00
23
504 00
72
878 93
102 1,944 00
19 87 1,008
878 93
122 2,448 00
19 87 1,080
(Optional - expenses breakdown)
Total Feed
428.23
Total Other Cash 1703.06
Inventory Purchased for Resale
28
500.00
21
9
22
9
23
ENTERPRISE LOAN PAYMENT SUMMARY
Purpose
The purpose of the Enterprise Loan Payment Summary is to record the information on any
loans you take out related to your enterprise(s). Many people do not have money available to
pay the on-going expenses on an enterprise, so they borrow money from a bank or another
person to pay these expenses. The lender, the one who loans the money, is paid interest for this
service. The interest is calculated as a percentage of the principal, or the total amount
borrowed. Interest is usually paid while the loan is being paid off. Even if the money is from a
family member, it still must be recorded as a loan.
It is important to record all loans in your Enterprise Loan Payment Summary, even if they
are “no interest” loans. For example, your business agreement might state: “my parents will
provide all the capital and I will pay them back when I sell my enterprise.” In this case, the
money is yours to use and you will be recording expense entries in your Journal. Therefore,
you must list the money as a loan.
Additional Information
Loans are an extremely important part of all agricultural businesses. Agriculture is a capitalintensive industry, which means the typical farm or agricultural business usually borrows a high
amount of money. Farmers frequently carry a large debt and a large number of loans. Because
loans are such an integral part of agriculture, it is important to practice accurate loan record
keeping.
The basic formulas for figuring interest follow:
SINGLE PAYMENT LOAN
Principal X Interest Rate X Time = Interest
Where Interest Rate is expressed in decimal form and Time is expressed as years or fractions thereof.
MULTIPLE PAYMENT LOAN
Balance Owed X Interest Rate X Time = Interest
Where Balance Owed is the amount you still have to pay back on the principal, Interest Rate is expressed in
decimal form, and Time represents the time between payments, or the fraction of year.
The principal payments of a loan are not recorded in your Journal, but the interest payments
are recorded there. The reason for this is that the principal is normally used to buy items that
are recorded in the Journal, but the interest payments will only show up as an expense when you
29
make a separate entry. If the principal is used to buy a depreciable property item, the expense
shows up as depreciation. From the standpoint of income tax, only interest is tax deductible,
while principal for loans is not deductible.
When a financial institution such as a bank makes a loan, they are required by law to have the
borrower sign a statement that shows exactly what the interest rate will be. This statement must
indicate the annual percentage rate (APR). Normally this statement will also show how much
total interest you will pay and what the total amount of each payment will be.
How To Complete The Loan Payment Summary
The Enterprise Loan Payment Summary page is divided into two identical parts. Each part is
designed for one loan of up to 12 payments. Use this form even if you make less than 12
payments. If you have more than two loans, you will need to get another copy of page 6 for
your Record Book.
If you borrow money from an individual, whether it is a family member (including Mom or
Dad) or not, you must include in your Enterprise Loan Payment Summary the principal,
interest rate, repayment schedule, and how much the payments are to be (indicating both
interest and principal for each payment).
There are several important things to remember when keeping track of loans:
Receipt of a loan is not recorded in the Journal.
Payments of interest are recorded in the Journal.
Payments on the principal of your loan are only recorded in your Enterprise Loan
Payment Summary, and never in your Journal as an expense.
Fill out the Enterprise Loan Payment Summary in pencil.
Fill out the Enterprise Loan Payment Summary as soon as possible after you first
receive your loan.
There are two kinds of loans that will be described here, the single and multiple payment loans.
An example of a single payment loan would be when your parents loan you $300 for the
purchase of a market hog and supplies. When you repay the entire loan at once, such as
immediately after you sell your hog at the fair, this is a single payment loan.
Single Payment Loan
The instructions for filling out the Enterprise Loan Payment Summary for a single
payment loan follow:
30
1. Fill out the top portion of the Enterprise Loan Payment Summary as soon as you
receive the loan.
Date Borrowed. Enter the date that you secured the loan. If it was January 3,
2003, then write 1/3/03.
Name and Address of Person or Firm. List the name and address of the person or
business from whom you are borrowing.
Purpose of Loan. Indicate what use you will make of the money, such as to
purchase animals or to buy feed.
Total Amount due (Principal). List the amount borrowed, for example $800.00.
Interest (Int.) Rate. Write the interest rate. If it is 12%, write .12.
Final Payment Date. List when the last payment will be made.
2. Enter the single payment you make on Payment line #1.
Date – Enter the date the single payment is made.
Amount Paid:
Interest – Calculate the interest paid by utilizing the formula:
Principal X Interest Rate X Time
In this case, the principal is $800.00, the Interest Rate is .12, and the time is 9 months,
represented as 9/12ths of a year.
($800.00) X (.12) X (9/12) = $72.00
Principal – This is the total amount of money you originally borrowed. In this
example, $800.00 would be recorded as the principal.
3. Balance of Principal Owed – This is the amount of the principal that you still owe. In
this case, as this is a single payment loan, the amount is 0.
4. The amount of interest paid must be recorded in the Journal on the date it is made. The
payment on the principal is not a business expense, and therefore not recorded in the
Journal. In this example, $72.00 would be recorded as the interest paid.
5. Total for the Year. Enter the total amounts you paid in both interest and principal.
Again, since this is a single payment loan, these numbers will be found on the Payment
line #1.
31
Multiple Payment Loan
The instructions for filling out the Enterprise Loan Payment Summary for a multiple
payment loan follow:
1. Fill out the top portion of the Enterprise Loan Payment Summary as soon as you
receive the loan. The instructions for filling in this information are the same as for a
single payment loan.
2. Enter the payments you make beginning with Payment line #1. The financial institution
that made the loan to you will have provided you with a repayment schedule. It will
indicate the Date, Interest, Principal, and Balance of Principal Owed for each payment
you make. Enter payments as they are made.
3. Total for Year. Add up the totals for all payments made, both in interest and principal.
You have completed the Enterprise Loan Payment Summary. For further information on
how to complete this section, see listed examples.
32
Example
ENTERPRISE LOAN PAYMENT SUMMARY
NOTE:
Entries of Interest Payments on this page must also be recorded in the Journal.
Date
Borrowed
Name & Address of
Person or Firm
Purpose of
Loan
Total Amount
Borrowed
(Principal)
1/3/2003
Super Thrift & Loan
35 Main St
Purchase of Lawnmower
500.00
Amount Paid
Balance of
Principal Payment
Owed
Date
Paid
Date Final
Int.
Rate Payment Due
0.14
12/31/2003
Amount Paid
Balance of
Principal
Owed
Payment
Date
Paid
#1
2/1/03
5 83
41 67
458 33
#7
8/1/03
5 83
41 67
208 31
#2
3/1/03
5 83
41 67
416 66
#8
9/1/03
5 83
41 67
166 64
#3
4/1/03
5 83
41 67
374 99
#9
10/1/03
5 83
41 67
124 97
#4
5/1/03
5 83
41 67
333 32
#10
11/1/03
5 83
41 67
83 30
#5
6/1/03
5 83
41 67
291 65
#11
12/1/03
5 83
41 67
41 63
#6
7/1/03
5 83
41 67
249 98
#12
12/25/03
5 87
41 63
0
70 00
500 00
0
Interest
Principal
TOTAL FOR YEAR
Interest
Principal
Date
Borrowed
Name & Address of
Person or Firm
Purpose of
Loan
Total Amount
Borrowed
(Principal)
1/3/2003
Mom and Dad
9 Main St
Sow and Supplies
800.00
Payment
Date
Paid
#1
10/1/03
Amount Paid
Interest
72 00
Principal
800 00
Balance of
Principal Payment
Owed
0
Date
Paid
Date Final
Int.
Rate Payment Due
0.12
Amount Paid
Interest
Principal
#7
#2
#8
#3
#9
#4
#10
#5
#11
#6
#12
TOTAL FOR YEAR
33
72 00
800 00
10/01/03
Balance of
Principal
Owed
ENTERPRISE ACCOUNTS RECEIVABLE
Purpose
The purpose of the Enterprise Accounts Receivable is to record at the beginning and end of
year any money owed to you as a result of your enterprise. Entries are only made in the
beginning and end of the year. They are a summary of the money owed to you. After you
complete the Enterprise Accounts Receivable, the totals are transferred to the Financial
Statement.
Everything recorded in Enterprise Accounts Receivable must be related to your enterprise. If
this is your first Record Book the beginning of the year should be zero. If this is your second
book or later, then just transfer the Total Accounts Receivable value from the end of year in
your last Record Book to the Accounts Receivable at the beginning of the year for this year’s
Record Book.
HOW TO COMPLETE THE ENTERPRISE ACCOUNTS RECEIVABLE
1. Complete the Enterprise Accounts Receivable in pencil.
2. Date
In each of the two columns, for the beginning and end of year, fill in the correct date.
3. Person
Write the name of any person or business that owes you money.
4. Balanced Owed Me
Beginning of the Year:
Write how much is owed to you by each party at the beginning of the year.
End of Year:
Write how much is owed to you by each party at the end of the year.
5. Total Accounts Receivable
Add the values in each column to determine the total amount owed to you in the beginning and at the
end of the year.
6. Transfer “Total Accounts Receivable” value for both beginning and end of year to the
Financial Statement.
34
7. If this is the end of year, also transfer the end of year “Total Accounts Receivable” value
to the beginning of year in your next Record Book.
You have completed the Enterprise Accounts Receivable. If you have further questions
please see the example below or ask your instructor for help.
Example
ENTERPRISE ACCOUNTS RECEIVABLE
Entries on this page are made at the beginning and end of the year ONLY and are transferred to the Financial
Statement
Date: 1/1/03
Person or Firm
Date: 12/13/03
Balance Owed Me,
Beginning of Year
Robert Weinstock
145 00
Circle H Catfish Company
Balance Owed Me,
End of Year
15 00
65 00
Ralph Ernesto
67 50
Schoenthaler, Inc.
45 00
TOTAL ACCOUNTS RECEIVABLE
35
210 00
127 50
ENTERPRISE ACCOUNTS PAYABLE
Purpose
The purpose of the Enterprise Accounts Payable is to record all the money that you owe
others at the beginning and end of each year. The feature that distinguishes accounts payable
from a loan is the time period in which the money will be repaid. Whereas a loan is to be repaid
over a period greater than 60 days, accounts payable include revolving accounts and credit from
businesses to which you owe money in the short term. For example, you may have credit, or a
revolving account, at the local feed store where you buy hay on a weekly basis, but you pay
only once a month. The money you owe the feed store at the beginning or at the end of the year
would be listed here, in Enterprise Accounts Payable.
Entries in Enterprise Accounts Payable are to be made only at the beginning and the end of
year. After entries are complete they should be transferred to the Financial Statement.
Everything recorded on this page must be related to your enterprise(s). If this is your first
Record Book the beginning of the year will always be zero. If this is your second Record Book
or later, then get beginning of year values from the end of year values in last year’s Record
Book.
HOW TO COMPLETE THE ENTERPRISE ACCOUNTS PAYABLE
1. Complete the Enterprise Accounts Payable in pencil.
2. Fill out the Enterprise Accounts Payable at the beginning and end of the year.
3. Date
In each of the two columns, for the beginning and end of year, fill in the correct date.
4. Person
Write the name of anyone or any business that you owe money, if any.
5. Balanced Owed Me
Beginning of the Year:
Record the amount of money you owed that person(s) or firm(s) at the beginning of the year.
End of Year:
Record the amount of money you owed that person(s) or firm(s) at the end of the year.
Make the beginning and end of year entries for the same party on the same line.
6. Total Charge Accounts
36
Add the values in each column to determine the total amount you owe at the beginning and end of the
year.
7. Transfer “Total Charge Accounts ” value for both beginning and end of year to the
“Enterprise Liabilities” portion of the Financial Statement. (page 11, line 6b)
8. If this is the end of year, also transfer the end of year values to the beginning of year in
your next Record Book.
You have completed the Enterprise Accounts Payable. If you have further questions please
see the example below or ask your instructor for help.
Example
ENTERPRISE ACCOUNTS PAYABLE (other than loans)
Entries on this page are made at the beginning and end of the year ONLY and are transferred to the Financial
Statement
Date: 1/1/03
Person or Firm
Date: 12/31/03
Balance I Owe,
Beginning of Year
Masseli's Iron Works
84 40
Sonoma County Farm Supply
Balance I Owe,
End of Year
67 37
27 31
TOTAL CHARGE ACCOUNTS
37
84 40
94 68
CURRENT/OPERATING INVENTORY
(Non-Depreciable Property Inventory)
Purpose
During the course of your agricultural experience you will acquire many different items in your
enterprises. These things will make up your inventory of property. Inventories are usually
taken at the beginning and the end of a year. Inventories are used in completing the Financial
Statement and Income Summary. For tax purposes, the property you own is divided into three
categories, Current/Operating Inventory, Non-Current/Capital Non-depreciable inventory, or
Non-Current/Capital Depreciable Inventory
The Current/Operating Inventory is a detailed list and market valuation of everything you
own related to your enterprise that is not depreciated. Current/Operating Inventory includes
items that are frequently used up in the production process with a normal useful life of less than
one year.
All items that you entered as an expense in the Journal when they were purchased, but you still
own at the year’s end are to be included in the Current/Operating Inventory. Examples of
Current/Operating Inventory include feed, medicines, fertilizer, livestock intended for resale,
annual crops, nursery stock and other items that you own at the time you do the inventory.
An inventory must include both 1) a description, and 2) a dollar value for each item. While you
may take an inventory of your enterprise at any time, only enter inventory values taken at the
beginning and the end of the year in your Record Book.
How to Complete the Current/Operating Inventory
The Current/Operating Inventory will need to be completed once in the beginning of the year
and once at the end of the year.
If an item is used for more than one enterprise, you will want to apportion it to both enterprises.
For example, if you have both a horse and a steer enterprise, and at the end of the year you have
20 bales of alfalfa, you may wish to assign bales to each enterprise based on normal
consumption. For example, if the steer and horse consume equals amounts, assign 10 bales to
each enterprise.
Use the following instructions each time you fill out an inventory.
1.
Use a pencil to complete the Current/Operating Inventory.
38
2.
Enterprise – Write the name of each of your enterprises in the inventories that apply to
you. Use page 8a for the enterprise that you believe will have the most entries.
3.
Date – Enter the correct dates for the beginning and end of the year in which you are
keeping records. Do this on each of the enterprise inventories for which you are
keeping records.
4.
Description of Items Owned – Describe the item that is owned. Be specific so
someone else can tell what it is.
5.
Number of Units – List how many of each item you own. For example, you may have
five feeder pigs that weigh 50 pounds each.
6.
Value per Unit – List how much each item is worth.
7.
Total Value – Multiply the number of units and the value per unit and enter the
number here.
8.
Total for Enterprise – Add up all the numbers in the “Total Values” column. Write
the total at the bottom of each enterprise inventory.
9.
Grand Total (page 8b) – Add up the “Total for Enterprise” values for both the
beginning and the end of the year. Place the Grand Total for the beginning of the year
the first box, and the grand total for the end of the year in second box.
You have now completed the Current/Operating Inventory. If you have further
questions, see the example listed.
39
Example
CURRENT/OPERATING INVENTORY
(NON-DEPRECIABLE PROPERTY INVENTORY)
Entries should include items that will be consumed or sold within one year. Examples: feed, medicines, fertilizer,
livestock intended for resale, annual crops, and nursery stock.
Calculations should be made at the beginning and end of the year ONLY and transferred to the Financial Statement.
Beginning of Year
Date
DESCRIPTION OF ITEMS OWNED
End of Year
1/1/03
No.
of
Units
Value
Per Unit
5
35
Date
12/31/03
No.
of
Units
Value
Per Unit
65 lb. Feeder pigs
7
45
00
315
00
Rolled Barley, 80 lb sacks
10
8
50
85
00
Protein Supplement
2
14
00
28
00
37
80
5
00
470
80
Total Value
Total Value
Enterprise Market Swine
50 lb Feeder pigs
00
175
00
Vet. Medicine
misc
Salt block
TOTALS FOR ENTERPRISE
1
XXXXXXXXXXXXX
175
40
00
5
00
XXXXXXXXXXXXX
Example
CURRENT/OPERATING INVENTORY
(NON-DEPRECIABLE PROPERTY INVENTORY)
Entries should include items that will be consumed or sold within one year. Examples: feed, medicines, fertilizer,
livestock intended for resale, annual crops, and nursery stock.
Calculations should be made at the beginning and end of the year ONLY and transferred to the Financial Stateme
Beginning of Year
Date
DESCRIPTION OF ITEMS OWNED
End of Year
Date
1/1/03
No.
of
Units
Value
Per Unit
Assorted Seeds (envelopes)
20
1
00
20
00
Osomocote Fertilizer, 25 lb sacks
2
23
40
46
80
Bedding plants, flats
25
8
00
200
00
Enterprise
Total Value
12/31/03
No.
of
Units
Value
Per Unit
4
1
25
5
00
5
8
00
40
00
8
8
00
64
00
109
0
15
8
25
Total Value
Landscape Maintenance
Ground Cover
TOTALS FOR ENTERPRISE
Enterprise
XXXXXXXXXXXXX
266
80
XXXXXXXXXXXX
Breeding Swine
Feed, lbs
55
Salt Blocks
2
2
50
5
00
Suckling Pigs
8
15
00
120
00
133
25
713
05
TOTALS FOR ENTERPRISE
XXXXXXXXXXXXX
XXXXXXXXXXXXX
GRAND TOTAL (Add Totals for all Enterprises
page 8a and 8b)
441
41
80
NON-CURRENT/CAPITAL NON-DEPRECIABLE INVENTORY
Purpose
During the course of your agricultural experience you will acquire many different items in your
enterprises. These things will make up your inventory of property. Inventories are usually
taken at the beginning and the end of a year. Inventories are used in completing the Financial
Statement and Income Summary. For tax purposes, the property you own is divided into three
categories, Current/Operating Inventory, Non-Current/Capital Non-Depreciable Inventory, or
Non-Current/Capital Depreciable Inventory
The Non-Current/Capital Non-Depreciable Inventory is a detailed list and market valuation
of raised breeding livestock and land. Raised breeding livestock are animals that you raised
since birth, as opposed to purchased breeding livestock, which is depreciable. Land must be
entered as an expense in the journal the year that you purchased the property. These items have
a useful life of more than one year, but are not depreciable.
An inventory must include both 1) a description, and 2) a dollar value for each item. While you
may take an inventory of your enterprise at any time, only enter inventory values taken at the
beginning and the end of the year in your Record Book.
How to Complete the Non-Current/Capital Non-Depreciable Inventory
The Non-Current/Capital Non-Depreciable Inventory will need to be completed once in the
beginning of the year and once at the end of the year.
If an item is used for more than one enterprise, you may want to apportion it to both enterprises.
For example, if you have both a horse and a steer enterprise, and at the end of the year you have
20 acres of land, you may wish to assign the acreage based on the estimated use of each
enterprise. For example, if the 20 acres is used equally then, assign 10 acres to each enterprise.
Use the following instructions each time you fill out an inventory.
Use a pencil to complete the Non-Current/Capital Non-Depreciable Inventory.
1.
Enterprise – Write the name of each of your enterprises in the inventories that apply to
you. Use page 9a for the enterprise that you believe will have the most entries.
2.
Date – Enter the correct dates for the beginning and end of the year in which you are
keeping records. Do this on each of the enterprise inventories for which you are
keeping records.
42
3.
Description of Items Owned – Describe the item that is owned. Be specific so
someone else can tell what it is.
4.
Number of Units – List how many of each item you own. For example, you may have
five sows.
5.
Value per Unit – List how much each item is worth.
1.
Total Value – Multiply the number of units and the value per unit and enter the
number here.
2.
Total for Enterprise – Add up all the numbers in the “Total Values” column. Write
the total at the bottom of each enterprise inventory.
3.
Grand Total (page 9b) – Add up the “Total for Enterprise” values for both the
beginning and the end of the year. Place the Grand Total for the beginning of the year
the first box, and the grand total for the end of the year in second box.
You have now completed the Non-Current/Capital Non-Depreciable Inventory. If you
have further questions, see the example listed.
43
Example
NON-CURRENT/CAPITAL NON-DEPRECIABLE INVENTORY
(NON-DEPRECIABLE PROPERTY INVENTORY)
Entries should include: breeding livestock raised and land ONLY.
Calculations should be made at the beginning and end of the year ONLY and transferred to the Financial Statemen
Beginning of Year
1/1/2003
Date
DESCRIPTION OF ITEMS OWNED
No.
of
Units
End of Year
Value
Per Unit
Date
No.
of
Units
Total Value
12/31/2003
Value
Per Unit
Total Value
Enterprise _________________
TOTALS FOR ENTERPRISE
Enterprise
XXXXXXXXXXXX
XXXXXXXXXXXX
Swine Breeding
Gilt, raised
1 hd
100
00
TOTALS FOR ENTERPRISE
XXXXXXXXXXXX
GRAND TOTAL (Add Totals for all Enterprises
page 9a and 9b)
44
100
00 1hd
100
00
100
00
150
00
XXXXXXXXXXXX
150
00
150
00
150
00
NON-CURRENT/CAPITAL DEPRECIABLE INVENTORY
Purpose
During the course of your agricultural experience you will acquire many different items in your
enterprises. These things will make up your inventory of property. Inventories are usually
taken at the beginning and the end of a year. Inventories are used in completing the Financial
Statement and Income Summary. For tax purposes, the property you own is divided into three
categories, Current/Operating Inventory, Non-Current/Capital Non-Depreciable Inventory, or
Non-Current/Capital Depreciable Inventory
The things you own that give service to your enterprise for more than one year and are
depreciable are included in the Non-Current/Capital Depreciable Inventory. Depreciable
items are often referred to as capital assets.
Depreciable property, or capital assets, are items such as purchased breeding livestock (as
opposed to livestock you have raised), perennial crops, trees, vines, buildings, machinery, and
equipment. All equipment purchased, no matter how small, or what the cost, must be listed in
the Non-Current/Capital Depreciable Inventory. Because they are depreciable, these items
are not recorded in the Journal as expenses.
Instead, the cost of these items is depreciated. This means that the purchase cost of the item is
spread out over a number of years. In doing this, the cost of the item will not show up in just
one year. Depreciation is the legal method, by federal regulations, to figure out how to
apportion these costs to different years. Depreciation is considered a non-cash expense to the
enterprise, and therefore it is only shown in your net income.
How To Complete The Non-Current/Capital Depreciable Inventory
For the purpose of this Record Book the alternate Modified accelerated cost recovery system
(MACRS) depreciation method will be explained. The alternate MACRS method is also known
as straight-line depreciation.
However, there are various methods of depreciation that the federal government determines
may be used when calculating taxes. These are explained in the Internal Revenue Service’s
Farmer Tax Guide (Publication 225), which is updated every year. In your agriculture course
your instructor may want you to learn and understand other methods allowed by the IRS.
Determining Alternate MACRS or Straight-Line Depreciation
First, you must determine how many years a capital asset may be depreciated. The IRS
establishes standard depreciation schedules that state over how many years farm-related items
45
may be depreciated. To be technically correct, you must refer to the latest Farmer Tax Guide.
The following is a schedule from the 2001 Farmer Tax Guide for typical depreciated items:
Ag/Horticultural Structures (single purpose)
Automobiles
Cattle (Dairy or Breeding)
Computers
Farm Buildings
Farm Machinery and Equipment
Fences (agricultural)
Goats and Sheep (Breeding)
Hogs (Breeding)
Tractor Units (over the road)
Trees/Vines
Truck (heavy duty, more than 13,000 lbs. unloaded)
Truck (less than 13,000 lbs.)
15 years
5 years
7 years
5 years
25 years
10 years
10 years
5 years
3 years
4 years
10 years
6 years
5 years
Next you must calculate the straight-line depreciation. The straight-line method has a standard
formula:
DEPRECIATION ALLOWED PER YEAR = ITEM COST /YEARS OF USE
ITEM COST is the original purchase price. YEARS OF USE is the number of years the item
will be used in your enterprise (this is established by the IRS. See Farmer Tax Guide, or
previous page), and the DEPRECIATION PER YEAR is the amount you may deduct as an
expense to your enterprise that year.
For example, you purchased a gilt for $600. According to the IRS the gilt has a “useful life” of
3 years. Then, for that gilt, the DEPRECIATION ALLOWED PER YEAR - $600 / 3 = $200.
However, for the first year of depreciation for any capital asset, the straight-line method allows
you to deduct only one-half the normal depreciation. This means that for first year depreciation,
you use the following formula:
FIRST YEAR DEPRECIATION = DEPRECIATION ALLOWED PER YEAR / 2
Then for the $600 sow, your FIRST YEAR DEPRECIATION = $200 / 2 = $100
The half-year depreciation represents the part of the depreciation that you can legally deduct in
the first year. The second year’s depreciation would then become the usual amount allowed per
year, $200, as would be the third. In the fourth year you deduct the remaining amount of $100.
46
DEPRECIATION SCHEDULE FOR GILT
Year
1
2
3
4
Determining
Depreciation
$600 /3/2 = $100
$600 / 3 = $200
$600 / 3 = $200
$600 / 3 = $100
Depreciation
$100
$200
$200
$100
End of Year
Value
$500
$300
$100
0
First Year/Last Year Rule
The first year rule applies no matter when you make your purchase during that year. You may
still only deduct one-half the depreciation allowed per year, whether you made your purchase
January 1 or December 31.
If you dispose of an item before the end of its usual life, you deduct one-half of the allowable
depreciation for that year. Depreciation is always rounded off to the nearest dollar.
Beginning of Year Entries
If this is your first year in agriculture education, you will not have any property listed in the
beginning of year column. The following steps are to be followed when opening your Record
Book in the beginning of the year. For calculations used in this example, the 2001 Tax Guide
was used.
1.
The Non-Current/Capital Depreciable Inventory must be completed in pencil.
2.
Items that are listed on this page must not be entered in the Journal as expenses.
3.
List an item in the Non-Current/Capital Depreciable Inventory when you purchase
it, but only make depreciation calculations for it at the end of each year.
4.
Enterprise – Write the name of your enterprise(s) in the appropriate place(s) on the
Non-Current/Capital Depreciable Inventory (pages 10a and 10b).
5.
Date – Write the correct dates for the beginning and end of the enterprise year at the
top of the Non-Current/Capital Depreciable Inventory form on both page 10a and
10b.
6.
Description – List each item you own under the enterprise for which it is used.
7.
Date of Purchase (column 1) – Write the exact date you purchased the item.
47
8.
Basis (column 2) – Write in the price you actually paid for the item. If you traded for
the item, or are purchasing your previous 4-H or other project, consult your instructor
for help in determining its value.
9.
Class (column 4) – Write the “useful life” of the item as designated in the IRS Farmer
Tax Guide.
10.
Percent - % (column 4) – Write the percent depreciation here. You can determine this
percentage by dividing 1 by the value in column 4 (the number of years the item will
be of use in your enterprise).
If this is the first year you depreciate the item, you are only allowed to take ½ the
allowed depreciation. Therefore, you must divide the percent depreciation by 2.
In all years except the first one, or when the item was disposed of, the percent
depreciation is equal to one divided by the number of years of use allowed.
11.
Book Value Beginning of Year (column 5) – This value is the original cost of the item
minus any depreciation taken in previous years. The figure entered here should be
transferred from your last book. If the item was purchased during this enterprise year,
you will not enter a dollar value here.
End of Year Entries
The following steps are to be completed at the end of the year, or when you close out your
Record Book.
1.
Depreciation This Year (column 6) – Multiply the Basis value (column 2) by the %
value (column 4). If this is your first year, see the instructions listed above under item
#10. As you purchased capital assets during the year, you should have made entries in
columns 1 through 5. You should not have made entries in the Journal as expenses.
2.
Book Value, End of Year (column 7) – If the item was purchased in a previous year:
End of Year Value = Book Value at the Beginning of Year (column 5) minus Depreciation
(column 6).
If the item was purchased this Record Book year:
End of Year Value = Basis (column 2) minus Depreciation (column 6)
3.
Totals for Enterprise
For each enterprise, add the values in columns 2, 5, 6, and 7, and enter the sum at the bottom of each
enterprise inventory.
48
In column 2 add only the Basis (cost) of items purchased this year. If you purchased nothing new
this year, then there will be no total in column 2.
4.
Grand Total – Add the “Total for Enterprise” values for each enterprise and place this
Grand Total at the bottom of page 10b.
5.
If a depreciable item is sold during the year, it is not to be recorded in the Journal as a
receipt. When capital items are sold, traded, or disposed of, they are to be recorded in
the box at the bottom of page 10b. Also one-half of the allowable depreciation must
be taken.
The mower was sold during the year for $190. This is recorded as its Sale Price. The Record
Book Value is the Beginning of the Year Book Value, minus one-half year depreciation allowed
(346 – 18).
To determine the Capital Gain or Loss you subtract the Record Book Value from the
Sale Price. If the result is a positive number, there is a capital gain; if the result is a
negative number, there is a capital loss.
In the example we have a Sale Price of $190, and a Record Book Value of $328,
which results in a capital loss of $138.
This information is used when filling out state and federal income taxes.
6.
Double check to see that all your calculations are correct and in the right places.
7.
The concept of depreciation is a complex one. Further information may be obtained
from your instructor.
49
Example
50
Example
51
Revised 10.1.10
FINANCIAL STATEMENT
Purpose
The purpose of the Financial Statement is to give a summary of your financial
situation at a particular point in time. It is one of two major summaries of your
enterprise activities for the year. The Financial Statement, along with the Income
Summary, will give a good indication of how successful your enterprise program has
been.
The Financial Statement represents your enterprise at a specific point in time, usually
the beginning or the end of the year. It may be referred to as a net worth statement. It is
also a listing of all your assets and all your liabilities. In other words, it lists everything
you own, and everything you owe. Liabilities are subtracted from assets to determine
your net worth. Enterprise and personal items are considered separately which allows
for the calculating of three net worths: Enterprise Net Worth, Personal Net Worth, and
the sum of the two, Total Net Worth.
Because the Financial Statement shows how successful your enterprise has been and
how much you are currently worth, it is an important piece of information bankers use
when you apply for a loan. Based on the information contained in the Financial
Statement, the Income Summary, and the Budget, the bank is able to tell what kind of
risk they are taking in loaning you money. If, for example, you were worth more money
than the amount you want to borrow, the bank would consider you a good risk. They
would be more likely to invest in you, or loan you money.
These forms are similar to forms used by bankers in their daily dealing with customers.
Many times banks will want to see financial statements from two or three previous years
to see how your business is progressing.
How to Complete The Financial Statement
Most of the entries are transferred to this form from other forms you have already
completed. In order to complete the Financial Statement, you will need to have
completed the following portions of your Record Book:
Enterprise Loan Payment Summary
Enterprise Accounts Receivable
Enterprise Accounts Payable
Current/Operating Inventory
Non-Current/Capital Non-Depreciable Inventory
52
Revised 10.1.10
Non Current/Capital Depreciable Inventory
You will also need to know exactly how much money you have in the bank, along with
any other personal assets you have and their values.
Be sure to only include items related to your enterprise in the enterprise portion. All
other items you own that are not related to your enterprise are listed under the personal
portion of the Financial Statement.
Because the Financial Statement represents your total financial worth, it does not
separate entries by enterprise.
• Use a pencil to complete the Financial Statement.
• Date – Write the correct dates for the beginning and the end of your Record Book
year. You will complete the Financial Statement once at the beginning of the
year, and once at the end of the year. There are two separate columns for these
dates.
In this example, the End of Year column would have been completed 12
months after the Beginning of Year column. For the purpose of instruction
they will be shown together.
Be careful to enter figures in the correct column, depending on whether you
are filling out the Financial Statement in the beginning or the end of the year.
• The following steps are numbered according to the line on which they occur in
the Financial Statement.
1.
Enterprise Assets
a. Cash on hand or in the bank from enterprise
List the amount of money you have at home, in your wallet, or in the bank, that was
earned from your enterprise(s). This is usually the total from your savings and checking
accounts, plus cash money you have on hand.
If you are a new agriculture student filling this out in the Beginning of Year column,
you may not record anything here. But, if you have already started an enterprise before
joining the FFA, you would list money that is in the bank or cash on hand earned from
your enterprise prior to joining the FFA. (i.e. a 4H project or other existing project)
53
Revised 10.1.10
Other money that you have, from before high school, or which was not earned as a
result of your enterprise, are to be listed on line 3b – 3e as “Personal Assets.”
b. Enterprise Accounts Receivable
From Enterprise Accounts Receivable, page 7 , enter the value(s) from where it says
“Total Accounts Receivable".
c. Value of Current/Operating Inventory
Current/Operating Inventory, page 8b, enter the value(s) from the bottom of the
page where it says “Grand Total.”
d. Value of Non-Current/Capital Non-Depreciable Inventory
From Non-Current/Capital Non-Depreciable Inventory, page 9b, enter the value(s) from
where it says “Grand Total.”
e. Value of Non-Current/Capital Depreciable Inventory
From Non-Current/Capital Depreciable Inventory, page 10b, enter the value(s) from
where it says “Grand Total.”
2.
Total Enterprise Assets
Add up all the values in section 1, lines a) through g) and enter the total here.
3.
Personal Assets
a. Cash on hand or in the bank from non-SAE sources.
List any cash you have that was not listed in part 1a above. This information should be
available from your personal records.
The next two lines, b) and c), have been left empty. If you have any other personal
assets, list them here, along with their cash value.
Examples of personal assets might include a bicycle, a car, stocks, a 4-H project NOT
being transferred into FFA, a recreational horse, or other items of value. Your
instructor will be able to help you determine what to put here.
4.
Total Personal Assets
54
Revised 10.1.10
Add up all the values in section 3, lines (a) through (c) and enter the total here.
5.
Total Assets
Add the values from line 2, “Total Enterprise Assets” and line 4, “Total Personal Assets”
and enter it here.
6.
Enterprise Liabilities
a. Enterprise Loan Payments, Balances Owed
Enter the total balance owed, to date, on any loans listed in the Enterprise Loan
Payment Summary.
Note in the example that the loan for the sow and supplies does not appear because it
was taken out after, and paid off before the book was closed.
b. Enterprise Accounts Payable
Enter the total balance owed, to date, on any monies owed listed in the Enterprise
Payable.
7.
Total Enterprise Liabilities
Add up all the values in section 6, lines a) through d) and enter the total here.
8.
Personal Liabilities
Include any other liabilities you may have from your personal records. For example, the
“personal” share of your auto is listed here as the amount you still owe on it.
9.
Total Personal Liabilities
Add up all the values in section 8, lines a) and b) and enter the total here.
10.
Total Liabilities
Add the values from line 7, “Total Enterprise Liabilities,” and line 9, “Total Personal
Liabilities” and enter it here.
11.
Enterprise Net Worth
Subtract the value of Total Enterprise Liabilities, line 7, from Total Enterprise Assets, line
2, and enter the value here.
12.
Personal Net Worth
55
Revised 10.1.10
Subtract the value of Total Personal Liabilities, line 9, from Total Personal Assets, line 4,
and enter the value here.
13.
Total Net Worth
Add the values of Enterprise Net Worth, line 11, to Personal Net Worth, line 12.
Check this figure by comparing it to Total Assets, line 5, minus Total Liabilities, line 10.
The numbers should be the same.
You have now completed the Financial Statement. If this is the end of the year
Financial Statement, then all figures should be transferred to the beginning of the
year column of the Financial Statement in your next Record Book. For further
clarification, check with your instructor.
56
Example
FINANCIAL STATEMENT
Beginning of Year
End of Year
ASSETS
Date 1/1/03
1
Date 12/31/03
Enterprise Assets
a) Cash on hand or in the bank earned from SAE enterprises
600 75
b) Enterprise Accounts Receivable (page 7)
210 00
128 95
c) Value of Current/Operating Inventory (from Grand Total page 8b)
441 80
713 05
d) Value of Non-Current/Capital Non-Depreciable Inventory (from Grand Total page 9b)
100 00
150 00
e) Value of Non-Current/Capital Depreciable Inventory (from Grand Total page 10b)
1849 00
5473 00
2
TOTAL ENTERPRISE ASSETS
2600 80
7065.75 75
3
Personal Assets
1973 00
593 17
400 00
680 00
a) Cash on hand or in the bank earned from non-SAE enterprises sources
b) Bike, stereo, etc
c) Pick -up (60% share)
4800 00
d)
e)
4
TOTAL PERSONAL ASSETS
2373 00
6073 17
5
TOTAL ASSETS (line 2 + line 4)
4973 80
13863 92
LIABILITIES
6
Enterprise Liabilities
a) Enterprise Loan Payments, "Balanced Owed" (from page 6)
2240 00
b) Enterprise Accounts Payable (page 7)
84 40
94 68
7
TOTAL ENTERPRISE LIABILITIES
84 40
2334 68
8
Personal Liabilities
a) Pick Up
3360 00
b)
c)
d)
9
TOTAL PERSONAL LIABILITIES
3360 00
10 TOTAL LIABILITIES (line 7 + line 9)
84 40
5694.68 68
11 ENTERPRISE NET WORTH (line 2 minus line 7)
2516 40
4731 07
12 PERSONAL NET WORTH (line 4 minus line 9)
2373 00
2713 17
13 TOTAL NET WORTH (line 11 + line 12)
4889 40
7444 24
NET WORTH
57
INCOME SUMMARY
Purpose
The purpose of the Income Summary is to summarize, at the end of the year, the financial
standing of your enterprise(s). As a summary of the income and expenses for the year, it shows
you how much money you have made on the enterprise(s). The Income Summary provides for
the calculation of a net income by the accrual method. Your net income is equal to the total
income minus total expenses. The Income Summary also includes a record of the total hours
of labor you worked for the year.
How To Complete The Income Summary
Before you complete the Income Summary, you must have completed and totaled the
following: Journal, Current/Operating Inventory, Non-Current/Capital Non-Depreciable
Inventory, Non Current/Capital Depreciable Inventory, and Capital Gain or Loss. In
completing the Income Summary you will be transferring values from the above-mentioned
pages to the Income summary and doing some simple calculations.
The Income Summary separates everything by enterprise and then does a total for all
enterprises along the right-hand column.
It is possible that you will have to list both positive and negative numbers here. The acceptable
ways that a negative number may be shown are: by writing a minus sign (-) before the number
or by writing the number between parenthesis (). For the Record Book it is recommended that
you use the parenthesis method. For example, for minus $100, write ($100), not -$100.
The following steps will guide you through completing the Income Summary.
Date – Enter the last date of the record book year at the top of the page.
Enterprise – List each enterprise name under the appropriate letter. Enterprises should be
listed in the same order as listed on the Journal page (5b).
1.
Current/Operating Inventory at End of Year
From the Current/Operating Inventory, pages 8a and 8b, enter the “Total For
Enterprise” in the “End of Year – Total Value” column for each enterprise. Add the
values across the line to get the total for all enterprises. This total must match the
GRAND TOTAL, end of year, from the bottom of page 8b.
2.
Current/Operating Inventory at Beginning of Year
58
From the Current/Operating Inventory, pages 8a and 8b, enter the “Total For
Enterprise” in the “Beginning of Year Value” column for each enterprise. Add the
values across the line to get the total for all enterprises. Add the values across the line
to get the total for all enterprises. This total must match the GRAND TOTAL,
beginning of year, from the bottom of page 8b.
3.
Change in Current/Operating Inventory
Subtract the value of Current/Operating Inventory at Beginning of Year (line 2) from
the value of Current/Operating Inventory at End of Year (line 1). Add the values
across the line to get the total for all enterprises.
4.
Income
From the last page of your Journal, page 5b, transfer the “Total Income” value(s)
(from each column 8) to the appropriate enterprise column(s). Add the values across
the line to get the total for all enterprises. This total must match the income total from
column 5, of your last journal page (5a).
5.
Total Current/Operating Income
Add the values of line 3 - Change in Current/Operating Inventory and Line 4 Income. Add the values across the line to get the total for all enterprises.
6.
Operating Expenses
From the last page of your Journal, page 5b, transfer the total enterprise expenses
values (from each column 9) to the appropriate column(s). Add the values across the
line to get the total for all enterprises. This total must match the expenses total from
column 6, of your last journal page (5a).
7.
Net Current/Operating Income
Subtract the value of Operating Expenses (line 6) from Total Current/Operating
Income (line 5). Add the values across the line to get the total for all enterprises.
8.
Non-Current/Capital Non-Depreciable Inventory
From the Non-Current/Capital Non-Depreciable Inventory, pages 9a and 9b, enter the
“Total For Enterprise” in the “End of Year – Total Value ” column for each enterprise.
Add the values across the line to get the total for all enterprises. This total must match
the GRAND TOTAL, end of year, from the bottom of page 9b.
59
9.
Non Current/Capital Depreciable Inventory
From the Non Current/Capital Depreciable Inventory, pages 10a and 10b, enter the
“Total of Enterprise in the “Book Value End of Year Value” column for each
enterprise. Add the values across the line to get the total for all enterprises. This total
must match the GRAND TOTAL, end of year (column 7), from the bottom of page
10b.
10.
Capital Assets Sold or Traded
From grid at the bottom of page 10b enter the “Total” value from the “Sale Price”
column. Add the values across the line to get the total for all enterprises. This total
must match the TOTAL, from the grid at the bottom of page 10b.
11.
Non-Current/Capital Non-Depreciable Inventory at Beginning of Year
From the Non-Current/Capital Non-Depreciable Inventory, pages 9a and 9b, enter the
“Total For Enterprise” in the “Beginning of Year Value” column for each enterprise.
Add the values across the line to get the total for all enterprises. This total must match
the GRAND TOTAL, beginning of year, from the bottom of page 9b.
12.
Non Current/Capital Depreciable Inventory at Beginning of Year
From the Non Current/Capital Depreciable Inventory, pages 10a and 10b, enter the
“Total For Enterprise” in the “Book Value Beginning of Year” column for each
enterprise. Add the values across the line to get the total for all enterprises. This total
must match the GRAND TOTAL, beginning of year (column 5), from the bottom of
page 10b.
13.
Capital Assets Purchased
From pages 10a and 10b enter the “Total for Enterprise” value from the “Basis”
column. Add the values across the line to get the total for all enterprises. This total
must match the GRAND TOTAL, beginning of year (column 2), from the bottom of
page 9b.
14.
Net Capital Transactions
Add the values of Non-Current/Capital Non-Depreciable Inventory (line 8) and Non
Current/Capital Depreciable Inventory (line 9) and Capital Assets Sold or Traded (line
10), and then subtract the values of Non-Current/Capital Non-Depreciable Inventory
at Beginning of Year (line 11) and Non Current/Capital Depreciable Inventory at
Beginning of Year (line 12) and Capital Assets Purchased (line 13). Add the values
across the line to get the total for all enterprises.
60
15.
Return to Capital, Labor, and Management
Add the values of Net Current/Operating Income (line 7) and Net Capital Transactions
(line 14). Add the values across the line to get the total for all enterprises.
Summary Information
16.
Ownership Net Income
If the enterprise is an ownership enterprise, enter the Return to Capital, Labor, and
Management from Line 15. Add the values across the line to get the total for all
ownership enterprises.
17.
Paid Placement Income
If the enterprise is a paid placement enterprise, enter the Return to Capital, Labor, and
Management from Line 15. Add the values across the line to get the total for all
placement enterprises.
18.
Hours Self Labor From Ownership Enterprises
From the last page of your Journal, page 5b, enter the “Total to Date” for “Hours”
(column 10) for each ownership enterprise. Add the values across the line to get the
total for all enterprises.
19.
Hours Self Labor from Paid/Unpaid Placement Enterprises
From the last page of your Journal, page 5b, enter the “Total to Date” for “Hours”
(column 10) for each placement enterprise. Add the values across the line to get the
total for all enterprises. Unpaid hours from Unpaid Placement Enterprises that utilized
a Placement Agreement must be entered here. Remember, if the Unpaid Placement
Enterprise was over 50 hours, a Placement Agreement must be utilized. Add the
values across the line to get the total for all enterprises.
20.
Hours Self Labor from Unpaid Work Experience
For Unpaid Placement Enterprises that did not utilize a Placement Agreement, from
the last page of your Journal, page 6b, enter the “Total to Date” for “Hours” (column
11). Add the values across the line to get the total for all enterprises.
D.
Grand Total All Hours Self Labor
61
Add the value from line 18 through 20 in the totals column. This total must match the
total hours from column 7, of your last journal page (5a).
You have now completed the Income Summary. If accurate, this information may now be
transferred to advanced degrees, proficiency awards, and some scholarship applications. If
you have further questions about how to fill out the Income Summary, ask your instructor
to help you.
62
Example
INCOME SUMMARY for year ending
December
, 20
2003
Directions: Complete this form when you close your book for the year by recording in each box the appropriate number as indicated by
the instructions to the left of that line.
CURRENT/OPERATING INVENTORY AT END OF YEAR (enter the number
1 from "Totals for Enterprise" line under the "End of Year Total Value"
column from page 8a and/or 8b)
CURRENT/OPERATING INVENTORY AT BEGINNING OF YEAR (enter the
2 number from "Totals for Enterprise" line under the "Beginning of Year
Total Value" column on pages 8a and/or 8b)
Enterprise A
Enterprise B
Enterprise C
Enterprise D
Market Swine
Landscape
Maintenance
Breeding Swine
Jones Nursery
470
80
109
00
133
25
175
00
266
80
295
80
(157
80)
133
25
1733
64
445
94
540
00
2448
2029
44
288
14
673
25
1214
29
37
63
878
815
15
250
51
TOTALS
713
05
441
80
271
25
00
5167
58
2448
00
5438
83
93
19
87
2150
72
(205
68)
2428
13
3288
11
150
00
150
00
4035
00
5473
00
190
00
100
00
1849
00
3 CHANGE IN CURRENT/OPERATING INVENTORY (Line 1 minus Line 2)
INCOME (enter last total in column 8 at the bottom of your last journal
4
page)
5 TOTAL CURRENT/OPERATING INCOME (add lines 3 & 4)
OPERATING EXPENSES (enter the last total in column 9 at the bottom of
6
your last journal page)
7 NET CURRENT/OPERATING INCOME (Line 5 minus 6)
NON-CURRENT/CAPITAL NON-DEPRECIABLE INVENTORY AT END OF
8 YEAR (enter the number from "Totals for Enterprise" line under the "End of
Year" column on pages 9a and/or 9b)
NON-CURRENT/CAPITAL DEPRECIABLE INVENTORY AT END OF YEAR
9 (enter the number from "Totals for Enterprise" line under "Book Value End
of Year" column 7 on pages 10A and/or 10b)
1329
00
Capital ASSETS SOLD OR TRADED (enter the SUM of the "Sale Price" of
10 all Depreciable Property items sold or traded during the year from the grid
at the bottom of page 10b)
109
00
190
00
NON-CURRENT/CAPITAL NON-DEPRECIABLE INVENTORY AT BEGINNING
11 OF YEAR ( (enter the number from "Totals for Enterprise" line under the
"Beginning of Year Total Value" column on pages 9a and/or 9b)
NON-CURRENT/CAPITAL DEPRECIABLE INVENTORY AT BEGINNING OF
12 YEAR (enter the number from "Totals for Enterprise" line under "Book
Value Beginning of Year" column 5 on pages 10A and/or 10b)
CAPITAL ASSETS PURCHASED (enter the Sum of the "Basis" column 2 for
13
each Non-current Property item purchased or built during the year)
100
1381
00
468
117
00
(169
00)
(169
646
15
646
15
00
00
4647
00
4764
00
00)
(562
00)
(900
00)
81
51
(767
68)
2388
46
81
86
(767
68)
(40
02)
2428
13
14 Net Capital Transactions ( add Line 8 & 9 & 10 subtract lines 11 & 12 & 13)
15 Return to Capital, Labor, Management (add line 7 & 14)
2428
13
SUMMARY INFORMATION:
16 OWNERSHIP INCOME (enter line 15 above if from Ownership enterprise)
PAID PLACEMENT INCOME (enter line 15 above if from Placement
17
enterprise)
HOURS SELF LABOR FROM OWNERSHIP ENTERPRISES (enter last total in
18
column 10 at the bottom of your last journal page)
2428
223
93
13
122
HOURS SELF LABOR FROM PAID/UNPAID PLACEMENT ENTERPRISES
19 (that utilize a Placement Agreement)(enter last total in column 10 at the bottom
of your last journal page)
438
1080
HOURS SELF LABOR FROM UNPAID PLACEMENT (those hours that do not
20 utilize a Placement Agreement)(enter last total in column 11 at the bottom of your
last journal page)
1080
9
21.
63
GRAND TOTAL ALL HOURS SELF LABOR
(add lines 18 through 20)
1527
CONTRIBUTION TO SUPPORT OF FAMILY
Purpose
Many students who earn money from their enterprises use it to pay for family support.
Technically, this money is neither invested, nor in the bank. Nonetheless, these contributions
for family support may be counted as “earned and invested” when applying for advanced FFA
degrees or awards.
Entries include enterprise funds the student has spent on necessary living expenses such as
home rent or mortgage payments; electricity and heating; expenses for fuel; upkeep and
maintenance of family automobile; health care, including life and health insurance premiums;
and purchase of food and clothing for self and immediate family members.
How to Complete The Contribution to Support of Family
Make all entries in pencil.
Make entries as they occur, so you do not forget to enter them later.
If you need more lines, tape a new page to the bottom of the form.
The information on this form is not carried forward to subsequent Record Books. If you
apply for an advanced FFA degree or award, you must check each year’s Record Book
for the total amount you have contributed towards the support of your family.
1. Date – Enter the date you made the contribution to support your family.
2. Paid to – Write the name of the person or business to which you paid money.
3. Description of Item – Describe exactly what you paid for.
4. Amount – Write the total amount you paid.
5. Grand Total for Year – Add up all the values in the “Amount” column.
You have completed the Contribution to Support of Family portion of your Record Book.
If you have further questions, ask your instructor, or see the listed examples.
64
EXPENSES FOR EDUCATIONAL PURPOSES
Purpose
Many students who earn money from their enterprises use it to pay for educational purposes.
Technically, this money is neither invested, nor in the bank. Nonetheless, these contributions
for educational purposes may be counted as “earned and invested” when applying for advanced
FFA degrees or awards.
Entries include expenses paid for by the student from enterprise earnings for any of the
following purposes: room and board while away from home for the expressed purpose of
attending school; tuition and registration and enrollment fees at an educational institution;
books and related classroom supplies purchased expressly for educational purposes; and testing
and application fees necessary for the purpose of advancing personal educational objectives.
How To Complete The Expenses For Educational Purposes
Make entries in pencil.
Make entries as they occur, so you do not forget to enter them later.
If you need more lines, tape a new page to the bottom of the form.
The information on this page is not carried forward to subsequent Record Books. If you
apply for an advanced FFA degree or award, you must check each year’s Record Book
for the total amount you have contributed towards educational purposes.
4.
Date – Enter the date you made the payment.
5.
Paid to – Write the name of the person/business that you paid money to.
6.
Description of Item – describe exactly what you paid for.
7.
Amount – Write the total amount you paid.
8.
Grand Total for Year – Add up all the values in the “Amount” column.
You have completed the Expenses for Educational Purposes portion of your Record
Book. If you have further questions, ask your instructor.
65
Example
CONTRIBUTION TO SUPPORT OF FAMILY
Entries should include SAE funds that the student has spent on necessary living expenses such as home rent or mortgage
payments; electricity and heating; expenses for fuel, upkeep and maintenance of family automobile; healthcare, including life
and health insurance premiums; and purchase of food and/or clothing for self and/or immediate family members.
Date
Description of Item
Paid to
Amount
2/19/03
Hartford Insurance
Life Insurance Policy
120.00
3/22/03
Father
Car repair
486.00
3/30/03
Mother
Furniture Purchase
420.00
GRAND TOTAL FOR YEAR
1026.00
EXPENSES FOR EDUCATIONAL PURPOSES
Entries should include SAE funds used by the student for any/all of the following purposes: room and board
while away from home for the expressed purpose of attending school; tuition, and registration and enrollment fees at an
educational institution; books and related classroom supplies purchased expressly for educational purposes; and testing
and/or application fees necessary for the purpose of advancing personal educational objectives.
Date
Description of Item
Paid to
4/7/03
Cal Poly Pomona
Dorm
6/1/03
E.T.S.
SAT Exam Fee
8/14/03
Cal Poly Pomona
Registration Fees
Amount
760.00
GRAND TOTAL FOR YEAR
66
40.00
1023.00
2583.00
FFA ACTIVITIES
Purpose
The FFA is an integral part of your agriculture education experience. A record of the
activities you have participated in will be valuable to you later when you apply for
scholarships and awards. Many chapters also have Point Award Programs that are
based on these types of activities.
Be sure to keep this information up-to-date. When you have an entry to make, do it
immediately. Be sure to include enough detail so you or someone else can
understand exactly what took place two or three years later. Also, you may only list
each Activity once in this and the following Activity-related sections (School and
Community Service Activities) on Record Book pages 14-17. Do not enter the same
Activity in more than one section.
How To Complete The FFA Activities Section
Information on this page relates to one or more of the constitutional qualifying
requirements for advanced degrees in the FFA.
Only include information on these pages that has occurred this year. Nothing
is transferred from previous books.
Complete this section in pencil.
A.
Degrees Held in The FFA
Record the date you earn any of the degrees listed. Do not confuse the date you earned
the degree with the date on which you received the pin or certificate.
The date you record is very important! Keep in mind the California FFA State
Constitution requires that you “have held the Chapter FFA Degree for at least one year
immediately preceding application for the State FFA Degree.”
B.
Parliamentary Skills
There are two ways to meet the State Degree requirement for knowledge of
parliamentary procedure. You must either demonstrate a total of 10 parliamentary skills
(complete box B1), or you must successfully pass a written examination demonstrating
proficiency in parliamentary law given by your agriculture instructor (complete box B2).
67
Again, this information is not carried forward from year to year. Only include
information about skills you have demonstrated this year.
B1.
Progress in Developing Parliamentary Skills
List the date the procedure was performed.
Indicate what procedure you performed.
Indicate where the procedure was performed
Have your advisor initial the form.
Do not duplicate entries from previous books.
B2.
Parliamentary Proficiency
Write the date you successfully passed a written examination
demonstrating proficiency in parliamentary law.
Have your advisor initial the form.
C.
Speaking Engagements Promoting Agriculture and/or the FFA
There are also two ways to meet this constitutional requirement for the State
FFA Degree. You must either give a six-minute speech, or lead a group
discussion for forty minutes. Either of these presentations must be on a
topic relating to agriculture or the FFA.
Again, this information is not carried forward from year to year. Only include
information about skills you have demonstrated this year.
Record the date your presentation was given.
Indicate what type of presentation it was, either a formal speech, or a group
discussion.
Indicate who was the audience, or group, to whom you presented.
Indicate what was the topic of the presentation.
Record how long your presentation lasted.
D.
FFA Offices and Committees
There are two ways to meet this requirement for State FFA Degree. You
may either serve as an officer, or participate as a member, or chairperson of
a committee.
Again, this information is not carried forward from year to year. Only include
information about duties you have begun this year.
D1.
FFA Offices Held
Indicate the year you held the office
List the office you held.
68
Indicate with an “X” at which level you served.
D2.
E.
Service on FFA Committees
Name the committee(s) on which you served.
Indicate with an “X” at what level you served.
Chapter Level Activities
Here you must only list activities that occurred at the chapter level.
For the State FFA Degree you must participate in “at least five distinctly different
activities at the chapter level.”
Indicate the date you participated in the Activity.
Describe the Activity in which you participated.
Indicate what was your responsibility or placing in the Activity.
Remember, do not duplicate activities listed in other sections of the Record Book
page 14-17.
F.
FFA Activities Above the Chapter Level
The State FFA Degree requires that you “have participated in at least five
FFA activities above the chapter level.” However, these activities do not
have to be distinctly different from one another.
Indicate the date you participated in the Activity.
Describe the Activity in which you participated (as long as it is not recorded
anywhere else in Record Book pages 14-17).
Place an “X” at which level the Activity took place.
Indicate what was your responsibility or placing in the Activity.
You have now completed the FFA Activities section of the Record Book. If you have
further questions, talk to your agriculture instructor.
69
Example
FFA ACTIVITIES
A. Degrees Held in the FFA
B1. Progress in Developing Parliamentary Skills
Enter date ONLY for degree earned during the year
covered by this record book.
Instructions: List here only those procedures of parliamentary law which you
have never before listed in the previous record book and which you performed
to the satisfaction of your chapter advisor this year.
Degrees
Date Elected
Date
Greenhand FFA Degree
Chapter FFA Degree
1/4/03
State FFA Degree
B2. Parliamentary Proficiency
During the year covered by this record book the
student successfully passed a written
examination, demonstrating proficiency in
parliamentary law, under the supervision of the
local agriculture instructor.
Date Examination Passed
Procedure
Where Performed
Performed (i.e.classroom, ASB, FFA Contest, Etc.)
2/1/03
Motion
Classroom
2/3/03
Amend
Classroom
2/15/03
Classroom
3/6/03
Refer
Point of
Order
3/9/03
Division
Parli Pro Team practice
Classroom
Question
Previous
Question
3/9/03
Amend
3/9/03 amendment
Parli Pro Team practice
3/9/03
12/15/03
Instructor's Initials
Advisor's
Initials
Parli Pro Team practice
Parli Pro Team practice
4/23/03
Table
Parli Pro Team practice
4/23/03
Withdraw
Parli Pro Team practice
C. Speaking Engagements Promoting Agriculture and/or the Future Farmers of America (FFA)
No.
1
2
Date
Formal speech or
Discussion Leader
(list which one)
10/2/03
Speech
Lion's Club
Water - Who Owns It?
3/15/03
Speech
Section Meeting
Legislation and the FFA
Group Speaking to/Leading Discussion with
Title/Topic
Length in
minutes
9
7
3
D1. FFA Offices Held (List offices for which you began your service as an officer during the year covered by the book.)
School Year
Office
2003-04
Reporter
2003-04
Vice President
Chapter
Section
Indicate Level
Region
X
X
D2. Service on FFA Committees - List committees which began to function during the period covered by this book.
Committee
Program of Work
Chairman
Indicate Level
Yes No Chapter Section Region State Nat'l
X
X
X
Responsibilities
Update Calendar
70
State
Example
FFA ACTIVITIES (Continued)
E. Chapter Level Activities - List each FFA Chapter-level activity in which you participated in this year which fits
under no other section on pages 13-16
Date
Activity
Placing or Responsibility
1/5
Freshman Officers
Secretary
2/3
Chapter Meeting
Member
2/4
Farm Lab Clean up
Participant
2/20
Food for America
Explained Pig Care
2/21
State Officer Visit to class
Participant
2/22
FFA Week
Participant
4/10
Candy Sales
Salesperson
6/1
FFA Banquet
Attended
6/4
Pre-Fair Show
Showed Hog
6/10
Planted Chapter Corn
Drove tractor
6/21
School Board Presentation
Presenter
6/25
Class Bulletin board
Constructed it
8/10
Summer Camp Out
Participant
10/2
Football Concessions
Salesperson
10/7
Petting Zoo
Helped kids with animals
11/3
FFA Calendar Sales
Salesperson
71
72
COMMUNITY SERVICE ACTIVITIES
Purpose
In addition to FFA activities, you will probably be involved with Community
Service Activities. These activities must be recorded, as they will be of importance
when applying for awards and scholarships.
The requirements for the State FFA Degree call for participation in “activities for
community involvement as evidenced by participating in at least two distinctly
different activities, to the extent of spending at least 20 hours of personal time, which
seek to serve and/or improve the quality of life in the local community.”
How To Complete The Community Service Activities Section
Only include information from this Record Book year.
Fill out this section in pencil.
Indicate the date you participated in the Activity.
Describe the Activity in which you participated in such a way that is clear to
others reviewing your Record Book that these activities are indeed of a
community service nature.
Place a “X” in the Comm. Serv. column
Record the number of non-class hours of community service you donated.
At the end of your Record Book year add up all the values in the “Hours of
Service” column and enter the sum at the bottom where it says “Total Of
Community Service Hours.”
You have now completed the Community Service section of the Record Book. If
you have further questions, refer to your instructor for assistance.
73
SCHOOL ACTIVITIES
Purpose
In addition to FFA and Community Service activities, you will probably be involved
with many School Activities. These activities must be recorded, as they will be of
importance when applying for awards and scholarships.
The requirements for the State FFA Degree call for participation in “at least two
distinctly different non-FFA school activities that are conducted outside of normal
class time.”
How To Complete The School Activities Section
Only include information from this Record Book year.
Complete this section in pencil.
Indicate the date you participated in the Activity.
Describe the Activity in which you participated.
Place a “X” in the School column
You have now completed the School Activities section of the Record Book. If you
have further questions, refer to your agriculture instructor for assistance.
74
Example
COMMUNITY SERVICE AND SCHOOL ACTIVITIES
No.
1
2
3
4
5
6
7
8
9
10
11
12
13
Date
Activity
1/3
Restored Community Park with 4H
1/5
Drama - Stage Crew
2/5
School Comm. Serv. Hours of Community Service
X
60
Helped Lions Club with Blood Drive
X
7
3/7
Sang at Local Rest Home
X
2
9/1
Student Body Officer
X
9/1
Choir
X
9/1
Band
X
9/1
V.I.C.A.
X
10/2
Exchange student for day
X
10/5
Homecoming Parade
X
11/8
Jr/Sr. Prom
X
11/9
Particiapted in Food for Elders Program
X
12
X
12/10 Yearbook staff
X
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
Total
of Community Service Hours
75
81
Revised 10.1.10
TRANSFERRING EXISTING PROJECTS TO FFA
(any enterprise started before entering a high school agriculture course and FFA)
Students frequently enter the agriculture education program with existing projects as
part of an ongoing 4H or their own personal enterprise. If the student wishes to
maintain the project without transferring it to FFA, then all items related to the project
must be listed in the Financial Statement under “Personal Assets,” or “Personal
Liabilities.” However, if the student elects to transfer the project into the FFA, then
they will need to follow these instructions.
CALIFORNIA FFA CHANGED THE OPENING FINANCIAL STATEMENT
AND INVENTORY PROCEDURE STARTING JANUARY 1, 2011.
1. All inventory items related to the existing project must be listed under “Enterprise
Assets” on the Financial Statement for the beginning of the year. This includes
any animals, feed, and cash that were part of the project (Current Operating
Inventory) In addition Accounts Receivable and Payable, Non-Current/ Capital
Non Depreciable Inventory, Non-Current/ Capital Depreciable Inventory would
be listed for the beginning of the year.
2. The student WOULD NOT show in the Record Book that they have purchased
the animals, feed, etc…from their existing project (Current Operating Inventory).
DO NOT list market animals, feed, and other consumable items in the Journal as
an expense when transferred. Listing of any of these items under Current
Operating Inventory, Beginning of Year will account for the expenses of these
items. List purchased breeding animals and equipment in the Depreciable
Property Inventory as a beginning balance. The purchase date would be the
original date the item was purchased by the member, not the date they transferred
into the FFA. Continue depreciating from the original purchase date, not the
transfer date. Raised breeding livestock (i.e. animals born and raised from the
student’s own breeding livestock) would be entered in the Non-Current, Capital
Non-Depreciable Inventory.
3. Gifts and/or Inheritances, related to the enterprise, received prior to joining FFA
should be treated as expenses. A gift of breeding livestock would be entered as
depreciable property, with a cost basis of the fair market value at the time of the
gift. The purchase date is the day the gift was received and depreciation would
start on that date. All other gifts or inheritances would be entered into the
appropriate inventory. An example: the gift of a market animal would go in the
Beginning of Year Current/Operating Inventory.
76
GLOSSARY
Acquire: to gain possession of something.
Activity: an actual physical action related to your enterprise.
Agreement: a written statement between two or more parties explaining the details
of a business venture.
Agriculturally Related: farming or some related industry; having to do with the
general area of agriculture.
Analysis: looking at your enterprise critically at the end of the year and drawing
some conclusions about it.
Apportion: to divide or assign parts of the total cost of an item to the different
enterprises in which the item was used.
Asset: items of value that you own, including cash and money owed to you by
someone else.
Balance: the amount of money owed at any point in time.
Basis: the cost factor from which you start MACRS depreciation. Normally the
purchase price of an item.
Borrow: to take or receive something with the understanding that it will be returned.
Budget: the estimated expenses, receipts, and net income for an enterprise.
Calendar: according to the order of occurrence, following the dates of a calendar.
Capital: money that is used to make more money. Capital may be obtained through
selling of assets or by borrowing.
Capital Asset: an item that is used in the business, but is not used up in a single
production cycle.
Debt: something owed by one person to another, or others.
77
Deduction: the amount of money taken off the value of an item over a period of time.
For our purposes, one year.
Depreciable Property: Purchased property such as machinery, equipment,
structures, or breeding livestock that has a useful life of more than one year.
Depreciation: a method of spreading the costs of capital assets over their useful life
to the enterprise.
Enterprise: an undertaking or project. In the Supervised Agricultural Experience
Program, the enterprise is either an individual ownership or non-ownership (work
experience) Activity.
Enterprise Asset: An asset that is directly related to your enterprise.
Enterprise Liabilities: money or items of value that you owe to someone else as a
result of your enterprise.
Enterprise Net Worth: enterprise assets minus enterprise liabilities.
Estimate: a rough calculation of size, quantity, value, etc…an “educated” guess.
Expense: the cost of doing something such as raising an animal.
Income: the money received from selling something or for working.
Interest: money paid for the use of money borrowed.
Internal Revenue Service/IRS: the part of the federal government responsible for
collecting taxes.
Inventory: a listing of items that you own, categorized in a logical fashion and given
a dollar value.
Liabilities: money or items of value that you owe to someone else.
Lender: the person or company that loans you money.
Loan: a sum of money lent, often for a specified period and repayable with interest.
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Management: the act of making decisions or controlling. In an ownership
enterprise you are your own manager, making all the decisions regarding your
activities. In a Placement enterprise someone else manages what you do.
Modified Accelerated Cost Recovery System (MACRS): an IRS approved method
of depreciation that allocates the cost of a capital asset to the enterprise over a period
of years.
Multiple Payment Loan: a loan that is repaid with several payments.
Net Income: income minus expenses.
Net Worth: assets minus liabilities.
Non-Cash Expense: an expense to the business that does not cost money at a
particular point in time. Depreciation is a non-cash expense to the enterprise. The
money that is deducted for depreciation is not paid in dollars at that point in time.
Non-Depreciable Inventory: items that are frequently used up in the production
process. Non-Depreciable property normally has a useful life of less than one year
and is not depreciated.
Ownership Enterprise: an enterprise you own or manage.
Party/Parties: people with whom you make a business agreement.
Payment: the principal and interest paid back to the lender for the loan.
Personal Asset: assets you own that are not related to your enterprise (your stereo,
for instance).
Personal Liabilities: money you owe others that are not related to your enterprise
(for example, the money you borrowed to buy a car).
Personal Net Worth: personal assets minus personal liabilities.
Placement Enterprise: An enterprise in which you do not own anything, typically
working for someone else (paid or non-paid).
Planning: the act of anticipating activities before they are to occur.
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Principal: the original amount of money borrowed without including the interest due
over time.
Production Cycle: a completed round of events relating to the student enterprise.
For example, from the time of purchase of a market animal through the time of its
sale. Or, from the time of ground preparation and planting seed through the sale of
the crop.
Property: a possession, or something that is owned.
Receivable: money that you will receive when those who owe it fulfill their payment
to you.
Rent: money paid for using someone else’s resources such as buildings or
equipment.
Responsibilities: activities that you and other parties agree to do as specified in the
business agreement.
Single Payment Loan: a loan that is repaid in one lump sum, all at once.
Straight-Line Depreciation: the most common method of depreciation that takes
off the same amount of value for each full year of ownership.
Terminate: to end. If either party does not keep a business agreement, the
agreement is terminated. If your employer doesn’t pay you, or if you refuse to do
work as it was agreed upon, this is cause for termination of the business agreement.
Transfer: to move from one place to another.
Valuation: the act of assigning a value or a price on something.
Wages: money paid to an employee in exchange for working. Wages are usually
paid on an hourly, or daily, or piecework basis.
Work Experience: to work for someone else, either for pay or no pay. Work
experience situations are generally considered learning opportunities, where you are
learning while you are doing work.
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