Section Two

There are two methods for calculating net farm income. Cash Accounting or Accrual Accounting. It is important to understand the differences and how to calculate both. Build the following equations by filling in the blanks with the appropriate phrases. DO NOT USE NUMBERS!
Fill out this sheet.

Use the following terms for calculating net farm income. Each column is an equation.

FM | Calculating Net Farm Income Exam

Name*
First Last
Address*
City State
Date*
MM slash DD slash YYYY

Gross cash farm income	Gross cash farm revenue
Cash farm expense	Inventory adjustment
Net cash farm income	Gross farm revenues
Depreciation	Cash farm expenses
Net farm income from operations	Depreciation
Gain/loss on sale of farm capital assets	Non-cash expenses adjustments
Net farm income	Net farm income from operations
Gain/loss on sale of farm capital assets	Net farm income

NET FARM INCOME	NET FARM INCOME
(Cash Accounting)	(Accrual Accounting)

1.*
8.*
2. -*
9. +/-*
3. =*
10. =*
4. -*
11. -*
5. =*
6. +/-*
12. +/-*
7. =*
13. =*
14. +/-*
15. =*

Financial Training

CALCULATING NET FARM INCOME

FM | Calculating Net Farm Income Exam