The Income Statement—A Summary of the Farm operations

The Income Statement—A Summary of the Farm operations


When to Use

• For the business owner: to understand the profitability of your business, as well as the nuances of your different product lines and revenue streams (historical)
• For potential financiers, entrepreneurs and partners: to project the profitability of a new venture (projections)
• For the government: to file your taxes (historical).

Key Features

• The income statement is a detail of the business activity over a period of time, usually a month, quarter or year.
• The income statement details the activities directly related to the operation of your business (selling produce, paying employees), as well as indirect activities (money earned from renting land or interest income).
• The income statement shows your total revenue, total expenses and net profit.
• The income statement does not track cash flow.

The income statement presents a summary of everything you earn through the course of your business. It includes selling products and/or services, as well as the cost associated with running your business: what you spent to purchase your seeds and soil amendments, to pay your employees, for advertising, rent, and so on.

More academically, an income statement provides information about businesses’ operations in terms of profitability over a given period of time.

It is broken down into two major sections that distinguish the farm’s primary operations from the secondary transactions, which are divided by “the line.”

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