Livestock Economics, Marketing and Business Management

INCOME AND REVENUE

• Simply stated, income statement is excess of revenue over expenses. If the expenses exceed the revenue the result is a loss to the farm.
• Income statement is generally prepared for one agricultural year, i.e. at the end of the year. However it may also be prepared over a period of time, so that one can know the trend in receipts and expenses which indicates the success or failure of a farm business.
• It shows whether the farm is running under loss or profit. Hence it is also called as Profit and Loss Statement.
• It is different from balance sheet in that the balance sheet indicates about the assets and liabilities but not about the operational efficiency of the farm business in terms of receipts, expenses, profit and losses.
• The objective of preparing Income Statement is to summaries the income and expenses incurred in the farm throughout the year and present them in a schematic picture. This statement lists all the farm expenses on one hand and all the receipts on the other.

Revenue

• In the revenue realized through the sale of following items are included.

Opening Receipts

• Crops and feed
• Livestock and Poultry sold
• Livestock and Poultry Products sold
• Custom work- cash
• Government payments and patronage dividends, gifts etc.

Capital Receipts

• Breeding stock
• Machinery and equipment
• Appreciation in the value of assets

Non Farm Income

• Interest and dividends