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EMPOWERMENT THROUGH EDUCATION
Cash and Accrual Records with Quicken Tags
Wm. Bruce ClevengerOSU Extension Educator and Assistant Professor
Agriculture and Natural Resources
Is Farming Accrual?
• Did all activity about the 2012 crop occur in 2012?
Objectives
• To demonstrate how Quicken Tags can improve cash accounting records– for enterprise analysis across calendar
years– to track income and expenses by
• Farm• Landlord
Why Keep Records?
• #1 - Tax Reporting• #2 - Other “better” reasons
• Evaluate enterprises, financial reports, business analysis
• Cash Systems• Accrual Systems
Pitfalls of Cash Accounting
• Positive cash basis income “may” be a false sense of security
• Studies show a 2+ year lag in recognizing profit problems
• 151 cash grain farms over 6-years– Cash basis net farm income differed
by 85% compared to accrual adjusted
Quicken Workshop
• Ohio State University and Quicken since the early 1990’s.
• Recently, using the Oklahoma State University training manual.– http://agecon.okstate.edu/quicken/– Dr. DAMONA DOYE
• Acting Department Head, Regents Professor & Sarkeys Distinguished Professorship in Agriculture, (405) 744-9813, [email protected]
• Ohio Farmers asked me, “Can Quicken do…?”
What’s the Solution?
• Quicken Tags!• Quicken Terminology
– Transaction – Income or Expense• Date• Check Number or Electronic• Payee• Amount• Category• Tag (enterprise, commodity, landlord,
farm, etc.) Can Use Double Tags Too!
Quicken Categories
Quicken Sub-Categories
Tags
• Year Specific Tags: reports pull income and expenses by enterprise or commodity over multiple calendar year dates– Examples: Pre-paid expenses, In-
season expenses, commodity sales.• Using Double Tags: adds location
– Examples: Report all Corn across all acres in 2012, Corn at each farm in 2012
Quicken Tags
Pre-Paid Expenses
Date: 10/20/2012 Check Number: 1021 Payee: Buckeye Ag Service Payment: 25,000.00
Tags in Quicken Reports
• Tags are Independent of…– Date– Category– Sub-Category
• Tax Year Reports – Calendar Year• Enterprise Analysis – All Dates• Landlord Reports – Calendar or All
Tax Schedule Report
Report: Corn 2012 & 2013
Quicken
• Not necessarily a replacement for FINPACK Income Statement and two balance sheets.
• Can be very accurate for determining accrual cost of production
Accrual Adjustment gives you…
• Simplicity of cash basis accounting• Only once per year adjustment• Measurement against farm financial
standards– 16 to 21 standards
Conclusion
• The farm accounting system should help with decision making in a risky environment
• Investing in a “once a year” adjustment will yield an accrual adjusted income statement
• If you don’t measure anything, you don’t know what to fix.
Contact Information
Wm. Bruce ClevengerOSU Assistant Professor &Extension Educator, Defiance County, Agriculture and Natural Resources06879 Evansport Road, Suite BDefiance, OH [email protected]
