Enterprise Accounting

Iowa State University Extension and Outreach

Type: PDF
Knowledge level: Intermediate

Farm Table says:

This is a useful fact sheet if you are running a mixed farming operation.

This fact sheet produced by Iowa State University Extension and Outreach looks at fine tuning management decisions using enterprise accounting.

Farmers are used to calculating profits each year for their entire farm. But where do these profits come from? Most farms and ranches produce more than one product. By dividing the farm operation into separate lines of production the contribution of each one toward overall profit can be evaluated.

The key points presented include:

  • what is enterprise accounting?
  • cost allocation
  • internal transactions
  • cost centers
  • accounting systems
  • examples
  • accounting period
  • value added enterprises
  • comparing enterprises
  • comparing land units

In conclusion, enterprise accounting has many uses. It takes extra effort, but the information it provides is well worth it. This year might be a good time to overhaul the operator’s accounting system to find out which enterprises are performing well and which ones are not.

2016 - United States - Iowa State University Extension and Outreach
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