Agriculture Reference
In-Depth Information
taxes are not levied against the businesses themselves, but are assessed against the individual
owners. Profi ts are taxed as personal income (see
Chapter 4
). Cooperative businesses often
have lower entries either for taxes or for after-tax profi ts due to the nature of their organiza-
tion and its respective operating objectives (see
Chapter 4
).
Statement of owner's equity
The
statement of owner's equity
is usually the shortest and least complicated of the fi nan-
cial statements. It details the changes that affect the owner's equity accounts. The primary
change is usually a change in retained earnings resulting from a net income or loss. Other
changes could occur due to contributions made or distributions withdrawn from the owner's
invested capital. Also, stock could be issued by the agribusiness.
The statement of owner's equity for Brookstone Feed and Grain company for the year
ending December 31, 2009 is provided in
Table 9.3.
As can be seen, the common stock
equity account did not change from beginning to end of year. However, BF&G made a net
profi t after taxes of $196,650, as reported on its income statement for 2009. Of that amount,
the owner withdrew $96,650 from the business and retained the remainder of the profi t in the
business. So the retained earnings account increased from $1,680,000 on December 31,
2008 to $1,780,000 on December 31, 2009. Consequently, owner's equity increased by
$100,000, from $3,565,000 on December 31, 2008 to $3,665,000 on December 31, 2009.
Statement of cash fl ows
This statement is basically a way to show the cash infl ows and outfl ows of the fi rm for a
period of time. It can be tabulated at the end of a period, like the balance sheet and income
statement, to help interested parties see what happened. Or, more importantly, it can be
constructed at the beginning of a period in an attempt to budget appropriate changes over
the period.
The statement of cash fl ows, like the balance sheet, always balances, i.e., sources of cash
(dollars fl owing into the business) always equals uses of cash (dollars fl owing out of the
business) over the period. The primary categories for this statement are: (1) cash fl ows from
operations, (2) cash fl ows from investments (disinvestments) made by the fi rm, and (3) cash
Table 9.3
Statement of owner's equity for Brookstone Feed and Grain, year ending December
31, 2009
Owner's Equity, December 31, 2008
$3,565,000
Retained Earnings, December 31, 2008
$1,680,000
Net Income After Taxes, 2009
$196,650
- Dividends
$0
- Withdrawals
$96,650
Increase (Decrease) in Retained Earnings
$100,000
Retained Earnings, December 31, 2009
$1,780,000
Common Stock, December 31, 2008
$1,885,000
+ Increases
$0
− Decreases
$0
Increase (Decrease) in Common Stock
$0
Common Stock, December 31, 2009
$1,885,000
Owner's Equity, December 31, 2009
$3,665,000
