Introduction to Agribusiness Accounting

• owner's equity is also known as net assets
• the primary objective of a business is to generate profit and growth of net assets over time
• the five functions of management are planning, organising, leading, controlling and staffing
• the central functions to management are planning, organising and controlling
• the difference between taxation accounting and management accounting is that taxation accounting is concerned with compliance with tax legislation and minimising the businesses taxation liability within the confines of this legislation. Management accounting is concerned with the overall business and is a tool for managers in the decision making process
• operating income refers to the income arising from the normal annual production activities of the business
• capital income refers to the amounts received from the sale of non-current assets or the obtaining of loan funds and should not be regarded as income in the calculation of profit
• the most common business goals are financial and non financial - environmental, sustainability, expansion of the business, market access, employment
• the profit equation is income - expenses
• the owner's equity equation is assets - liabilities
• the financial triple bottom line is ensuring the business is stable (equity is highly positive), liquid (current assets exceed current liabilities) and profitable (income exceeds expenses)
• taxation accounting often does not reflect the true market situation in terms of profit or total assets
• management accounting provides a realistic view of what is possible for a business
• accounting is the financial measurement of a businesses resources
• financial management consists of planning and organsising a businesses financial resources in line with the goals set by that business
• management is the process of making an organisation perform through identifying business goals and making decisions on how to use resources efficiently and effectively