This article throws light upon the three financial test ratios used to find out the state of profitability in the farm business. The financial test ratios are: 1. Cost Ratios 2. Capital Ratios 3. Income Ratios. 1. Cost Ratios: These show the relationship between costs and returns. Cost ratios are averages and their magnitude reflecting physical production efficiency, selection of [...]
After reading this article you will learn about the capital and revenue expenditure of a farm business. Allocation and receipt under Capital and Revenue is important when property is improved there are distinction made between: 1. Permanent improvement. 2. Current improvement. Permanent improvement appears in B.S. Current expenditures appear in Profit and Loss Accounts Revenue means income but revenue account [...]
This article will help you to maintain cost accounting records for your farm business. Meaning of Cost Accounting: In any business where production of goods, services, or processing of raw material is undertaken the maintenance of the cost of production is very crucial. In the field of crop production working out of the cost of production (cost of cultivation plus [...]