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 throws light upon the three main types of cash book that can be maintained in a farm business. The types are: 1. Cash Book with Cash and Discount Columns 2. Cash Book with Cash and Bank Columns 3. A Cash Book with Bank and Discount Column 4. Petty Cash Book. 1. Cash Book with Cash and Discount Columns: [...]