On Tue, Mar 20, 2018 at 12:49 PM, Ella Lobatina <[email protected]>
wrote:
> Ok, I got what you mean, but I'm not buying cabbage, I'm *growing* them.
> So they become assets without direct expenses.
> Of course there are expenses, but they are still hidden behind plowing,
> sowing etc. at the time of acquisition of the cabbages.
> That's why I started posting them to the ledger as an income:
>
> 2018/03/21 farm
> income -5 cabbage
> inventory:farm 5 cabbage
>
> Now Ismael suggested to 'buy' them at a zero price.
> That's ok with me, as long as I can track them as a commodity from harvest
> to sales along the different locations ('warehouses') where they may pass,
> and as long as I can clean up the inventories when they leave.
>
> Klauss suggested to put the sales revenue in an account separate from
> income but although I perfectly understand why that may be good, I'm a bit
> hesitant to do that because that would change the whole way I'm keeping
> books until now, and I'm not saying I'm doing it wrong all the time. I just
> want to track the items through the inventories. :)
> My opinion is that I will be able to calculate the net revenue by just
> subtracting total expenses from total income.
>
> Your explanation about expenses and assets is re-assuring to me in the
> sense that I think I can 'get away' with my maybe unconventional style of
> farm accounting, so I guess I'll just try to write it like this:
>
> 2018/03/21 plant
> ; consumed in plant
> ; balance of cabbages is zero
> expenses 5 cabbage
> inventory:plant -5 cabbage
>
> 2018/03/21 plant
> ; entry of salads produced
> income -2 salad
> inventory:store 2 salad
>
> 2018/03/24 buyer
> ; Now the salads are in store and being sold.
> inventory:store -2 salad {= 2 $}
>
> >
> > Hope it helps/answer your questions
> > --
> > Ismael
> >
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> cash 2 salad {= 2 $}
>
> Now the cabbages *and* salads are both gone,
> the income is from the 2 salads sold,
> at a price of $ 2,
> the revenue is in cash,
> and net revenue can be calculated as income-expenses.
>
One minor problem.
$4 income - 2 cabbages (expenses) = an undefined value that the IRS will
throw a hissy fit at.
Don't know if it made it through but I gave a multi-step process for doing
this. And yes I'm a farmer mostly have
been in a bigger scale than a market garden but I DO understand the
complexities required to describe what are simple process when one is using
financial record keeping to do that.
Regards
Dee
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