1. Understanding Financial Records Animal Science- Small Animal Unit B

2. Competency 5.00 Develop a financial record keeping system for use in the small animal industry Objective 5.01 Describe the elements of a financial statement Objective 5.02 Use the principles of record keeping to compose a financial statement.

3. What kinds of records should businesses keep? Assets Liabilities Net worth Profit and loss statement Cash receipts Non-cash receipts Invoice

4. Assets Things that one owns and completely pays for. Example: Your car after all payments have been made.

5. Current Assets Items quickly converted to cash or that will be sold within 12 months cash checking savings stocks or bonds Money others owe you Current non-depreciable inventory

6. Non-current Assets Items that have a useful life or more than one year land Non-current, non-depreciable inventory

7. Liabilities Things that you owe money to other people for or debts Example: My Visa

8. Liabilities Current-due to be paid this year fertilizer and feed bills tractor and building payments part of the mortgage due this year Non-Current-not due this year mortgages

9. Net Worth One’s assets minus their liabilities. You have $3000 in the bank, but you owe $1750 for your bills. Your net worth is $1250.00

10. Net Worth Current Assets + Non-Current Assets=Total Assets Current Liabilities + Non-Current Liabilities=Total Liabilities

11. Debt-to-Equity Ratio Used by banks and lending institutions to decide whether or not to lend money to specific people or businesses Debt-to-Equity Ratio = Total Liability Net Worth