The cash flow statement is organized into sections for cash inflows and cash outflows.
Cash inflows include three types of items: operating receipts, capital sales, and
contributed capital.
In the operating receipts section, the totals for crop sales (wheat, canola, hay), livestock
sales (calves weaned, hogs, broilers, goats or other livestock), government payments
(LFP, ARC, PLC, conservation) are summed along with other farm income, such as
custom work.
Capital sales include the sales of culled breeding livestock, vehicles, machinery and
equipment, land or buildings. Any asset that is expected to be used in the operation for
multiple years is considered a capital asset. Any income that results from the sale of this
type of item is a capital sale. So a bull that has tested infertile and is sold at the local
livestock auction is a capital sale as is the used farm pickup.
Contributed capital consists of funds that come from outside the farm business to
support the farm. It may come from off-farm income, gifts from relatives or lottery
winnings. So, if you inherit, $10,000 from Aunt Mae and choose to deposit it in the farm
checking account to be used for farm purposes, it becomes contributed capital.
In the cash outflow section, you also have three general types of items: operating
expenses, capital purchases, and family living withdrawals.
Operating expenses include…
Capital purchases are the outflows of cash associated with buying capital assets. The
5