A sunk cost is a cost that has already occurred and cannot be recovered, no matter any future action. When making a future decision you should not consider any sunk costs. Move on.
Return on Investment (ROI) - is a performance measure used to evaluate the efficiency of an investment.
ROI = (Current Value of Investment - Cost of Investment) / Cost of Investment
Revenue Recognition is an accrual accounting principle that determines when to record and report a sale.
A sale may be recorded when the following has occurred:
Accrued interest is the amount of loan interest which has accumulated since the initial loan or since the last loan payment, which interest has not been paid. In other words, interest which is due but has not been paid.
For the borrower the accrued interest amount is recorded as a current liability on the balance sheet and as interest expense on the profit and loss statement.
Investment in Growing Crops is a prepaid expense reported on the balance sheet. These are prepaid expenses to produce a crop which is not yet harvested. Each month during the growing season, these costs are accumulated on the balance sheet. When the crop is sold these costs are removed from the balance sheet and reported as cost of goods sold on the profit and loss statement. Example of costs to include in growing crop investment would be: farm labor, repairs & maintenance, seed, fertilizer, fuel, insurance, utilities and any other direct cost associated with the growing crop.
Working Capital my hold the key to your farm's success. It is the money available to meet your current expenses.
How to calculate working capital:
Total current farm assets - Total current farm liabilities = Working Capital
The higher the number, the better able the farm will be to cover their short-term obligations.
Cash keeps the wheels turning.
Transportation cost to market - this is the cost of moving finished farm products from the farm to the market. This cost does not increase the value of the product, merely moves it to the market. Transportation cost to market is not included in the production cost, but is a variable operating expense.