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  • ICAR and TNAU E-Course Summarized

    Summarized Notes
  • In a cash flow projections analysis of a farm, what would you do if a certain month indicated that there would be more expenses than income

    Question: In a cash flow projections analysis of a farm, what would you do if a certain month indicated that there would be more expenses than income

    Options:

    Terminate the enterprise causing the cash flow problems that month
    Change from cash to actual accounting method
    Use savings delay expenses move up sales or borrow money*
    Change depreciation methods

    ✅Explanation:

    • Cash flow shortfalls are a common challenge in farm management. Here are some strategies to address a month with higher expenses than income:
    -Savings: Utilize existing savings to cover the shortfall.
    -Delay Expenses: If possible, delay non-essential expenses like equipment maintenance or fertilizer purchases until a month with higher income.
    -Move Up Sales: Can you accelerate the sale of some products (livestock, crops) to generate immediate income?
    -Borrow Money: As a last resort, consider a short-term loan to bridge the gap. However, borrowing should be managed carefully to avoid a debt burden.

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