What is the difference between net farm income and return to management? a. Return to management allows
Question:
What is the difference between net farm income and return to management?
a. | Return to management allows the manager to evaluate progress of the specific operation over time, but does not allow for yearly price or weather factors beyond the manager's control. | |
b. | Net farm income measures the value of all farm output produced or sold without regard to the cost of producing it. Return to management begins with net farm income but nets out the cost of livestock and feed purchased off the farm. | |
c. | Net farm income is what remains after all accounting costs are deducted, both cash and accrual, while return to management has the opportunity costs of unpaid labor and equity capital subtracted as well. | |
d. | Net farm income more accurately reflects the performance that was possible in a particular year given the existing price and weather conditions. |
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill