Farm accounts - Agriculture Form 4
Suggested Topic Activity.
Name and distinguish the various books of accounts a farmer can keep in a dairy farm.
2. Visit the schools account office and find out the financial documents the school keeps.
3. Students to prepare a sample balance sheet for an imaginary farm and note down the main parts of a balance sheet.
4. Prepare cash analysis from the information given below filling all the columns in the table.
Ref .macmillan, sec.Agric. bk 4 ,pg 132-133. Fig 5.11.
Let us review what you learned earlier about agricultural economics . In form one you learned the meaning of agricultural economics and the basic concepts of economics such as opportunity cost, choice and preference. You also studied farm records and Importance of keeping farm records. In this topic you will learn the basic principles farm of accounting.
1.Farm Acconts - records or statements of financial transactions of the farm.
2.Invoice-Document used in business when goods are delivererd on credit.
3.Receipt-Document issued when cash payments for goods delivered or services rendered is made.
4.Delivery note-Document that accompanies goods on delivery.
5.Purchase Order-A contract document between a buyer and the seller to supply specified goods.
6.Ledger-Main book used in keeping financial records.
7.Inventory-Abook in which a record of all the assets owned by a business or individual is kept.
8.Cash book-A book in which all transactions involving the receiving and paying out of cash are recorded.
9.Journal-A book where all unclassified transactions are entered.
10.Balanec sheet-Financial statement drawn to show the financial position of the farm business at a particular period of the year.
11.Liabilities-Consists of what a farming enterprise owes for goods supplied,or all debts the business owes other firms.
12.Assets-Are property owned by a business and have a monetary value attached to them.
13.Profit and loss account-A financial statement showing whether a business made a profit or loss.
14.Opening valuation-These include all assets in the firm or business by the beginning of a financial year.
15.Closing valuation-This includes all the assets in the farm or business by the end of the financial year.
16.Cash analysis-Is a financial statement drawn up to show the receipts and payments of cash in the business.
By the end this topic, you should be able to;
- state the importance of farm accounts,
- distinguish and describe the various financial documents and their uses,
- prepare and analyze financial statements,
- identify various books of account and their uses.
Agricultural Economics IV (Farm Accounts)
Meaning of agricultural economics, Agricultural economics is the study of how the society employs the scarce resources to production of goods and services for use by the society over a period of time. Farm accounts are written farm records of all the financial transactions in the farm which evaluate its performances
Farm Records Kulipa ushuru ni Kujitegemea
A financial document is a record in form of written piece of paper or electronic form of record giving information of expenses, assets or monetary status of a firm. They include the following;invoice, delivery note, invoice, statement of account and purchase order.
Statement of account:
Books of Accounts.
These are books into which information on various business transactions are recorded over a long period of time, they are also called financial books. The financial books used in the farm include;
- Cash book,
- Inventory book,
- The ledger,
Cash book Layout
A cash book is divided into to two main sides namely; sales and receipts side and purchase and expenditure side. Each side of a cash book has the following columns. Date column: when the transaction was made. Particulars column, which describes the transaction being carried out specifying the items sold or purchased. Amounts column, which indicate the total money paid or received in each transaction. On the sales and receipts side, purchase and expenses must balance by carrying down the balance either from the sales and receipts side or purchase and expenditure side .
Both the sides have the following details
Date: this shows the date in which transaction took place. Particulars column: is a short description of the cause of entry and name of other accounts affected by the same transaction. Amount: the amount of money by which the account is increased or decreased. 1. Ledger is the main book used in keeping financial records. 2. It is in the ledger where all accounts are kept. 3. A ledger is a book in which a record of all assets owned by a business are kept. 4. A ledger account has credit side and a debit side. 5. A ledger book is where are all un classified transaction are kept are entered 6. A ledger has a folio page where particular accounts appears 7. A particular column in a ledger is used for writing the cause of the entry being made.
A journal has the following details;
Date of transaction. Shows the date in which the transaction took place. Name of the account to be debited: shows a decrease transaction. Name of the account to be credited: shows an increase transaction. Transaction particulars: brief description of the cause of entry. Amount of money involved: money by which an account is increased or decreased.
These are statements which show various financial transactions on the farm. They include the following; balance sheet, profit and loss account and cash analysis.
This are debts the farmer or the business owes other firms. There are two types of liabilities:
- long time liabilities- are those debts payable for a long period of time eg 5yrs.
- short time liabilities- are those debts payable within a year.
Profit and Loss account:
- Purchases and expenses: the cost incurred when buying goods and services
- Sales and receipts: the money received after selling good and services.
- Opening valuation: opening valuation: the value of the business at the beginning of a financial year.
- Closing valuation: Closing valuation: the value of the business at the end of a financial year.
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