Page 292 - Agriculture_Form_Three

Agriculture for Secondary Schools

Chapter

Thirteen

Farm records and accounting

Introduction
In farming business, it would be very difficult to recall all the transactions, their
dates, and the people involved without having proper physical and financial records.
Likewise, a farm business without key sources of information and evidence cannot
have reliable farm records and accounts. You can recall about physical farm records
that you have learnt in Form Two. In this chapter, you will learn about the concepts
of financial records as well as basic accounting and related documentation in
farming business. The competencies developed from this chapter will enable you to
remember and verify the transactions made on the farm and within the enterprise
as well as manage farm records, prepare simple financial statements and make
informed decisions about your farm business.

Concepts of financial records and accounting

Farming, like any other business where transactions are carried out, involves
keeping all financial records using accounting documents. Financial records of the
farm are the details or information of all transactions which are taken systematically

in connection with the farm business activities. These records show what the farmer
spends or receives on the farm and their sources. The process of recording and
presenting all farm resources and transactions that have financial consequences is
what is referred to as farm accounting.

Farm accounts show statements of financial transactions of the farm hence they
involve paper work and normally farmers dislike paper work as they are busy with
their farm work. In some cases, a place to keep records might be a problem for a
farmer as one cannot expect an office or a desk on the average farm. Therefore, farm

accounts should be kept very simple. Moreover, if they are to be kept manually, it is
preferred to have all records in one counter book.

Despite the fact that dealing with farm accounting may take part of the farmer’s
time and effort, this is compensated by its benefits. Some advantages of having basic
farm records and accounts are:

Student’
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