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Agriculture for Secondary Schools


          The amount of cash that you have not yet paid to suppliers for credit purchases is
          your accounts payable. This is a liability because it is the money that your business
          has to pay out to someone else. To determine your accounts payable, take the current
          balance  from  your  creditors’  (lendersʼ)  record  or  add  up  the  amount  from  your
          invoices that you have not yet paid.

          Step 7:  Find out the total amount of taxes payable for your business and enter it next
          to number 7. Your business may have debts required to be paid to the tax authority
          for income tax on your past profits or for Value Added Tax (VAT) if applicable. You
          can get this amount by looking at the current balance of your taxes payable record
          or your tax bills that you have not yet paid.
          Step 8:  Find out the total amount of unpaid loans in your business and enter it next
          to number 8. This is determined by whether your business received any loan for
          which it is still repaying. If so, the unpaid amount of this loan is a liability. To find
          the amount of your outstanding loans, look at the balance column of your loans
          record.

          Step 9:  Find out the total liabilities of your business and enter it next to number 9.
          This is found by adding up the figures in step 6, 7 and 8. This is the amount of debts
          that your business has to pay to others.

          Step 10:  Find  out  the  Net  worth  of  your  business  by  subtracting  the  figure  in
          number 9 (total liabilities) from figure in number 5 (total assets) and enter it next to
          number 10. This is the amount of your business’ assets minus its liabilities which
          mathematically is represented by Figure 15.2:
                                            Tatu Farm

                        The net worth statement as at 31  December, 2020
                                                         st
                                     Amount                                     Amount
              Assets                                  Liabilities
                                       (TZS)                                       (TZS)
          1. Cash in hand         270,000.00     6.   Accounts payable      3,300,000.00
          2. Cash in bank        3,550,000.50    7.   Taxes payable           300,000.00
          3. Accounts             200,000.00     8.   Loans outstanding                 0
              receivable
          4. Inventory           4,780,000.00    9.   Total Liabilities     3,600,000.00
          5. Total Assets        8,800,000.50    10. Net worth              5,200,000.50
                                                      (item 5 minus item 9)

                   Figure 15.2: Simplified hypothetical sample of a net worth statement






                                                                    Student’s Book Form Three
           320




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   AGRICULTURE FORM 3   9.11.2022.indd   320                                              10/01/2025   12:32
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