Page 331 - Agriculture_Form_Three

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
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