Farming business accounting refers to recording, reporting and analyzing of financial transactions. Farming business accounting involves maintaining records of cash incomes, short term cash expenditure, long term capital expenditure and debt repayment for management of agriculture enterprises. Farming business Accounting Software packages which also provide extra information on management are available today, for use by innovative farming business people, particularly youth in agriculture as a result of technological advances.
1) Cash register: This is the book where all the farming business financial transactions that have taken place during the year are recorded. It also reflects cash balance after all the annual expenditure is deducted at the end of the year. Small holders can employ income and expenditure records to determine, cost of production, budgets for the next year, enterprise analysis, Farming business analysis and determination of taxes. An example of a cash register is shown below:-
Farm Cash Register as at 31st December 2011
Income
|
Expenditure
| ||
Item
|
Ksh
|
Item
|
Ksh
|
Starting capital
Sale of 350chicken
Sale of bulb onions
Sale of 5 goats
|
1,400,000
42,000
280,000
7,500
|
Farm implements
Purchase of 4 acres of land
Buildings
Onion seeds
De-wormers
Broiler chicks
Goats
Salaries
Tractor
Fertilizer
|
8,850
800,000
43,000
2,500
1,800
11,100
12,000
86,400
415,000
12,300
|
Total
|
1,729,500
|
1,400,000
| |
Farmers balance as at 31st December 2011 is 329,500 (1,729,500-1,400,000)
| |||
2) Ledger Book
The ledger book is reconciled at the end of every year during stock taking. The farmer records all the farm assets, liabilities and their values in order to indicate the total worth of the farm at the end of the year. Ledger accounts are essential in a farming business for the purpose of showing the value of:-
- Creditors
- Debtors
- Produce and livestock end of year account
- Land
- Buildings
- Implements and tools
- Personal capital
3) Farm Trading Profit and loss Account
This accounts record helps agriculture business owners to find out the profit or loss incurred within the accounting season or year.
