Farm business Accounting and ICT

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 31^st 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.