Farm account

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Welcome to class! 

In today’s class, we will be talking about the farm account. Enjoy the class!

Farm Account

CONTENT

• Meaning of Farm Accounts
• Importance of Farm Account
• Types of Farm Accounts

Meaning of farm accounts

Farm Accounts are a statement of money paid out or received for goods and services in a farming business.

Money is received due to sales of farm produce or loans from other sources while money is paid out for purchases of farm produce or settlement of debts.

Importance of farm accounts

1. It helps to monitor the changes in prices of items bought or sold on the farm.
2. It shows the financial position of the farm.
3. It shows whether profit or loss is made.
4. It is useful in taking management decision.
5. It is useful in the procurement of loans.
6. It helps to determine animal tax.

Evaluation

1. What is the Farm Account?
2. List five importance of Farm Account.

Types of farm accounts

1. Sales Account: It shows the details of farm products sold, this includes; the types of product sold; the quantity, date sold, to whom and at what price.
2. Purchase Account: It shows the details of items purchased for use on the farm. This includes the name of the input, date purchased, number of input, quantity and the cost.
3. Farm Valuation: It contains information that helps to determine the value of the farm.
4. Balance Sheet: It shows the capital or financial position of the farm at the end of the accounting period, usually a year. It is also called the Net worth.
5. Farm Income statement: It comprises all the farm receipts (sales) and expenses earned on the farm over a specific period.
6. Cash Analysis Account: It shows the details of income and expenditure of a farm over some time.
7. Profit and Loss Account: It shall be discussed next week.

General evaluation

1. What is a farm account?
2. List four importance of Farm Account.
3. List five types of Farm Account.
4. State the uses of a farm income statement.
5. State the uses of cash analysis account.

Reading assignment

Junior Secondary Agriculture for Nigeria Schools, Book 3, Chapter 4, Pages 32-34

Theory

1. What is a farm account?
2. State the use of the following:

• Cash analysis account.
• Farm income statement.

 

In our next class, we will be talking about  Profit and loss account.  We hope you enjoyed the class.

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