Bookkeeping and Business Records in Horticulture and Crop Production for JSS 1

Book Keeping in Horticulture and Crop Production

Performance Objectives

By the end of the lesson, students should be able to:

1. explain the meaning of Book-Keeping in horticulture and crop production;
2. identify sources of primary book of entries;
3. identify types and methods of Book-Keeping in horticulture and crop production;
4. explain the benefits of book-keeping in horticulture and crop production;
5. record transactions in receipts, vouchers and other documents.

What is Book-Keeping?

Book-keeping is the process of recording all the financial transactions and other important information of a business in an organised way.

In horticulture and crop production, book-keeping means keeping track of all the money spent (expenses) and all the money earned (income) from farming activities. It also involves recording other important details about the farm, such as the number of crops planted, harvested, or sold, and the amount of fertiliser used.

Imagine a farmer who grows maize and vegetables. Every time the farmer buys seeds, fertiliser, or pays workers, it is an expense. Every time the farmer sells maize or vegetables, it is income. Book-keeping helps the farmer write down all these details so they can remember them later.

Sources of Primary Book of Entries

Primary book of entries are the first documents or records where financial information is written down. These documents provide the original details of every transaction that happens on the farm. They are very important because they serve as proof of income and expenses.

Common sources of primary book of entries in horticulture and crop production include:

1. Receipts: A receipt is a written acknowledgement that something of value has been received. When a farmer sells crops, they can issue a receipt to the buyer. When a farmer buys seeds, tools, or fertiliser, they should receive a receipt from the seller. Receipts show the date, what was bought or sold, the quantity, the price, and the total amount.
2. Vouchers: A voucher is a document that shows a payment has been made or approved. Farmers use vouchers to record payments made for things like labour wages, transportation costs, or other farm supplies. It usually includes details like the date, amount paid, purpose of payment, and who received the money.
3. Sales Records: These are simple records of all the crops or produce sold. A sales record can be a notebook entry or a simple form that lists the date of sale, type of crop, quantity sold, price per unit, and total amount received.
4. Purchase Records: These records keep track of all items bought for the farm. A purchase record can list the date of purchase, item bought (e.g., seeds, fertiliser, tools), quantity, price per unit, and total amount paid.
5. Labour Records: These documents track the work done by farm labourers. They include details such as the names of workers, dates worked, hours worked, tasks performed, and wages paid.

Types and Methods of Book-Keeping

There are different ways to keep records for a farm business. The choice often depends on the size of the farm and the resources available.

Types of Book-Keeping

1. Manual Book-Keeping: This involves recording transactions using pen and paper in notebooks, record books, or ledgers. It is a common method for small-scale farmers because it is simple and does not require special equipment.
2. Computerised Book-Keeping: This involves using computers or mobile devices with special software or spreadsheet programs (like Microsoft Excel) to record and manage financial data. This method can be faster and more accurate, especially for larger farms, but it requires access to technology and some computer skills.

Methods of Book-Keeping

For JSS1, the most common method for small farms is the single-entry system.

1. Single-Entry System: This is a simple method where each transaction is recorded only once, either as an income or an expense. It is like keeping a simple cash book where you list all money received and all money paid out. This method is easy to understand and use for small businesses like a horticulture farm.

Benefits of Book-Keeping in Horticulture and Crop Production

Keeping good records is very helpful for any farmer. Some of the benefits include:

1. Tracking Income and Expenses: Book-keeping helps farmers know exactly how much money they are earning from selling crops and how much they are spending on seeds, fertiliser, tools, and labour. This helps them understand where their money is going.
2. Determining Profit or Loss: By comparing total income with total expenses, farmers can find out if their farm is making a profit (earning more than they spend) or a loss (spending more than they earn). This information is vital for the farm’s survival.
3. Making Informed Decisions: Good records help farmers make better decisions. For example, if records show that a particular crop is not profitable, the farmer might decide to grow a different crop next season. If a certain expense is too high, they can look for ways to reduce it.
4. Planning for the Future: With clear records, farmers can plan for the next planting season. They can estimate how much money they will need for seeds, fertiliser, and other supplies, and how much income they expect to make.
5. Obtaining Loans: If a farmer needs a loan from a bank or a cooperative to expand their farm, good book-keeping records can show the bank that the farm is well-managed and capable of repaying the loan.
6. Meeting Tax Requirements: In some cases, farmers may need to show their income and expenses to government tax authorities. Good records make this process easier and ensure compliance with regulations.

Keeping Records: Recording Transactions

The skill of keeping records involves accurately writing down every transaction as it happens. This helps to ensure that all financial activities of the farm are captured.

How to Record Transactions in Receipts and Vouchers

This procedure explains how to fill out and use receipts and vouchers for farm transactions.

The required materials are:

1. Receipt book
2. Payment voucher book
3. Pen

The procedure involves the following steps:

1. For Issuing a Sales Receipt (when you sell crops):
   1. Take a receipt from your receipt book.
   2. Write the current Date clearly at the top.
   3. Write the Name of the Buyer (the person you sold the crops to) in the “Received From” or “Buyer’s Name” section.
   4. Write the Amount of money received, both in figures (e.g., N5,000.00) and in words (e.g., Five Thousand Naira Only).
   5. Clearly describe the Purpose of the payment in the “For” or “Particulars” section (e.g., “Sale of 10 bags of maize”).
   6. Sign your Signature as the seller or farm owner.
   7. Give the original receipt to the buyer and keep a copy for your farm records.
2. For Recording a Purchase (when you buy supplies and receive a receipt):
   1. When you buy items like seeds or fertiliser, make sure you receive a receipt from the seller.
   2. Check the receipt to ensure the Date, Item Description, Quantity, and Amount are correct.
   3. Keep this receipt safely. You can paste it into a special record book or file it in a folder marked “Expenses.”
   4. In your farm’s expense record book, write down the date, what you bought, and the amount paid, using the details from the receipt.
3. For Issuing a Payment Voucher (when you pay for something, e.g., labour):
   1. Take a payment voucher from your voucher book.
   2. Write the current Date clearly.
   3. Write the Name of the Person or Company you are paying (e.g., “Musa Bello” for labour, or “Agro Supplies Ltd” for fertiliser).
   4. Write the Amount of money being paid, both in figures and in words.
   5. Clearly state the Purpose of the payment (e.g., “Wages for farm labour from 1st to 7th October,” or “Purchase of NPK fertiliser”).
   6. Have the payment Approved By the farm owner or manager (their signature).
   7. Have the person receiving the money sign in the “Received By” section to confirm they got the payment.
   8. Keep the original voucher for your farm records.

Always ensure that all details are filled correctly and clearly. This makes your records reliable and easy to understand later.