Farm Records and Accounting


Farm Records and Accounting

It is always said that Indian cultivator is good Producer rather than good business man. He knows how to produce but he does not know how to keep accounts of the farm. It is therefore very necessary to have sufficient knowledge about farm accountancy in order to handle the farm business efficiently.
The farm accounting or accountancy is also called as “Farm Book keeping”. It s defined as under.

1) Farm accountancy is defined as the art as well as the science of recording in books business transactions in regular and systematic manner so that their nature, extent and financial effects can be readily ascertained at any time of the year.

2) Farm accounting is an application of the accounting principles to the business of farming.

3) Farm book keeping is known as a system of records written to furnish a history of the business transactions, with special reference to its financial side.

The Farm Accountancy or Farm Book Keeping is a matter of Farm Business Analysis. Therefore Farm Business Analysis Is done by following three steps.

1) Prop recor1ing of accounts and activities:
All the transactions are properly recorded in relevant books. Therefore aspect wise record books are to be maintained. Proper recording of data will be useful further analysis purpose.

2) Analysis & Interpretation:
The collected data is raw data. Under this second stage, farm accounting begins with determination of the proper measures of income and computation of management and efficiency factors for the farm.

3) Presentation of Results:
Finally tabulation arid charts are made to show the factors which affect the farm success and failure so that an individual farmer by comparing his performance with these mousers or standards may be able recognize his weak points and take necessary steps for improvements.

Objective of Farm Accountancy:

The main object of keeping Farm account is to examine as to
1) How does the business fare at a certain time?
2) Where are the Weaknesses?
3) What improvements are possible?
Similarly by farm business analysis, the background information can be obtained for getting credit facilities.

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