WEEK 1

MEANING AND IMPORTANCE OF FARM RECORDS

FARM RECORDS
Farm records refer to the documentation of all the various activities on the farm. It
shows the major activities and transactions that takes place in a farm enterprise
over a period of time.

IMPORTANCE OF FARM RECORDS

Farm record is important in the following ways:
1. Farm records give the history of what has happened on the farm for the
periods during which they are kept.
2. It allows the manager to carry out performance evaluation of the farm
business.
3. It helps in determining the profitability of the business.
4. It is an indispensable tool for the farm manager during planning and
budgeting.
5. It allows the farmer to determine the efficiency levels of inputs used in the
production.
6. Farm records are used to know the size of the farm.
7. It determines the farmer’s management skills.
8. It gives an actual value of the farm in case of winding up.
9. It gives the actual farm yields.
10.It is a vital requirement when seeking loans from banks.
11.It enables the farmer to prevent fraudulent practices on the farm

WEEK 2

TYPES OF FARM RECORDS

The following are types of farm records;

1. Farm dairy: This is the record of all important daily activities being
performed on the farm. This record helps the farmer to keep track of past
farming activities and plan for future activities.

2. Farm inventory: This is the record of all items in the farm. These items
include tools and equipment. Farm inventory can also contain the date of
purchase of the equipment and their description.
3. Production records: This is the record of all farm produce on the farm. This
record is usually prepared every week and then summed up at the end of the
month and at the end of the year. It helps the farmer to keep track of how
well the farm is doing.
4. Consumption record: This shows the major farm produce consumed by the
farmer, his family and workers. This enables the farmer to know the items
taken out of the farm without payment.
5. Sales record: This is the record of all sales made from farm produce. It
shows the income realized from the sales of farm produce, including the
amount and the quantity sold.
6. Profit and loss account: This is the record that shows the profit made by the
farm and the loss incurred on the farm. It records sales (income) and the
expenditure (expenses) made at the end of the year
7. Input record: This is a record used to keep track of agricultural inputs such
as fertilizers, seeds, food implements etc. It also contains the amount each
input is bought.

COMPUTER AIDED FARM RECORDS AND ITS BENEFITS

Computer aided farm record are computer software programs that can record
basic income and expense data for farmers, with quick summary and ability to
prepare variety of financial reports.
Due to the complexity in the farming business which demands accurate records
and careful analysis, planning becomes very important and computer tools are
highly needed by the farmer to make the work easier.
BENEFITS OF COMPUTER AIDED FARM RECORDS
1. It makes record keeping easy.
2. It gives accurate information.
3. It transforms the input data into useful information.
4. It reduces stress and labour.
5. It is faster than normal record keeping.
6. The information generated can be transported via the internet to any part of
the world.

WEEK 3
BOOKKEEPING
This is the process of recording, analysing, and interpreting the financial
transaction of a business in agriculture. The transactions include purchases, sales,
receipts, and payment by an individual person or an organization/ cooperation.
IMPORTANCE OF BOOK KEEPING
Every business organizations keep record of their financial transactions.
Therefore the importance of book keeping becomes important for the following
reasons:
1. It helps to determine the profitability of a business.
2. It shows both assets and liabilities of the business.
3. It provides permanent records for all financial transactions.
4. It shows the income realized and also the expenditure spent in running the
business.
5. It provides a means by which the finance of a business is controlled.
METHODS/TYPES OF BOOK KEEPING
There are several methods of book keeping but the most commonly used are:
1. Single- entry book keeping system.
2. Double- entry book keeping system.

• SINGLE- ENTRY BOOK KEEPING SYSTEM

A single-entry bookkeeping system is one that records each business
transaction with a single entry to the accounting records. It only tracks
records of cash disbursement, accounts receivables, taxes and accounts
payable. Assets and liability are usually not captured in a single- entry
system. The primary form of record keeping in this system is the cash book.

• DOUBLE- ENTRY BOOK KEEPING SYSTEM

This requires posting or recording each transaction twice, using debits and
credits. Therefore, every debit entry has a corresponding credit entry, and
this serves as a kind of error detection system.

Examples of book kept for account are :

1. General journal.
2. General ledger.
3. Cash receipt journal.
4. Sales journal.
5. Purchase journal.

BOOK KEEPING PRACTICES

1. Account should be balanced regularly.
2. Cheques should not be issued when account is red.
3. Cancellation of financial documents or cheque should be signed.
4. Space should not be left when writing figures to avoid insertion of figures.
5. Huge cash should only be moved with adequate security.
WEEK 4 & 5
MEANING OF SOURCE DOCUMENTS
A source document is the original document that contains the details of a
business transaction. They are the physical basis upon which business transactions
are recorded and they contain the following information:
• The description of a business transaction.
• The date of the transaction.
• The total amount of the transaction.
• An authorizing signature.
• The company’s name.

IMPORTANCE OF SOURCE DOCUMENTS

1. It provides evidence that a transaction occurred.
2. It assists in the preparation of financial statements.
3. It helps in analyzing the business activities.
4. It can be used for control purpose. Errors can be detected in the books of
account.
5. It helps to avoid fraud.
6. It serves as a future reference to the business on an event that happened in
the past.

TYPES OF SOURCE DOCUMENTS

1. Invoice.
2. Debit note.
3. Credit note.
4. Receipt.
5. Cheque.
6. Purchase invoice.
7. Returns inwards.
8. Returns outwards.
(Extensive reading on page 41-49 in the textbook).
WEEK 7
JOURNAL
Journal may be defined as daily record into which transactions are entered and
classified as debit and credit before they are posted into the ledger. It is a book of
original entries in which transactions are recorded in a chronological order.
A journal is also known as a book of original entry. Every record or item recorded
in the journal is referred to as an entry. The journal entries have column for date,
particulars, folio debit and credit.
FORMAT OF JOURNAL ENTRY
Date Particulars Folio Debit Credit

Example: Write up the sales return journal of Kenny enterprises for the month of
January 26, 1992.
Jan .5----- Returned from Royal enterprises.6 bags of sugar at N20 each. 2
plates of salad at N100 each.
Jan. 26----- Returned from shakirat Nigeria Limited;
3 crates of coke at N50 each.
RETURN INWARD JOURNAL
Date Particulars Folio Detail Total

Jan.5

Jan. 26

ROYAL
ENTERPRISES
• 6 bags of
sugar at
N20
each.
• 2 plates
of salad
at N100
each.
SHAKIRAT
NIGERIA
LIMITED
• 3 crates
of coke
at N50
each.

N
120

200

150

320

150

470
TYPES OF JOURNAL
1. Sales journal: This is the type of journal used to record the daily sales of the
business.
2. Purchase journal: It is a journal for recording all purchases made in the
business.
3. Return inward journal: This is used to record all goods that customers
returned to the business due to some reasons.
4. Return outward journal: It is used to record goods that a business returned
to its supplier.
5. Sales return journal: This is a book of prime entry used to record goods
returned by customers due to some reasons. It is also known as return inward
day book.
6. Purchase return journal: The purchase return journal is a book of original
entry used to record goods returned to the supplier. Goods can be returned as
a result of damage and many other reasons.
7. General journal or journal proper: The general journal is also a book of
prime entry used to record the initial entries in a chronological order. It can

also be defined as the daily records of transactions. It is used for many

purposes like correction of errors, opening entries and so on.
USES OF JOURNAL/ADVANTAGES OF JOURNAL
Journal as a book of original entry performs many functions. Some of these
functions are listed below;
i. Correction of errors.
ii. Opening and closing of entries.
iii. Recording of purchases of fixed assets.
iv. Recording of sales of fixed assets.
WEEK 8
STOCK EXCHANGE
A stock exchange is a place/market where shares, stocks, bonds and other
securities are bought and sold. It can also be defined as a place where buyers and
sellers engage in an auction process by placing bids and offers to exchange (buy
and sell) stocks. In Nigeria, this transaction is usually approved by the stock
exchange council of Nigeria.
Agriculturally, stock exchange can be defined as the buying and selling of goods
and services available now and in the future of farming business. It is a form of
investment.
SOME IMPORTANT TERMS USED IN STOCK EXCHANGE
1. STOCK: This is the total capital of a company which can be broken into
shares, bonds and debentures.
2. SHARE: One unit of stock is called a share. A share is defined as the
smallest unit of capital issued out or offered for sale by a company. It is
what one acquires to become a member of a particular company. When you
buy a share of a company, you become a member of that company (a
shareholder).
3. SHAREHOLDER: A shareholder is one who owns or holds shares of stock
in a company or an organisation. If the company makes profit, the
shareholders are given dividends which the company distributes at the end of
the financial year. The profit that is distributed to the shareholders at the end
of an accounting year is called dividends.

4. SECURITIES: These are written documents by which the claims of holders

in specified property are secured. They could be stocks, shares, bonds and
debentures.
5. BONDS: Bond is a type of security. It is a legal document representing a
promise by the government to pay back with a certain amount of interest
over a definite period of time.
6. DEBENTURE: This is a legal document representing a promise by the
company to pay back a loan with a certain amount of interest over a definite
period of time.
IMPORTANCE OF STOCK EXCHANGE
1. It helps to raise capital for agricultural business.
2. It provides a market for the members of the public and the farmers to buy
shares from viable companies.
3. It provides a forum for investors, industrialists and farmers to disseminate
information.
4. It encourages investment in agriculture.
5. It encourages contract farming.
6. The stock exchange moderates prices of securities (i.e. shares and bonds).
PEOPLE INVOLVED IN STOCK EXCHANGE
1. Sellers.
2. Buyers.
3. The farmers’ agents.
4. Speculators.
5. Jobbers.
6. Brokers.
7. Authorized clerks.
8. Investors.
9. Unauthorized clerks.
WEEK 9
PRIMARY ROLES OF THOSE INVOLVED IN STOCK EXCHANGE
1. SELLERS: These are people who have stock for sale. Sellers can either be
an individual or an organization.
2. BUYERS: These are people who buy shares in an organization.
3. THE FARMERS AGENTS: These are people who inform the farmers
about the stock exchange market and get them involved in it. They act as an

intermediary between the farmers and the stock exchange in order to

generate interest from the transaction.
4. SPECULATORS: These are people who buy shares not because of the
regular income they could obtain, but because of the profit they will make
from fluctuation in the shares. The Bulls are people who buy shares hoping
that price will rise for them to sell and make profit. The Bears are people
who sell shares because they expect the price to fall.
5. JOBBERS: These are the dealers in stocks and shares. They buy and also
sell shares. The shares have two different prices, usually a lower one for
buying and a higher one for selling. The difference between the two prices is
known as the jobbers turn and this represents the profit that the jobbers
make.
6. BROKERS: Members of the public buy shares from jobbers through
brokers who serve as agents. Brokers get a commission on the purchases and
sales which they negotiate. The duty of a broker is to act as a medium
between their client and the job.
7. AUTHORIZED CLERKS: These are the employees of jobbers and brokers
who help their principals to buy and sell stocks and shares.
8. INVESTORS: These are people or institutions that buy stocks or shares for
the sake of investment.
9. BUYERS AND SELLERS: They buy or sell securities on their own
through brokers who act as their agents. Selling price is usually high.
WEEK 10
IMPORTANCE OF STOCK EXCHANGE TO AGRICULTURE
1. It encourages investment in agriculture: The stock exchange gives
investors an opportunity to invest in agro-based industries and benefit from
profit they make. The profits could be in form of dividends and bonuses. The
shares are distributed to all the shareholders at the end of every financial
year. The bonus and the shares can be easily converted into cash.
2. Raising of capital: The stock exchange enables agro-based industries to
raise money for expansion. This is done through the introduction of
securities (i.e., shares and bonds) to the public for the first issue called
primary market.
3. The stock exchange moderates prices of securities (i.e. shares, stocks and
bonds): Some daily newspaper in Nigeria publish the daily trading summary

of the Nigerian stock exchange. This enables investors to know the price of
their shares as they are quoted by the NSE.
4. It encourages contract farming: Contract farming is the process whereby a
company or an agro-based industry gives out loan to the farmers to help
them produce farm products, e.g. tobacco. When the farmer harvests the
farm produce (tobacco), he sells it to the industry in order to pay back the
loan he has collected from the company. Most agro-based companies raise
their capital through the primary market of the NSE and use the money for
contract farming.
5. It provides a forum for investors, industrialists and farmers to disseminate
information.
6. It provides a market for the members of the public and the farmers to buy
shares from viable companies.
7. It provides employment opportunities to workers in the stock exchange
market especially the buyers and sellers.
8. It provides professional advice on the management of investments.
9. It increases the quality of agricultural productivity.
10.Indicator of the state of economy: Share prices tend to rise or remain stable
when companies and the economy show signs of stability and growth. A
depressed economy with financial crisis may lead to crashing of the stock
market. Therefore the movement of the share prices can serve as an indicator
of the state of a national economy.
11.It attracts foreign investors.