There are three main categories of farm records which are production activities records, accounting activities records and supplementary records.

Production Activities Records

Production activities are related to the production of crops and livestock. Revenue which is generated through custom work done for others should also be included in the production activities records. We also need to include expenses that are incurred in the production process e.g. cost of seeds, chemicals, fertilizers and so on.

Crop records normally contains details of a crop that is grown such as date of planting, type and amount of fertilizer applied and amount harvested. In other words, these records will highlight the inputs that we have used in the production process and the respective yields of the crop in question.

Livestock records may be kept for each livestock enterprise. Rearing of livestock may involve special records for feed intake, antibiotics and disease incidents. It is better for us to have separate records for different types of livestock. Even for each individual livestock enterprises such as poultry, it is relevant for us to have separate records for layers, broilers so that we can evaluate performance with feed intake. We may keep labor records separately or they can be part of the other records. Labor records should include payment that we make both in kind or cash.

Payments in kind are those that we make in material form and are not in cash e.g. food, drinks, clothing etc. Sometimes it may be appropriate for us to keep a wage book for hired labor on the farm.

Investment Activities Records

These are records that are related to purchase, depreciation and sale of long lived assets on the farm which include land, buildings and machinery. These records should include purchase date, purchase price, annual depreciation and book value, current market value, sale date, sale price as well as the gain or loss incurred at the time of sale. 2.2.3:

Financing Activities Records

These are records that are related to borrowing money, payment of interest and principal on debts that the farm has. Financial activity records involve monies that is borrowed to finance production activities for the year as well as the accounts payable at the farm.

Need for Keeping Records

(a) It is in our best interest to keep systematic records of the transaction so that an accurate statement at the end of the year can be produced with minimum effort and expenses.

(b) It will enable us keep a close check on the flow of cash in our farm business to avoid overspending.

(c) It is not enough for us to know that the profit are decreasing or increasing at the farm there is need for us to also identify the reasons for such changes. These changes are worth analyzing because they might reveal trends that we may be able to correct if we identified them when there is still time to take corrective action.

(d) Zambia Revenue Authority expects a record of accounts at the end of the year so that they can be able to assess taxes that are due. When preparing the accounts records the accountant or the person in charge should draw the farmer’s attention to alternatives and legitimate methods that may be used to lessen the burden of taxation.

Purpose and Use of Accounting Records

The purposes of keeping accounting records at the farm are outlined and explained below;

1. To measure profit and assess the financial position of the farm business. To measure profit we use the income statement whereas to measure the financial condition of the farm the balance sheet is used.

2. To provide us with data useful for business analysis. Information collected from the income statement and balance sheet can assist us in doing an in depth analysis of the farm business.

3. Assist in obtaining loans. In this case a cash flow statement is used which is a summary of use and source of funds. Lenders need financial information to assistant them in making decisions.

4. To measure the profitability of individual enterprises. A farm that is showing profit may include several different enterprises and it may be possible that one or two of the enterprises are the ones that are producing all or most of the profit whereas others are making losses.

5. Assist in the analysis of new investment. A decision to commit a large amount of capital to a new investment can be difficult for us and may require that we gather a large amount of information so that we can be able to make a proper analysis. Past records can be an excellent source of information which can assist us in analyzing potential investment.

6. Preparation of the income tax returns. The ZRA requires keeping of records that permit the proper reporting of taxable income and expenses.