Agricultural Accounting

in Education2 months ago

As agricultural production has grown, many of these farms have been forced to have greater control and organization of their resources in order to generate greater economic growth and production. With the help of farm accounting this work has become much easier, and many of the owners of the farms have been able to inform themselves about the profitability of their crops or the value of their animals.



Agricultural accounting is a viable reference for obtaining information on everything involved in the production process of a farm, ranch or farm.



By means of this type of accounting, we will have a better control of the resources that a farm has, and also be able to obtain adequate information that serves for decision making. Since it is necessary that any agricultural sector must have accounting, and thus have a better understanding of the economic results of a farm, to subsequently determine whether its production process is profitable or it is necessary to diversify it.

Additionally, the agricultural and livestock companies need to comply with other purposes such as; the payment of income tax, and determine the improvement of the farm's infrastructure. All this will be feasible and possible through the collection of information required by accounting.

It should be noted that thanks to the reliability of the information provided, errors can be detected in time and duly corrected.

Objectives of Agricultural Accounting

1-to report in a correlative way at the end of each financial year the value of the capital, whether it has increased or decreased.

2-To report on an annual basis the profit or loss accounts.

3-Calculate the differences between the profit or loss from month to month or previous years.

4-Detect and analyze the reason for the profit or loss.

5-Start with projects that increase income compared to previous years.

6-Facilitate the real financial information of the farm, to request credit to the banking institutions.

Importance of Agricultural Accounting

Regardless of any type of farm, the importance of accounting lies in the fact that it generates viable and reliable information on everything related to the production process, in order to have a better knowledge of what to do and what not to do.

Difficulties of Agricultural Accounting

In this specific type of accounting there are some inconveniences, regarding the changes in the value that animals present, since, they can be considered as production factors or as products. Such is the case of the cow that can produce milk but at the same time can provide meat.

In the same way, there are disadvantages when it comes to differentiating the income and expenses of family members or of the company.

The agricultural exploitation is very limited by the hand of man, for example the climatic issue is a point that can be totally out of control.

It must be taken into account that the valuation of the land will depend entirely on the stage or development of the crop.

Having a combination of agriculture and livestock makes it difficult to estimate the cost separately.

And finally determine the depreciation of all machinery used for the production process, such as tractors, electric milking machines, watering cans, among others.

Bibliographic Reference Consulted

[1]Agricultural Manual
[2] Agricultural Accounting
[3] Agricultural Accounting

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