Record Keeping

Record keeping is the organized process of collecting, storing, and managing important business
documents and data. It involves tracking financial transactions, customer details, employee
records, inventory, legal documents, and other key information needed to run a business
efficiently.

Importance of record keeping

1. Legal Compliance – Helps meet tax, labor, and industry regulations.
2. Financial Management – Tracks income, expenses, and profits for better decision-
making.
3. Business Performance – Allows analysis of sales, costs, and growth trends.
4. Audit & Dispute Resolution – Provides proof in case of legal issues or tax audits.
5. Customer & Supplier Management – Maintains order history, contracts, and payment
records.
6. Prevents Fraud and theft: Proper documentation makes it harder for empolyees and
suppliers to commit fraud, as transactions are recorded and verified.
7. Simplifies tax filling and deductions: detailed financial records help ensure correct tax
remittance ensuring the business is not penalized.

Common record keeping tools

1. File Folder: It's usually made of cardboard or plastic and holds documents like receipts,
invoices, or client forms. You can write labels on the tab to easily find what you need.
File folders work well for small businesses that don’t have too many papers to store.
2. Hanging Folder: A hanging folder is a stronger version of a file folder, with hooks that
clip onto rails inside a filing cabinet. It keeps folders neat and prevents them from falling
over. You can put multiple file folders inside one hanging folder to organize bigger
categories (like "Taxes" or "Employee Records").
3. Filing Cabinet: A filing cabinet is a heavy-duty storage box with drawers, made to hold
file and hanging folders. It keeps documents safe, organized, and protected from damage.
Businesses with lots of paperwork (like contracts or financial records) use filing cabinets
because they save space and keep everything in order.
4. Computerized (Digital) System: Instead of paper, a computerized system stores files on
a computer or online. Examples include spreadsheets (Excel), accounting software
(QuickBooks), or cloud storage (Google Drive). Digital systems let you find files
quickly, share them easily, and save physical space. They’re best for businesses that want
fast access and backup security.

Types of agri-enterprise records

Types of records kept will depend on the enterprises on a given farm: A farm that is purely dairy
will have different records from a farm that is purely crop. However, the following are the
common categories of farm records.
(i) Inventory records
(ii) Production records
(iii) Health records
(iv)Sales and marketing records
(v) Financial Records
 (vi)Weather records

Inventory records
It is a list of all physical property of a business along with the values at a specified date.

Principles of taking inventory

(i) List assets in physical terms i.e. Number,weight, liters, etc depending on the type of
the assest
(ii) Assign values to all assets using appropriate asset valuation methods
(iii) Group the assets e.g. crops, animals, machinery

Purpose of taking inventory

(i) Give a complete list of assets with their values this shows the amount of capital
accumulation in the farm business.
(ii) Reveal the changes in the net worth through comparison of farm inventories at the
beginning of the year with farm inventories at the end of the year.
(iii) Enable the farmer to work out measures of income.
(iv)Enable the farmer determine the depreciation costs
(v) Acts as basis for preparation farm financial statements.
(vi)To report on inactive stock, stock losses and wastages.
(vii) Documented farm inventory serves as collateral for credit purposes.

The process of taking inventory involves two steps

I. Physical counting: physical counting involves a general inspection of the land,
buildings, fences, equipment and supplies. This step helps verify the weights and
measurements.
II. Valuation of physical assets: This involves assigning a monetary value to the assest and
accounting for depreciation where necessary i.e. for equipment that has been around for
some time usually more than one year.
Common inventory records include:
 Input records: this is a record of all the items used in running the farm during the year.
Examples include; Seed inventory, fertilizer and pesticides
 Machinery inventory records
 Tools and equipment records
Production records
Production records refer to the detailed documentation of all activities, inputs, outputs, and
yields related to the production processes on a farm. These records help farmers monitor the
performance of various enterprises (e.g., crops, livestock), make informed decisions, and
improve efficiency and profitability. They include:
a) Land use records
official documents or databases that track how land is being used or is intended to be used.
Individual field records should have:
i. Plot size
ii. Crop grown
iii. Variety
iv. Planting date
v. Spacing
vi. Weeding dates
vii. Crop protection measures
viii. Harvesting dates
ix. Yield

b) Labor records

Labour records in farm management are detailed documents that track all labor-related
activities, including the type of work performed, who performed it, when it was done, and the
associated costs. These records are essential for managing human resources efficiently and
controlling labor costs, which are often one of the largest expenses on a farm.

A labour profile is a schedule of labour as a production factor showing the quantity of labour
required by an individual enterprise or a number of enterprises over a period of time in a farm.
It shows seasonal fluctuations of labour factor and may be used to determine periods of surplus
and periods of deficits.

It can also be used to determine monthly labour requirements in a given farm. Data from labour
profile can also be used when planning changes in enterprise technology.

The labour record analyzes the following;

i. Total labour required by each enterprise

ii. Total labour required by the farm
iii. Shows labour peak period
iv. Shows labour surpluses and deficit
c) Livestock reconciliation register

A livestock reconciliation register is a farm record used to track changes in the number and
status of livestock over a specific period. It provides a clear and accurate account of all livestock
movements, including births, deaths, purchases, sales, and transfers. This helps farmers maintain
control over their livestock inventory and monitor the performance of their herd or flock.

d) Milk production records

Milk Production Records are detailed documents or electronic logs used on dairy farms to track
and manage the quantity and quality of milk produced by individual cows or the entire herd over
a specific period.
 e) Breeding records

Breeding records are systematic documents or digital logs used on farms to track the
reproductive activities of livestock

Activity

The following information is available from the records of Mwembe Tayari Dairy Farm owned
by Mr. Charles Mwangi as at 31st Dec 2019
Financial records

Financial records are systematic documents that track all monetary transactions, expenses,
income, and financial health of a farm business. They include

Receipt

This is a document issued against goods purchased on cash or services paid in cash.

Important features of a cash sale receipt:

 Date
 Receipt no.
 Description of item purchased
 Total amount of sale
 Name and address of the business
 Invoice

It’s a document issued against goods bought on credit. Important features of in an invoice are;

 Date
 Serial no.
 Description of item
 Units (Kgs, no., Kshs)
 Name of the business
 Name of customer

Delivery note

This is a document issued against goods as they are collected or delivered.

 Local purchasing order

This is official purchase order used by a person intending to purchase specified goods on credit

Credit note

A credit note is an official business document that a seller issues to a buyer to cancel out all or
part of a previous invoice.

GREEN ACRES FARM

P.O. Box 123, Townsville
 CREDIT NOTE

To: The Town Grocer Ltd.

Credit Note No: CN35
Date: 20th October 2023
Reference: For original Invoice No. 204

Description Quantity Unit Price Total

Bags of Potatoes 2 1400 2800
Total Credit 2800
Reason: For return of goods found to be spoiled upon delivery

 .

Daybooks/ Journals

A journal is a book of original entry where financial transactions are recorded in chronological
order before being posted to the ledger. It serves as the first step in the accounting process,
ensuring accurate record-keeping and tracking of business transactions. They include:

 Sales day book (sales journal)

 Purchase day book (purchase journal)
 The sales returns day book (Return inwards journal)

Sales Daybook

A Sales Day Book, also known as a Sales Journal, is a book of prime entry used to record the
details of all credit sales before they are posted to the main ledger.

NOTE:

 It only records credit sales of goods.

 Cash sales are NOT recorded here; they go into the Cash Book.

The source document is the sales invoice

Formart

Date Details Invoice No. Sales Ledger Amount

05/10/24 J. Butcher 201 SL 12 1200

 08/10/24 Fresh Milk 202 SL14 850
Dairy Co-op

15/10/24 The Town 204 SL 08 400

Grocer Ltd.

16/10/24 P. Poultry 205 SL 15 250

18/10/24 J. Butcher 206 SL 12 700

Total Amount 3400

 Date: The date on the sales invoice (the date the sale was made).

 Details: The name of the customer (the Debtor).

 Invoice No.: The unique, sequential number from the copy of the sales invoice sent to the
customer. This provides a crucial audit trail.

 Sales Ledger Folio (SLF): The page number or account code of the customer's personal
account in the Sales Ledger. This is filled in when the transaction is "posted" to their
account and acts as a cross-reference.

 Amount: The total value of the sale from the invoice.

Purchase daybook

The Purchases Day Book is used to record all credit purchases of goods that the farm will use
for its operations or for resale.

Note

 It only records purchases on credit. Cash purchases go in the Cash Book.

 It is used for purchasing inventory or consumables (e.g., feed, seed, fertilizer, fuel).
 The purchase of a fixed asset (like a new tractor or a building) on credit is NOT recorded
here. That is a special transaction recorded in the General Journal.

The entry is made from the Purchase Invoice that the farm receives from its supplier.

Date Details Invoice No. Purchase Amount

Ledger

05/10/24 J. Butcher 201 PL 12 1200

08/10/24 Fresh Milk V45 PL14 850

 Dairy Co-op

15/10/24 The Town 9046 PL 08 400

Grocer Ltd.

16/10/24 P. Poultry 205 PL 15 250

18/10/24 J. Butcher 206 PL 12 700

Total Amount 3400

The sales returns daybook (return inwards journal)

This book is used to record goods that were previously sold on credit but have now been
returned to the farm by a customer. The goods might be returned because they were damaged,
of the wrong type, or poor quality.

The entry is based on a copy of the Credit Note which the farm sends to the customer.

Date Details Credit note No. Sales Ledger Amount

05/10/24 J. Butcher CN20 SL 12 1200

08/10/24 Fresh Milk CN21 SL14 850

Dairy Co-op

15/10/24 The Town CN34 SL 08 400

Grocer Ltd.

16/10/24 P. Poultry CN40 SL 15 250

18/10/24 J. Butcher CN50 SL 12 700

Total Amount 3400

The Purchase returns daybook (return Outwards)

This book is used to record goods that the farm previously bought on credit and is now
returning to its supplier. This could be due to receiving faulty equipment, expired medicine, or
incorrect supplies.

The entry is based on the Credit Note that the farm receives from the supplier.

Date Details Credit note No. Purchase Amount

 Ledger

05/10/24 J. Butcher CN20 PL 12 1200

08/10/24 Fresh Milk CN21 PL14 850

Dairy Co-op

15/10/24 The Town CN34 PL 08 400

Grocer Ltd.

16/10/24 P. Poultry CN40 PL 15 250

18/10/24 J. Butcher CN50 PL 12 700

Total Amount 3400

Cashbook

A cash book is a document or a record of all transactions involving cash in business

organization. It keeps track of all incoming and outgoing cash i.e. cash receipts and payments

Types of cash book

Single-Column Cash Book

This is the simplest type of cash book, used for recording only cash receipts and cash payments.
It has two sides:

 Debit side (Receipts): Records money received by the business.

 Credit side (Payments): Records money paid out by the business.
Purpose:

 Helps track daily cash flow.

 Useful for small businesses with simple cash transactions.

2. Double-Column Cash Book

This type has two columns on each side: one for cash and one for bank transactions. It records
cash and bank transactions simultaneously.

Purpose:
  Helps in managing both cash and bank accounts in one book.
 Reduces errors by ensuring bank deposits and withdrawals are tracked properly.
A contra entry, for cash book items, is where both the debit and the credit entries are shown in
the cash book, such when cash is paid into bank or withdrawn.

A withdrawal of cash from bank would appear in the cash book as a debit for cash and a credit
for bank of the same amount and vice versa for a deposit. Both the debit and credit entries are in
the same book. When this happens it is known as a contra item

Example

Mr. Tamaa started a business on 1st January 2007. During the first month of trading the
following transactions took place.

Wrote a personal cheque and deposited into the business bank account Sh800,000

Withdrew Sh200, 000 from the bank and put it into the cash till.

2nd Jan, Purchased goods by cheque Sh70,000

3rd Jan, Bought furniture for cash Sh25,000

3rd Jan, Bought equipment on credit Sh75,000

4th Jan, Sold goods for cash Sh100,000

5th Jan, Bought goods and paid by cheque Sh.200,000

6th Jan, Bought a motor van paying by cheque Sh.210,000

10th Jan, Obtain loan from the bank Sh.500,000

12th Jan, Sold goods on credit Sh75,000

16th Jan, Sold goods payment made by cheque Sh.100,000

16th Jan, Received a cheque from a debtor Sh.60,000

30th Jan, Took Sh10,000 from the cash till personal use

3. Triple-Column Cash Book

A triple-column cash book has three columns on each side:

 Cash column (records cash transactions).

 Bank column (records transactions through bank accounts).
 Discount column (records discounts allowed and received).
Purpose:

 Provides a complete record of cash, bank, and discount transactions in one place.
 Helps businesses track discounts and bank activities efficiently.
Example:

Enter the following transactions in a three column cash book.

 Balance brought forward cash Sh 4700 bank Sh 17000

 Cash sales Sh 20000 (discount 8%)
 Cash sales Sh 42000
 Cash purchases Sh 18000 (discount 10%)
 Sales paid for by cheque of Sh 40000 after deducting a 20% discount
 Paid Sh 50000 by cheque after deducting 20% cash discount.
 Purchases by cheque Sh 12000
4. Petty Cash Book

A petty cash book records small, everyday expenses (e.g., office supplies, minor repairs, and
transport costs). A cashier manages petty cash using the imprest system, where a fixed amount is
allocated and replenished periodically.

Purpose:

 Helps in controlling minor expenses efficiently.

 Reduces the burden on the main cash book.

Selecting a record keeping system

A record-keeping system is an organized method of documenting, storing, and retrieving farm-

related data to support decision-making, compliance, and operational efficiency. An effective
system can be manual (physical) or digital, depending on the farm’s size, resources, and goals.

Manual record keeping system

A manual record-keeping system relies on physical, paper-based methods to track farm

activities, production, finances, and livestock data.

Advantages

 Low cost – No need for computers or software

 Easy to use – No technical skills require
 Reliable – Not affected by power outages or internet issues
 Works as a backup
 Easy to implement

Disadvantages

 Time-consuming – Handwriting entries takes longer

 Risk of damage – Paper can be lost to pests, water, or fire
 Hard to analyze – No automatic calculations or trend tracking
 More opportunities to make mistakes

Computerized record keeping system

A computerized (digital) record-keeping system uses software, apps, or spreadsheets to

store, manage, and analyze farm data. This modern approach improves efficiency, accuracy, and
decision-making compared to manual methods.
Advantages

 Time saving and efficiency

 Improved accuracy
 Advanced analytics
 Remote access and collaboration
 Integration with smart farming technology
 Scalability

Disadvantages

 Upfront cost – Software subscriptions/hardware purchases.

 Tech dependence – Power/Internet outages disrupt access.
 Training needed – Farmers must learn the system.