Nature of transactions, Cost and revenue

01/09/2022 0 By indiafreenotes

Cost and Revenue:

Expenses and incomes associated with farming activities, other than agricultural activities are given below:

(A) Poultry Farm:

Expenses or Costs:

  1. Costs of chicken, feed;
  2. Stocks like hay, packing boxes, fuel;
  3. Maintenance cost of sheds;
  4. Medicines;
  5. Salaries and wages.


  1. Sale of eggs, chickens, broiler, hens;
  2. Sale of poultry excretions as manures.

(B) Dairy Farms:

Expenses or costs:

  1. Cattle feed and hay;
  2. Cost of cultivation of feed crop, if any;
  3. Insecticides;
  4. Salaries and wages;
  5. Cost of maintaining milk processing facilities.


  1. Sale of milk;
  2. Sale of milk products;
  3. Sale of calves;
  4. Sale of dairy cattle;
  5. Sale of slaughtered cattle.

(C) Fisheries:

  1. Cost of seed;
  2. Cost of water;
  3. Cost of fish feed;
  4. Maintenance costs of tanks;
  5. Catching expenses;
  6. Depreciation of nets and other assets;
  7. Salaries and wages.


  1. Sale of fish.

Treatment of Specific Items:

  1. Land Development Expenses:

A business may purchase land for cultivation. A lot of money may have to be spent by the business on cleaning, leveling the land, providing drainage, irrigation facili­ties etc. before the land can be used for cultivation. All these expenses are termed as “Land Develop­ment Expenses”, and should preferable is added to the cost of land.

  1. Drawings:

A farmer or his family may consume a part of farm production.

It is recorded as:

Drawings Account    Dr.

To Crop or Milk or Poultry or Fish Account.

  1. Similarly, when Farm Products are Consumed by Farm Workers it is Recorded as:

Wages Account Dr.

To Crop or Milk or Poultry or Fish Account

Apportionment Basis for Common Costs:

Seed, fertilizer, manure, pesticides, direct wages (Notional and Actual), land rent (Notional and actual) etc. can be identified crop-wise. But other costs like irrigation, services of agricultural machinery, implements or animal power depreciation, interest on capital etc. cannot be classified simply by nomenclature. Common costs of the agricultural farms are to be suitably apportioned among the crops for which such costs were incurred.

Many a time, common costs have been incurred for crop enterprises as well as livestock enterprises. Common costs should be apportioned among the crop enterprises on the basis of usage, wherever use of assets can be quantified. In other cases, length of crop season can be used.