Key Concepts in Accounting and Financial Management
T.1 Accounting
Therefore, we can define accounting as the science that makes known the qualitative and quantitative composition of the assets of a company while providing information for decision-making.
The identification process, measurement, and communication of economic information form judgments and enable informed decisions for stakeholders or users of this information.
The standard setters aim for the standardization of accounting systems to ensure that all companies use the same accounts, the same criteria, and the same layout for all their financial statements so that the data contained in the accounts are easy to understand for any person who uses them.
T.2 Heritage
The inventory is a detailed qualitative and quantitative list of the equity elements of a company at a given time.
It is a fundamental piece in the accounts, as the information provided by the inventory can start the recording of what is happening in the business. It is, therefore, the essential starting point for all accounts.
It is a relationship that must be detailed and refers to a particular moment in time.
According to its extension: General Part.
According to their periodicity: Annual, Semiannual, Trimestral.
According to their reasons: Regular, Special, Judiciary.
For the moment: Initial, Intermediate, Final.
Structure: Header, Body, Pie.
A = P + PN
T.3 Auditors by Function:
Administrative: Increases and decreases are measured using the same approach. The activities will always balance due to coinciding with the existence of rights outstanding, and the credit balance that a person has shall be equal to the outstanding obligations.
Speculative: The inputs and outputs have different values. They can present any balance and do not have a specific meaning. At the year-end, they will be regularized.
Depending on whom it is intended for: Personal: Individual-Collective. Materials: Individuals – General.
According to the representation of assets, rights, or obligations: Assets, Liabilities, Equity.
Or differential count results:
Spending Accounts (Groups 6 and 8): Only entries on the debit side.
Income Accounts (Groups 7 and 9): Only entries on the credit side.
Open: Assign a title and make the first entry by the initial value of the item.
Load: Enter on the debit side.
Pay: Enter on the credit side.
Debit Cards: Add to the annotations of the debit side.
Credit: Amount of annotations of credit.
Balance: The difference between debit and credit —> Borrower: debit > Creditor: credit; debit = credit
Zero credit: debit = credit.
Liquidate: Calculate the balance.
Balance: Put the balance where the sum was lower for the account to have a zero balance.
Close: Sum D and H; they have fulfilled the account. Closing operation. Reopen scoring balance on the opposite side which was held to settle the account. Operation at the beginning of the underwriting year.
Legal Regulation of the Accounting Books:
Requirement to maintain records and the person in charge. Books Required.
Legalization of Books.
Book Inventory and Annual Accounts.
Journal.
How to keep the books.
Conservation.
Secret.