Understanding Double-Entry Accounting and Financial Accounts

Posted on Dec 8, 2024 in Economy

Early Double-Entry Accounting

  • Assets must be recorded on the debit side.
  • Liabilities must be recorded on the credit side.
  • Outflows are recorded on the debit side.
  • Income is recorded on the credit side.
  • Equity is recorded on the credit side.
  • Everything that comes out of an account must be balanced.
  • Columns must be balanced.

Accounts

Assets

Cash and Bank Accounts

Accounts used to record deposits in checking accounts at national banks or abroad, freely available funds, and others that serve as payment.

  1. Cash: Cash in national currency, coins, or bills.
  2. Foreign Currency: Currency when used as payment, for example, to suppliers.
  3. Securities Deposit: Checks received from third parties.
  4. Bank Current Account: Money in the checking account.

Investments

Surplus loans of money beyond the principal activities, with the intent to obtain income or profit.

  1. Foreign Currency: Currency when it is acquired for speculative purposes.

Accounts Receivable

Receivables arising from the sale of goods or services that constitute the main activity of the entity.

  1. Sales Receivables: Receivables originating from merchandise sales in the current account.
  2. Notes Receivable: Documents received for the company for sales of goods.
  3. Secured Receivables: Rights secured on the property.
  4. Credit Card Receivables: Rights from sales with credit cards.

Other Loans

Rights to charge, originating in operations not related to the sale of goods or services that constitute the main activity of the entity.

  1. Sundry Debtors: Receivables originating from rights not related to the core business.
  2. Documents Receivable: Notes for the company that are not related to sales of goods.
  3. VAT Tax Credit: The right to recover the amount paid when making a purchase.
  4. Tax Credit AFIP: Difference in favor of the company in determining the fiscal position.
  5. Prepaid Rent: Right to the use of a property.
  6. Prepaid Expenses: The right to receive goods or services.
  7. Advances to Staff: Right to the provision of services by employees.
  8. Personal Loans: Right to demand repayment of the amount borrowed.
  9. Partner Contribution Account: The right to enforce the signed contribution.

Real Exchange Property

The company uses money to exchange for its main activity and advances to suppliers for the purchase of these goods.

  1. Real Goods: Goods purchased by the company for subsequent sale.
  2. Advances to Suppliers: The right to receive goods, price freezes.

Fixed Assets

Assets acquired for use in the normal development of activities.

  1. Furniture and Fixtures: Assets that can be moved.
  2. Installations: Real property physically attached.
  3. Machinery: Goods that permit the production of other goods.
  4. Vehicles: Goods such as cars, trucks, motorcycles, etc.
  5. Properties: Buildings and grounds.

Liabilities

Accounts Payable

Commercial debts.

  1. Suppliers: Amounts due to those who supply us with goods in the current account.
  2. Sundry Creditors: Amounts due on the current account to third-party providers, except suppliers.
  3. Notes Payable: Promissory notes signed by the company to third parties.

Loans

Payable to banks, financial or non-financial institutions.

  1. Bank Loans: Debt with the bank for borrowings.

Tax Charges

Payable to the national tax state, provincial or municipal.

  1. Debit Tax Attorney: Obligation to the state for sales taxes.

Equity

Contributions from the Owners

  1. Capital: The sum of the contributions subscribed by the partners.

Expenses

Operating Expenses

  1. Cost of Sales: Amount equal to the cost of goods sold.

Administrative Expenses

  1. Office Supplies: Negative result in the purchase of paper, ink, ballpoint pens, etc. for the sector.
  2. Miscellaneous Expenses: Expenses related to the administration that do not fit in another category.
  3. Professional Fees: Negative result for professional services received by the department.
  4. Light and Telephone: Negative result for light expense and fixed or mobile (sector consumption).

Marketing Expenses

  1. Advertising and Propaganda: Expenses such as brochures, signs, bags, signs, etc.
  2. Miscellaneous Expenses: Expenses related to sales and distribution that do not fit in another category.
  3. Professional Fees: Negative result for professional services received by the department.
  4. Office Supplies: Negative result for the purchase of paper, ink, ballpoint pens, etc. for the sector.
  5. Light and Telephone: Negative result for light expense and fixed or mobile (sector consumption).

Financial Results

  1. Interest Paid: Negative result surcharges for third-party financing.

Other Income and Expenses

  1. Freight and Transportation: A negative result from a third-party payment of freight or delivery costs.
  2. Fuels and Lubricants: Negative result for the purchase of fuel, gas oil, etc.
  3. Grooming and Cleaning: Negative result for the purchase of inputs or payment to cleaning services.
  4. Insurance Paid: Negative result for the policy on different risks.
  5. Miscellaneous Expenses: Expenses that do not fit into any category and are not associated with other departments.
  6. Monitoring Costs: Negative result derived from security.

Income

Typical and own positive results of economic activity.

Operating Income

  1. Sales: Net amounts invoiced, excluding value-added tax.