Accounting is a system Definition, types, tasks and principles

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Accounting is an ordered type of system designed to collect, record and summarize data in monetary terms through documentary, continuous and continuous accounting of all economic transactions. It is worth noting that this information may relate to the property apparatus, the obligations of the organization and their movement. In this article, we will consider the essence, meaning and varieties of the category. In addition, we will touch on the principles and tasks of accounting.

Keeping and Objects

Today, in accordance with the law in force in Russia regarding accounting, it is assumed that it can be carried out by the following persons:

• Chief accountant of the company.
• General director of the structure, if there is no chief accountant.
• An accountant who is not in charge.
• Third Party. Yes, accounting is a system whose main functions arecan be implemented through third-party accounting support.

You should know that the object of accounting can be the property complex of the organization or business transactions that are carried out by the company in the course of its functioning. In addition, the obligations of the structure are considered an object.

Tasks of bookkeeping

The key task of accounting is the formation of reliable and complete financial statements (accounting information) regarding the activities of the structure and its property status, which is necessary for internal users of accounting. Among them are the founders, managers, owners of the property apparatus of the organization, participants, as well as external investors, creditors and other users of accounting. It is important to note that based on these statements, it can be assumed that the objectives of accounting are the following items:

• Prevention of negative results regarding the economic activity of the company.
• Identification of on-farm reserves associated with ensuring the financial stability of the company.
• Monitoring compliance with the law in the process of implementing business operations by the organization.
• Checking the feasibility of economic transactions. It should be noted that this task follows from the definition of accounting.
• Control over the presence and movement of liabilities and property of the enterprise.
• Checking the use of labor,material and monetary resources.
• Monitoring the compliance of activities with approved standards, norms and estimates.

Key methods and elements of accounting

The main accounting methods are the following points:

• Inventory.
• Documentation.
• Calculation.
• Invoices.
• Evaluation.
• Double entry.
• Accounting statements.
• Balance sheet.

It is worth noting that the tasks listed in the previous chapter are solved using the named methods, the totality of which is called the accounting method. In accordance with the definition of accounting, let's consider its elements in more detail:

• Documentation should be understood as a written evidence regarding the implementation of an economic transaction, which gives legal force to accounting data.
• Valuation is a way of expressing money and its sources in a material dimension.
• Among the main definitions of accounting, it is important to note accounting accounts. This is a method of grouping the current reflection of the property apparatus, transactions and liabilities.
• Double entry is nothing more than an interconnected display of economic transactions on accounting accounts, according to which each transaction is simultaneously recorded on the debit of the first account and the credit of the second account for the same amount.
• The main definitions of accounting includeinventory. This is a check of the availability of property, which is listed on the balance sheet of the organization. It is worth noting that it is carried out by describing, counting, mutual reconciliation, weighing, evaluating the identified funds, as well as comparing the information received with accounting information.
• Balance sheet. As we found out, the objects of accounting are liabilities, property and business transactions. In turn, boo. the balance serves as a source of information and a way of forming these objects, expressed in a material assessment and formed on a specific date.
• Under costing it is worth considering the calculation of the unit cost of a product, service, work in monetary terms. In other words, this is a cost calculation.
• In accordance with the definition of the concept of accounting under the financial statements it is necessary to understand the set of accounting indicators, which are reflected in the form of tables. It should be added that they characterize the movement of liabilities, property, as well as the position of the company in the financial plan for the reporting period.

Accounting principles

In short, accounting is a system with certain principles. Among them, it is important to note the following points:

• The principle of autonomy, according to which any enterprise exists and develops as an independent legal entity. Accounting reflects only property that is recognized as the property of this organization.
• Principledouble entry, according to which all economic transactions are displayed simultaneously on the credit of one accounting account and the debit of another account for the same amount.
• The principle of the current structure assumes that the company performs its own functions and plans to maintain certain positions in the economic market in future periods, in the prescribed manner and within the specified time, repaying obligations arising to partners.
• The principle of objectivity in accordance with the definition of accounting objects is that all economic transactions must be reflected in accounting, be registered during all stages of accounting, confirmed by supporting documentation, on the basis of which accounting is carried out.
• The prudence principle implies some degree of caution in making judgments that are necessary in calculations under conditions of uncertainty. It is worth noting that this caution prevents overstatement of income or assets and understatement of expenses or liabilities. Compliance with this principle prevents the appearance of excessive stocks and hidden reserves, deliberate underestimation of income or assets, deliberate overestimation of expenses or liabilities.

Accrual principle

It is advisable to consider the principle of accruals separately, since its content is quite voluminous. As we found out, accounting is a system that functions in accordance with certain rules. The accrual principle assumes that alleconomic transactions are recorded as they occur, not when paid, and are included in the accounting period in which the activity occurs. This rule can be conditionally classified into the following components:

• The principle of recording revenue (income), according to which the income of the organization is reflected when it is received, but not when payment is made.
• The matching principle: the income of the reporting period, one way or another, must be correlated with the expenses that made these incomes a reality.

Additional principles

Accounting is a system that includes, in addition to the above rules, the following additional principles:

• The principle of periodicity, according to which the regular preparation of financial statements and balance sheet for the following periods is relevant: month, quarter, half year, year. It should be noted that this principle organizes the comparability of reporting information, and also after a certain period allows the calculation of the company's financial results.
• Principle of confidentiality, according to which the content of internal credentials is a trade secret structure. Thus, for damage to its interests or disclosure, liability is provided for under the legislation in force in the country.
• The principle of material measurement assumes that the country's currency is a unit of monetary quantitativemeasuring the facts of economic activity.

Category classification

What types of accounting are currently known? It should be noted that the initial moment of economic accounting is the observation of the phenomena and facts of economic activity. Today, there are three types of economic accounting: operational, statistical and accounting. It is the latter that is of interest to us. Its classification is defined as follows:

• Management accounting is accounting, in accordance with which the collection, processing and subsequent provision of accounting information for the management needs of the enterprise is carried out. It should be noted that the main goal of management accounting is the creation of an information system in the company. The task of this variety is to prepare complete and reliable information, which is a source for making the necessary decisions by the heads of enterprises in the management process. It should be added that the main share of this accounting is not only directly in accounting, but also in the subsequent analysis of costs, in other words, the cost of the product produced. Management accounting is closely related to the analysis of ready-made information for the company's management (optimal reduction in the cost component, improvement in the production process, and so on). This information is usually used in making managerial decisions in the case of forecasting and planning activities in order to account for financial resources. It should be added that management accounting data is recognizedtrade secret structure. They must not be disclosed by employees.
• Financial accounting should be understood as accounting information regarding the company's income and expenses, accounts payable and receivable, the composition of property, funds, and so on.
• Tax accounting should be considered as a type of accounting, according to which data are summarized to identify the tax base based on information from primary documentation, grouped in the order provided for by the Tax Code in force in the Russian Federation.

Functions

The main functions of accounting include the following elements:

• The control function involves the full provision of control over the availability, safety and continuous movement of means of labor, objects of labor, cash, as well as the timeliness and correctness of settlements with the state and its individual services. It should be noted that through accounting, three types of control are carried out, including preliminary, current control and subsequent.
• The information function acts as one of the main ones, because, in accordance with it, accounting is considered a source of information both for all departments of the company, and for higher institutions. It must be borne in mind that the data must necessarily be operational, timely, reliable and objective.
• Ensuring the safety of the company's property apparatus. It should be noted that the implementation of this function to a large extent depends on the current accounting system, as well as on the availability of storage facilities and specialization. Warehouses, one way or another, must be equipped with organizational plan equipment.
• The feedback function assumes that accounting generates and subsequently transmits feedback information.
• The analytical function implies the disclosure of existing errors and shortcomings in the system. Through it, methods of improving the activities of the structure and its individual divisions are reflected and analyzed.

Measuring instruments in accounting

You should know that accounting primarily involves the quantitative measurement of the objects listed in the previous chapters. It is this goal that is pursued by the use of accounting meters, which are labor, natural and monetary. Natural meters are used to display processes by weight (tons, kilograms, and so on), measure, count (number of pairs, pieces, etc.), other parameters in a natural key.

Labor meters are used to record the time spent working, usually calculated in minutes, hours or days. It must be borne in mind that labor meters, together with natural ones, can be used to calculate the amount of wages, identify its productivity, and also to determine production standards.

The money meter occupies a central position in accounting. It is used to reflect a variety of economic phenomena and summarize them ina single material assessment. It should be remembered that only by means of a monetary meter can one calculate the total cost of the heterogeneous property apparatus of an organization (materials, machine tools, buildings, and so on). The expression of this meter is relevant in rubles and kopecks (on the territory of the Russian Federation). It is necessary, in particular, to calculate the cost of the product, calculate the company's losses or profits, reflect the results of the economic activity of the enterprise.

Conclusion

So, it is advisable to take stock. The article provided detailed information about the concept, definition, varieties, features and main tasks of accounting. Among other things, the nuances associated with objects, as well as meters used in accounting today were discussed.

In conclusion, it is worth noting that financial accounting data is currently widely used by banking structures that lend to enterprises, shareholders of companies, government authorities, and investors. Taken together, they serve as a characteristic of the efficiency of the use of production and financial resources, the quality and quantity of the produced and sold product, the amount of resource costs (in other words, the cost of production), as well as the use of advanced capital.