When speaking of the term accounting, it refers to all movements of income and expenditure of capital that are handled in a business or company, public or private, they can also be small, medium or large; For this reason you should know what accounting definition, meaning and concept is.
It is a way of working the numbers to carry out everything related to the economy of a company, it also shows the financial state in which it is located, in order to demonstrate with the numerical operations if the business is profitable or not.
With accounting, a margin of knowledge about mathematical operations must be maintained, as well as multiple formulas that only the professional who studies this career knows, in order to have an idea of the amount of capital that the company manages.
Every company must have the possibility of keeping its accounting up to date, by virtue of not having tax problems or of any other nature where it incurs legal crimes and for which it needs to inform the state of all the income and expenses that it has had in a stipulated time.
For this reason, accounting must take into account:
- The type of public or private company.
- The service provided by the company.
- The amount of material that enters in a month (Purchase).
- The amount of material that comes out (Sale).
- Dates.
- Debit, Credit and balance.
- Red balances.
- Positive balances.
- Negative balances.
- Taxes and fees to pay.
- Financial information of a company.
Instructions
Accounting is nothing more than the management of the capital of any company and which is carried out by a person who is in charge of establishing the balance sheets and balance of a company, to know if it is profitable when it comes to producing, decreasing or increasing the capital.
Every business or company makes purchases, sales, loans for financing for a year, of which everything is translated into income, expenses and financing, taking into account that for the calculation of all this, only a specialist person manages to have the information and take it to the day.
With accounting, it is avoided having a minimum margin of error in the finances of any company, which will result in a positive balance in favor of the company, so that its operation is always governed with the opportunity to achieve reliable commercial transactions.
This is accounting
- Accounting is established to keep the information up to date on what is generated when introducing and removing any element depending on the activity to which the company or business refers, generating a response to see if a profit or a loss is obtained.
- The companies of the world must have an advisor in terms of accounting systems that acts as guarantor of all the assets that said company owns, and is the person in charge of keeping the numbers of the same to have all the requirements before the law up to date.
- Companies worldwide are classified as small, medium and large and use accounting to meet the necessary requirements to know if their start-up is viable, in addition to paying all the necessary taxes.
- Accounting was the first thing that was used in the great civilizations to maintain a stable trade between the different empires that dominated the earth, especially when it came to being able to obtain a commercial exchange between them.
- Luca Pacioli was the first accountant in history, who with rudimentary numbering processes managed to stabilize and describe the finances of:
- Venice merchants.
- Commercial contracts between parties.
- Merchant Terms.
- Interest rate on loans.
- Commercial exchange.
- This accountant established a document that until today has given terms and words that only those who study accounting know, in a way of making a jargon where only the connoisseurs are the only ones who know it, such as medical terms, lawyers, among others.
- Accounting can be established as a science that imparts the necessary knowledge to develop the different parameters to respond to different financial problems that any company in the world has to face.
- Within accounting terms, any number of concepts to be known are taken into account, which those who use this language are capable of deciphering to obtain the proper performance of any business that is starting or wants to expand.
In accounting, the concepts of equity and the statements that show personal or business finances are taken into account, these are in turn divided into:
Concepts that speak of heritage:
- Active.
- Passives.
- Net worth.
Concepts that talk about finance:
- Personal or general balance.
- profit account.
- Loss account.
- Changes in heritage.
- Cash.
- Memory and account.
You can also find different types of accounting according to the needs, but first it should be noted that there are three ways to find accounting that are:
- By its nature: public and private.
- By activity to which it is dedicated: textile, industrial, health, among many others.
- Depending on where it is applied: fiscal, management, costs and financial.
- The main objective of accounting is to provide the economic information that any company requires to manage itself within the world of the economy, to carry everything related to the management of capital inside and outside a nation.
- Accounting must be carried out in a transparent, orderly manner and of course taking into account the degree of continuity that reflects everything related to the management of any daily, weekly, biweekly, monthly and annual business or company.
- The main thing that is required is to obtain clean information and without any type of problems about the activity to which a company is dedicated, through the movement of capital for which the operation is scheduled.
- Accounting is responsible for keeping track of movable and immovable propertythat are part of the monetary heritage of a company, which must meet the necessary requirements to establish criteria that organize all financial knowledge.
- On the other hand, accounting is also in charge of controlling what enters and leaves during a certain time in a company, thus knowing in a transparent way if it is giving results by generating feasible profits.
- Make an inventory that organizes and offers a future projection of what the company is going to generate, by virtue of knowing everything that enters and leaves in a monetary way, as well as the costs that must be made to obtain an extra profit.
According to the commercial activities to which the companies are engaged, accounting is also divided into a specific classification and can be:
- Industrial: it is in charge of keeping control of the companies dedicated to the sector that transforms raw materials into essential products.
- Commercial: controls the information required in companies dedicated to the purchase and sale of a specific product.
- Extraction company: it is the one that carries the information of those companies that exploit the resources of any nation or state.
- Services: it is the one that is carried out in companies that provide any type of service to a consumer.
Likewise, other types of accounting are derived that depend on what is needed to know within the management of any company, taking into account that the following is available:
- Financial: it is dedicated to breaking down the finances of all the partners who run a particular company.
- Fiscal: refers to the actions to be taken to declare assets to the treasury for the payment of taxes or taxes required from the state.
- Administrative: necessary to know the management within a company that is going to prepare a strategic plan with the different actions to be carried out to improve.
- Costs: it is a chain that must have information on the cost of production, distribution and allocation to know if the company is profitable or not.
- Management: records the entire part of the productive economy of the company, to make use of the information by virtue of offering viable solutions in its improvement.
- In general, accounting is presented as a response to solve the financial problems of a company by translating the red numbers or the profit deficit into the possibility of obtaining a great improvement in all aspects.
- It is part of the numerical science that offers a multitude of formulas with numbers to support the economic sector of any company in order to achieve greater economic activity, to establish a high profit margin.
- With accounting, numerology is established in the part of the commercial activity, since different mathematical operations are used that will be part of obtaining a greater profit margin by virtue of offering a better vision of commercial companies.
- The mission of accounting is to generate profitability for a business, offering up-to-date tax payments and offering strategies that generate more profit for the part of the economic activity to which the company is dedicated. You will need to adopt a strategy for your purposes.
Tips
- The main thing is to have up-to-date accounting of the business so as not to have problems with the state.
- Keep accounting books up to date.
- Establish what is necessary to have the possibility of improving the conditions of the company.
- Always maintain order and clarity in the way of keeping the numbers of any business with which you work.