Accounting And Finance In The Business Community

Accounting and Finance in the Business Community

Introduction

With this work it is intended to show a rapid and easy understanding about the subject account and finance showing understandable concepts on topics that are necessary for any entrepreneur or entrepreneurial person in need of understanding.

It is important to clarify that accounting, as well as finances are important for any company and for the survival of it because in these will find support and strategies to create and maintain a successful business.

Accounting and Finance

Accounting and finance are important for the business community, because it allows studying, classifying, measuring and analyzing the economic facts that occur in each business, demonstrating perfection in the previous points, it could be verified if companies are satisfied or dissatisfied.

To understand accounting and finance it is necessary to know what a company and its fundamental parts are from customers to suppliers. Then basically accounting studies or analyzes the assets of a company and its individuals, the company is an organization to achieve an objective, assets are goods, collection rights and payment obligations;The asset is where the money is going and the liability where it comes from;And amortization is the loss of non -current asset, which means that any expense that must be reflected in the accounts and finances is the balance of all of the above, what is done with money.

For things to work properly in a company it is necessary to have constant control of their finances.

Accounting and finance are united because one complements the other.

Contrary to accounting, finance is the science or art of managing money. It is the balance between liquidity, profitability and risk.

Accounting definition

The concept of accounting could be defined as a science or discipline in charge of measuring, registering and informing of the economic events that occurred in any company or company in order to bring financial control.

The accounting aims to generate and provide useful, understandable, comparable and timely information to different types of users so that they can make decisions because it is a quantitative system reports the economic transactions that any organization or company performs.

Based on the type or model of company, accounting can be:

• OFFICIAL: Provides the necessary mechanisms to register the economic movements of state -level companies and is governed by the rules or norms that its higher body allocates (the General Accounting Office of the Nation.)
• Of service: refers to the accounting used by companies specialized in offering services. Related to the expenses that are affected by providing a service and the income received.
• Banking: dedicated to the analysis and registration of operations of financial elements such as banks or credit corporations, expressing the above in monetary terms and applying them to the financial statements.
• COMERCIAL: It focuses on companies dedicated to commercial activities that is, the sale of goods. Commercial accounting is responsible for registering within this any operation regarding economic terms.
• Of costs: records the economic operations of the costs and expenses of those of production companies as well as establishes the costs of the products offered by the same.

Accounting record

This term is important, since it is part of the methodology and technique that applies accounting to recognize that economic reality, records are also called accounting seats.

It is a structure under which the economic transaction or fact is represented under accounting language. It is also a voucher that shows the movement of the resources that make up the financial statements (object with which information users will make their decisions).

Accounting methods:

• Simple item method: It is also known as cash book or income and expenses accounting, it is one in which a record of monetary entries and outputs is carried out thus calculating its difference and reaching a final balance.
• Double starting method: there is no debtor without creditor, or creditor without debtor. Its objective is to maintain balance in balance reports.
• General Accounting Plan: Specific of each country. Defines rules of how accounting should work.
• Accounts: They are classified as real accounts and nominal accounts, they will help the company in strengthening the financial statements.
• Daily book: Within accounting it is a book that records all the expenses and income of a company daily.
• Major book: destined to register each of the accounting accounts of the company to which it belongs, chronologically.

Definition of finance

Finance is a branch of the economy and is also known as the art of managing money as well as studying what is related to obtaining and using it.

Starting from the above, in economics finance could also be defined as activities related to capital and money flows between individuals, companies or states.

Finance is related to accounting and both question how the company is in a certain time and what is its situation in a certain period of time, both issues are answered by accounting with 2 financial statements:

• General balance: It is an accounting financial report that shows the situation of a company in a certain period of time. This has two main components.
• Active: They are company -owned resources capable of generating future benefits. These can be current active with a maximum period of one year (effective, customers, accounts receivable, merchandise) and non -current active with a period of more than a year (fixed and intangible).
• Liabilities: Debts of the company with third parties, it is divided into current with maximum one year (taxes or appointments to pay, suppliers) and non -current that can be in the long term (accounts payable diverse, loans of the banks)
• Heritage: everything that a company possesses (capital, reservations, accumulated results that can be utilities or losses)

It is important to know that the 3 previous points make up the accounting equation (active = liabilities+net equity)

• Status of profits and losses: It presents the result of operations of a company (utilities or losses).
• Liquidity: capacity that every company has to generate cash and to fulfill its short -term obligations.
• Risk: It is the uncertainty of losing that directly and negatively affects the company.
• Profitability: Company’s capacity to generate profits compared to its investment level.
• Cash flow: refers to the entry (income) and exit (expenditures) of money in a given period.

conclusion

Mathematics is the science of order and measure, of beautiful chains of reasoning, all simple and easy. (Rene Descartes)

Accounting and finance go hand in hand within the economic and administrative field and are of the utmost importance for the survival of companies. Both issues are not only important for people with the highest position in the company but for all that involved within it (employees).

Arriving with the above to the conclusion that one cannot understand each other due to its joint feedback. While accounting records the data of each activity, finance, on the contrary, focuses on trying to make predictions of the future around what may or may not happen.

References

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• Farias, m. d. (2014). Basic Accounting Manual. Obtained from Basic Accounting Manual: http: // repository.UAEH.Edu.MX/Bitstream/Bitstream/Handle/123456789/15088/Manual_de_Contability_Basica.PDF?sequence = 1 & isalowed = y
• Garcia p., V. M. (2014). INTRODUCTION TO FINANCES. Mexico: Homeland.
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