Aspects And Functions Of Accounting

Aspects and functions of accounting

Accounting is responsible for collecting and selecting important economic-financial type information. This discipline teaches us the procedures to analyze, classify and record operations carried out within economic entities whether composed of a single individual or societies with activities of this type with the help of its basic elements.

The economic entities carry out financial statements, accumulating the effects of individual business transactions on their accounting records. The information in these records is used to prepare the financial statements among other types of accounting reports, also for:

• Establish the ability to respond for assets and transactions under the control of an individual/societies.
• Follow up on business routine activities.
• Obtain detailed information on each specific transaction.
• Evaluate the performance of each department within the entity.
• Maintain documentary evidence of the activities of each business.

The basic accounting objective is to provide useful information for decision making. To obtain this information, it is necessary to make financial statements, since;are the structured representations of the situation and financial development of an entity.

Financial statements must publicize information about the evolution of:

1. The assets: they are composed of the goods and rights that are owned by the entity.

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2. Liabilities: They represent all debts and obligations in charge of the entity.
3. ACCOUNTING CAPITAL: It represents the value of all the assets and rights of the entity and the total of its debts and obligations.

The accounting equation is related to the asset, liability and accounting capital since it is equal to liabilities plus capital.

Continuing with the ways of obtaining infromction, the easiest way to obtain this information is through two books: the book of newspaper and the book of older, since they make us known the operations that occur day by day in an entity.

• DAILY BOOK: Register one by one, all operations related to the entity’s activities to accounting seats.
• Major Book: It is composed of folios where we will write down the operations carried out individually in each account.

From the newspaper and book of older book, it is where we begin to form what is the scheme of the accounting process.

The accounting process is a series of mandatory phases that will help us determine the result of the exercise. This process is made up of phases, which are:

1. Diary book
2. Ledger
3. Statement of income
4. Balance sheet

The result status will be transferred at the end of the year as of December 31 and that is where it will show us in an orderly manner as the result of the exercise was obtained.

The general balance shows us outstanding information at a certain date, and, it is represented by structures either:

• Reported
• Account -shaped

The accounting is extensive, when gathering all the aforementioned, the first part of everything you can do in an entity is carried out, this is a key piece to clearly have in order everything that is done to a determining time and know ifThe objectives or támbien are being met if there are losses or profits in the entities.