Basic accounting

Basic accounting or basic general accounting is the science in charge of studying and analyzing the financial and economic transactions of companies in order to determine their entry and registration in the accounting books following the principles and rules established in the regulation.

Summary

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  • 1 Basic accounting functions
  • 2 Role of basic accounting
  • 3 The objectives of basic accounting
  • 4 Principles of basic accounting
  • 5 Source

Basic accounting functions

Collect , classify, record, summarize, analyze and interpret the financial information of the organization. Classification, recording and summarizing activities are routine and repetitive in nature and do not constitute final accounting functions . The development and systematization of accounting have freed the accountant from this phase of the process, allowing him to spend more time on tasks of greater importance, such as the analysis and interpretation of information.

Role of Basic Accounting

Although accounting for the business life of companies is often talked about, it also plays a fundamental role in the day-to-day life of countries and therefore in the world economy . Many political decisions are made based on accounting reports that are the thermometer of the economic situation of the countries, playing a decisive factor in where to direct their policy in the future.

The objectives of basic accounting

The primary objective of accounting is to provide financial information of the organization to individuals and legal entities interested in its operational results and its economic situation. Company administrators, shareholders, government, lenders, suppliers, and employees are individuals and institutions that constantly require financial information from the organization for their respective analyzes. Accounting supplies company informationadministrators, as a contribution to their planning, control and decision-making functions; they require reliable, understandable, objective, reasonable or timely financial information. The shareholders or owners of the company require financial information in order to determine the return on their invested capital and entrusting management.

Basic accounting principles

Accounting principles are made up of a list of standards that every professional must scrupulously observe to apply accounting science with great care. Thus, these principles help accountants to interpret with confidence the economic movements that are included in the financial statements. of any business.

There are some twenty generally accepted principles, such as those of entity, going concern, accrued, uniformity, objectivity, valuation at cost, double entry, etc.

Among all of them, one is usually stated as the basic principle that must guide the activity of the accounting professional at all times: that of equity . This is defined as the concern to maintain accounting objectively without allowing the different interests that conflict in business life to influence this section.

 

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