For a company to have good financing in its accounts and financial history in general, it must have controlled a multitude of activities and records that guarantee its stability and continuity. It is precisely through accounting that stands out one of the most important, the accounting of the company, one of the most important and necessary in any business model.
When we talk about accounting in a company, we refer to the techniques that are used to collect all the accounting movements that it carries out. Thanks to the review and study of the data, it is possible to implement control models and reach decision-making in the company.
Accounting is an important source of information for the company and within the infinity of advantages that its application in the business world brings.
Thanks to it, we can know at any time how many are the exact amounts that we owe and what are those that we are owed. In addition, it allows us to differentiate the expenses that the owners create over those generated by their own businesses, its study and application alert us to the general expenses and the investments made, it helps us to know the cost of production of a specific service or product allowing us to find out the price it should sell for.
Both in daily life and in business, we must make a wide variety of decisions. Many of these decisions are based on experience, financial information, or some other type of information. These decisions consist of choosing the most convenient option between two or more. The better the information used to make the decision, the greater the probability of success, if the quality of the information used to make decisions is bad, the decision made will most likely be bad.
In financial accounting, the profit for the year must be calculated, so it is necessary to make a valuation of inventories to calculate the cost of sales, cost accounting is the tool used in the calculation and valuation of inventories, even if it is not specified. Directly in the accounting regulation, the obligation to keep this kind of accounting is assumed when there is an obligation to calculate the cost of sales and value inventories for financial accounting.
As a tool serving as a basis for management accounting , the cost accounting is not regulated, as the practice of carrying cost accounting is not subject to principles or rules, nor is legally required. However, the elements used by management accounting tools are based on cost accounting.
The financial situation of the business is presented in the balance sheet. This financial statement shows the assets that the business owns at a determined date and the source of obtaining those resources and rights. One of the items included in stockholders’ equity within earned capital is the profit for the year, which represents the increase in business resources generated by its operation in a given period. The way to do this is by facing or calculating the difference between the economic benefits that the business obtained with the economic sacrifices that were made to generate them.
The financial information presented in the income statement is of little use if the elements used for its preparation are not a good approximation of the reality of the business. Wrong cost information of any kind can make the content of the financial statements not comply with the characteristics of the information, making it of little value for decision-making.
Every product is born as a consequence of an idea, which becomes the project that is quantified in relation to the activities necessary to carry it out and the resources required, either in a structured way or in an empirical way. Sometimes it is necessary to do a cost study to see if the product or idea is economically favorable for the business and can be sold in the market.
Accounting is of vital importance, it is an important tool for decision-making, the different behavior of costs are what make them as useful as possible, for this reason the classifications of costs are analyzed, the cost of manufacturing which includes direct raw material and indirect factory costs, within manufacturing costs there are two sub-classifications of costs; prime costs and conversion costs. Prime costs are understood as the sum of direct labor and direct raw material costs, which are the costs identifiable with the product. Conversion costs are costs that transform raw materials into finished products and are made up of direct labor and indirect costs.
Manufacturing costs are those that are included within the cost of inventories and as a consequence are those that go to expenses within the cost of sales.
Capital is associated with the idea of money and thus it is often heard that a certain person is a capitalist because he has a significant amount of cash, economically one of the factors of production and is represented by the set of goods that They serve to produce wealth, with respect to the money product of sales, it is likely that a part is deposited in the bank, both for its greater security and to take advantage of certain services from this class of institutions, such as credit, collection, and the other Keep it in the box of your business, to cover minor and unforeseen expenses. It is also necessary that you exercise control over the sales by your customers, since the timely collection of these credits will allow you, in turn, to settle your suppliers on time.
To keep a record of the operations carried out, you must observe certain rules and procedures, which constitute the principles or fundamentals of accounting, and to know the economic situation of the business at any given time, as well as the gains or losses that may have occurred. made, formulated the so – called financial statements, which are called balance sheet and profit and loss .
Once the manager is installed in his business, he will find that he has to cover certain expenses, some of them temporarily fixed, such as the salaries of his employees, the rent of the premises, certain contributions; and other variables, such as taxes on sales or profits, electricity and telephone services, stationery and stationery expenses. These expenses will logically try to recover them through the sales that I made of your merchandise, for which you will have to recharge at the cost of the same, a certain percentage that covers said expenses, and also an adequate profit margin, at the same time. investment made by the business.
Keeping accounting records is a key pillar of any successful company, since they monitor the finances of the business and its continuous profitability and based on this data strategic decisions are made. The importance of accounting lies in the fact that, without it, you will not know how much money comes in and out of the company nor will you be able to plan for future growth, accounting strategies make it possible to modify the financial status of your business and allow you to prepare reports of income statements for financial projections that guide the way forward.
Professionals are responsible for identifying, measuring and communicating the economic information that will serve for decision-making, this is usually done through accounts payable, accounts receivable and other financial transactions of the company, and currently accounting software is used to streamline these operations.
A part of the accounting activity focuses on the presentation of the financial information of the company in the necessary forms so that people outside the company can understand them. In order for there to be uniformity in these financial statements, the accountants follow certain guidelines for the presentation of the information.