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The Accounting is an essential part of any organisation, regardless of its size or sector. A proper Accounting enables companies to monitor their financial situation, make decisions on the basis of accurate Data and fulfil legal requirements. In this blog post, we will cover the most important accounting topics and give you a comprehensive overview of the various aspects.
Key Takeaways
- Accounting is the systematic recording and processing of business transactions.
- Double-entry bookkeeping and accounting are important accounting principles.
- The Chart of accounts is a structured list of all accounts used in accounting.
- Posting records are the basis for recording business transactions in accounting.
- The Value added tax is an important Taxwhich must be accounted for in the accounts.
Accounting principles
Accounting is the systematic recording, organisation and analysis of a company's financial transactions. A fundamental principle of bookkeeping is the principle of double-entry bookkeeping, in which every transaction is recorded on both the debit and credit side. This makes it possible to accurately record income and expenditure and to review the company's financial situation.
Another important aspect of accounting is balance sheet accounting, in which the financial activities of a company are summarised in a Balance sheet be displayed. The Balance sheet shows the company's assets, liabilities and equity at a specific point in time and provides an overview of its financial health.
Chart of accounts
A chart of accounts is a structured list of accounts that a company uses to record its financial transactions. Each account has a specific function and is used to record certain types of transactions. A well-organised chart of accounts is crucial for efficient bookkeeping as it allows transactions to be recorded and analysed quickly and accurately.
A chart of accounts consists of different categories of accounts, such as assets, liabilities, equity, income and expenses. Each account has a unique number and a name that describes its function. By using a chart of accounts, companies can systematically record their financial transactions and track them more easily.
Posting records
| Posting records | Quantity | Turnover | Profit |
|---|---|---|---|
| January | 120 | 15.000€ | 3.000€ |
| february | 90 | 12.000€ | 2.500€ |
| March | 150 | 20.000€ | 4.000€ |
An accounting record is a record of a financial transaction in the accounting system. It consists of at least two accounts - a debit account and a credit account - and shows the amount of the transaction and the type of transaction. Accounting records are used to record income and expenditure and to update the account balance.
To create and record an accounting record, you need to understand the type of transaction and select the appropriate accounts. For example, if you have a sales transaction, you would select a revenue account to record the amount of the sale and an inventory account to reduce the value of the goods sold. The posting record would then increase the amount of the sale in the revenue account and decrease the value of the goods sold in the inventory account.
Value added tax (VAT)
Value added tax (VAT) is a Taxwhich is levied on the sale of goods and services. It is an important part of accounting, as companies are obliged to calculate, collect and pay VAT to the tax authorities.
Calculating and reporting VAT can be complex as it depends on various factors such as the location of the business and the type of goods or services sold. Businesses must calculate VAT correctly, include it in their invoices and submit VAT returns regularly.
Annual financial statements
The Annual financial statements is an important part of accounting as it provides an overview of a company's financial situation at the end of a financial year. The Annual financial statements consists of various components such as the balance sheet, the Profit and loss account and the appendix.
The balance sheet shows the company's assets, liabilities and equity at a specific point in time. The Profit and loss account shows the company's income and expenses during the financial year and provides information on its profit or loss. The notes contain additional information on the company's financial activities.
Cost accounting
The Cost accounting is an important aspect of accounting as it helps companies to control and analyse their costs. The Cost accounting involves recording, analysing and allocating costs to various products, services or projects.
Cost accounting enables companies to understand their cost structure and make efficient decisions. They can identify the costs of various activities, recognise bottlenecks and take measures to improve profitability.
Liquidity
Liquidity is an important indicator of a company's financial health. It provides information on whether a company is in a position to fulfil its short-term liabilities and cover its current expenses.
There are various liquidity ratios that companies can use to analyse their liquidity. These include the ratio of cash and cash equivalents to current liabilities, the ratio of cash and cash equivalents to current assets and the ratio of current assets to current liabilities.
Receivables management
Receivables management is an important aspect of accounting as it helps companies deal with late payments and overdue accounts. Effective receivables management can help improve a company's cash flow and avoid financial bottlenecks.
To deal with late payments and overdue accounts, companies should set clear payment terms, carry out regular reviews of outstanding Receivables and, if necessary, issue reminders or take collection measures.
Tax law
Tax law has a significant impact on accounting, as companies are required to calculate, report and pay their taxes correctly. Companies must understand the applicable tax laws and ensure that they file all required tax returns.
To keep up with tax requirements, companies should regularly work with a tax advisor, keep their accounts up to date and keep abreast of changes in tax laws.
Conclusion
Accurate accounting is crucial to the success of a company. It enables businesses to monitor their financial situation, make informed decisions and fulfil legal requirements. In this blog post, we have covered the most important accounting topics, including accounting principles, chart of accounts, accounting records, VAT, financial statements, cost accounting, liquidity, receivables management and tax law. By understanding these topics and integrating them into your accounting practices, you can improve the financial health of your business and ensure its long-term success.
