Meaning of Accounting

Corporate accounting is used for the systematic recording, monitoring and informational consolidation of cash and service flows that arise from the corporate service process. A company’s money and goods flows are documented so that a company can be accountable to outsiders. Companies must be accountable to the tax office or the banks, but also to health care payers. This is where data is supplied that is required for the control and planning of a company.

Areas of accounting

The operational accounting comprises the four sub-areas

  • external accounting
  • internal accounting
  • Business statistics and comparative calculations
  • Planning calculation.

The external accounting

According to Wholevehicles, external accounting shows the company’s financial situation to the outside world and includes financial accounting . It depicts the asset, financial and earnings position of a company and is divided into the balance sheet, profit and loss account, cash flow statement, income and surplus account and other instruments that do not have to be number-based. There is also an appendix and a management report. The commercial code forms the legal basis for external accounting. It includes bookkeeping, inventory, annual financial statements with balance sheet, profit and loss account, notes and management report as well as special balance sheets, interim balance sheets and consolidated financial statements.

The internal accounting

Internal accounting is also known as controlling and comprises the planning, control and coordination of evaluated company processes with the aim of maximizing company success. The information ascertained in internal accounting is used to provide an objective foundation for management decisions. With the help of cost accounting and capital budgeting the sources of a company’s success are analyzed. Internal accounting is not tied to commercial or tax law requirements and can therefore work with additional valuation approaches. Deviating costs must be classified as imputed costs. The imputed costs can include company wages, interest, rents, depreciation, etc. It works with standard and planned values ​​and, in contrast to external accounting, is more future-oriented. Here, the components of the overall success can be determined and analyzed at the level of individual products and services. The internal accounting includes the operational accounting as imputed bookkeeping with cost type accounting, cost center accounting, cost unit accounting and short-term income statement as well as cost accounting as cost unit accounting .

Business statistics and comparative calculation

The business statistics and comparative calculation include business statistics, the individual company comparison, which includes the target / actual comparison, process comparison and time comparison, and the inter-company comparison in the form of benchmarks.

Planning calculation as part of accounting

A component of the planning calculation is the company and business-related forecast calculation, for which business methods are used. The planning calculation is used to prepare decisions for various areas and to find a strategy for the company.

Accounting tasks

Accounting has various tasks in the company. It is used for documentation and must record all business cases based on receipts. The accounting department provides information for the tax authorities and is used to prepare the annual financial statements. Accounting exercises a control function, it monitors the profitability and liquidity in a company. The figures determined are processed in accounting to provide a basis for decisions in the company.

Financial accounting basics

Financial accounting as external accounting takes up a large part of accounting. It records all business cases seamlessly and systematically. Business transactions arise from business relationships with suppliers and customers, from operational structural changes and from business relationships with employees. Companies are legally obliged to record these business transactions. With the financial accounting assets and debts are determined, changes in assets and debts are documented. The operational successes are determined, figures are provided for the price calculation. Financial accounting is used for internal control. The legal basis for financial accounting is the Income Tax Act, the Value Added Tax Act and the Implementing Ordinance, the Tax Code, the GmbH Act, the Stock Corporation Act, the Publication Act and the principles of proper bookkeeping.

Accounting as a complex process

Corporate accounting is a complex process with several areas. It provides an important basis for operational planning and decision-making processes.