Accounting Fundamentals: Organizations, Assets, and Financial Documentation

Organizations and Management

Organizations would: exist in all organizations. Organizations would manage resources, plan, coordinate, organize and control. Organizations must be well managed, doing the right things at the right time. They produce goods and services using factors of production: natural resources, capital (money, machinery, technology) and time and information (time that allows efficiency).

The Objective of the Company

The objective of the company is to satisfy the needs of consumers, generate profit and endure over time. Accounting is necessary to determine whether the company generates the expected profits.

The Company and the Environment

The company and environment: companies generate value for both internal and external stakeholders. The environment generates value through the resources and knowledge used in production, to satisfy the needs of consumers. Managers make decisions that improve efficiency, although they may sometimes make incorrect decisions.

Accounting as a Discipline

Accounting, as a discipline, studies the operations of the company. Its primary objective is not only mechanical recording but also to explain operations, so that information can be obtained and sound decisions taken. Accounting information can be used internally (by administrators) or externally (by government, banks, etc.), so it must be reliable.

Types of Companies

²²²²The company may be: primary industries (convert raw materials into products), secondary commercial companies (purchase and sell products), or service companies.

Assets

Assets are goods or heritage assets belonging to the company, used, transformed, consumed or sold, and expressed in money. They are economic goods with a determined value, classified as: goods of use (buildings, machinery, etc.), goods for change (goods destined for sale, merchandise), available goods (cash or payment in doubt), and intangible assets (trademarks, knowledge).

Equity

Equity is the set of assets and liabilities (obligations). Equity changes with contributions from partners or owners, and with gains or losses. Net worth = assets - liabilities.

Accounting Data Processing

Processing account data:

• Input (operations)
• Processing (techniques, accounting rules, etc.)
• Output (accounting information such as balance sheets, income statements, etc.)

All accounts are recorded. Operations may be patrimonial (modifying assets and liabilities without affecting equity) or income-related (modifying equity through income and expenses).

Equity Variations

Equity variations: Net worth = Assets - Liabilities; A = P + NW; A = P + C + G - PS; A + PS (debit) = P + C + G (Apr).

Commercial Documents

³³³³Commercial documents: Records of operations in written form, used to control the company, serve as evidence, and support entries in a trial balance. Documentation should be stored for 10 years.

Systematization of Documents

Group 1 (sales and purchase invoices): the document, issued by the seller, informs the buyer of the amount of the sale and the conditions of the sale and payment (cash, installments, etc.).

Fact A: issued to other companies, with VAT discriminated.
Fact B: issued to final consumers.
Fact C: issued to other entities.

Group 2 (transport-related documents): the document accompanies merchandise in transport and its delivery. Delivery notes are issued in triplicate.

Group 3 (payment-related documents: payment order, check, receipt):

• Payment order: the first payment made by the drawer to the creditor (beneficiary).
• Check: a payment document by which the drawer orders the bank to pay the beneficiary from the drawer's account (beneficiary, drawer, bank).
• Receipt: issued by the collector to the payer (buyer). The receipt allows the payer to prove payment was made. It is issued in duplicate; the original is kept by the paying party and the duplicate by the collector.

Group 4 (credit and debit note documents):

• Credit note: a document indicating that the other party (buyer) has been credited, reducing the amount the buyer owes. Reasons may include returns, greater discounts, or price reductions on merchandise.
• Debit note: a document that increases the amount owed by the buyer. Reasons may include returns, minor invoicing, interest charged, or late payment of terms.