Accounting Principles: Business Assets and Financial Reporting

Accounting Treatment of Information

Accounting is the economic science that studies business assets, standards, and the scientific grounds for registering a company's economic information. Its primary objective is to provide accurate economic data to various stakeholders.

A) Business Heritage: Concept

Business heritage is the set of assets, rights, and obligations held by a firm, valued in relation to its intended purpose. Assets are items of value; rights are amounts owed to the company; and liabilities are debts owed to suppliers.

The relationship between these elements is defined as follows:

• Net Worth (Equity): Assets + Rights - Obligations
• Active: Assets + Rights
• Passive: Obligations
• Formula: Net Worth = Active - Passive

The economic structure reflects the company's active business, while the financial structure represents net assets and liabilities.

Economic Masses

• Non-current assets: Fixed assets, long-term investments, and real estate investments.
• Current assets: Stocks, realizable assets, available assets, and net worth.
• Non-current liabilities: Long-term debts.

B) Patrimonial Elements

Patrimonial elements are the property rights and obligations that form the capital masses of a company.

• Tangible Fixed Assets: Land, natural assets, buildings, plant, machinery, furniture, computer equipment, and transportation.
• Intangible Assets: Intellectual property, transfer rights, and software.
• Accumulated Depreciation: Adjustments for tangible and intangible assets.
• Investment Property: Land, natural assets, and buildings.
• Stock Equity Items: Merchandise, raw materials, and finished products.
• Realizable Current Assets: Customers, short-term financial investments, debtors, receivables, public finance, and social security.
• Available Assets: Cash and bank balances.
• Long-term Equity: Social capital, reserves, and profit or loss.
• Long-term Liabilities: Long-term suppliers, bills payable, and debts with credit institutions.
• Short-term Liabilities: Suppliers, creditors, short-term debt, public finance, and social security.

The balance sheet serves as the inventory and valuation of the company's assets.

C) Company Results

Company results are determined by the balance of expenses and revenue:

• Expenses: Purchases of goods and raw materials, returns, sales discounts, stock variation, leasing, professional services, transportation, banking fees, supplies, taxes, wages, social security, and interest.
• Revenue: Sales of merchandise, services, purchase returns, volume discounts, lease income, and financial discounts.