Key Accounting Concepts: Assets, Liabilities, and Financial Statements

Key Accounting Concepts

8 Core Elements of Published Writing:

• Terms in case of death, company name, social order or business group, address for any legal purpose, initial contribution of partners, legal representative, identification of the members of the society, obtaining RUT.

Characteristics of Accounting Information

Four Key Characteristics:

• Meaningful: Must be relevant and understandable.
• Disclosure: Must properly reveal necessary information.
• True: Should present only factual information.
• Clear: Events should be shown specifically to avoid confusion.
• Accurate: Facts must be reflected precisely.

Role of Tax Accounting

The role of tax accounting is to track expenses and taxes incurred by the company.

Decision Making with Accounting Information

Used for granting credits, investing in stocks or shares, borrowing, and procurement.

Active Concepts

All movable property the company possesses, including facilities. Liabilities are obligations or business expenses.

Chart of Accounts

A document created when starting activities, recording all accounts.

The Account Book

A collection of elements with similar functions within the company, which may vary over time. It is a systematic grouping of debits and credits related to a single person or business, recorded under a heading.

Accounts Manual

A detailed description of each account's concept, serving as a guide for the accounting process.

Credit and Debit

Credit: The amount of credits. Debit: The endorsement made to debit.

Debit Balance

When the sum owed is greater than the sum of credits.

Loss and Gain Accounts

Loss Account: Shows money lost by the business. Gain Account: Shows all company profits.

Essential Accounting Books

• General journal
• Purchase and sales ledger
• Ledgers
• Inventory and balance book
• Book of letters
• Book of fees

Gratuities and Bonuses

Gratuities: An amount the company pays the worker in addition to their basic salary. There are two types of bonuses:

• Agreed Bonus: Agreed upon between the employer and employee in a collective agreement.
• Legal Bonus: Defined by labor law, with two types:
  • Annual Bonus: Calculated as 30% of the company's annual profits, usually paid in two parts. Based on registration data and company balance sheets.
  • Monthly Legal Bonus: Calculated as 25% of the basic salary, capped at 4.75 IMM.

Taxable Amounts

Include base salary, bonuses, commissions, overtime bonuses, but exclude assignment of collation, assignment of mobilization, travel allowance, and tool wear.

Family Allowance

The family allowance is not an expense for the company. It is an amount given by the state through companies in proportion to the worker's salary.