Understanding Business Assets, Equity, and Accounting Principles

Assets (EP): This represents the set of assets, rights, and obligations that a business (PRMS) possesses. Assets are properly rated based on their order (k).

Masses (MP): This refers to the classification of heritage assets into groups or masses (k) of homogeneous elements. These elements are grouped and ordered based on their availability and enforceability.

Non-Current Assets: This category includes heritage elements linked to the business for more than one fiscal year. It contains the following masses:

• Intangible Assets: These are assets that the business needs for production but lack physical form.
• Tangible Assets: This includes all physical assets and corporeal property that the business uses in its activities for productive periods.
• Long-Term Financial Investments: These are investments in long-term financial assets or shares of capital that the business intends to hold for an extended period.
• Real Estate Investments: This includes investments in real estate owned by the business.

Current Assets

Current Assets: This category comprises items that are in constant rotation, renewing themselves multiple times within the same economic year. The masses are:

• Inventory: This includes materials used in the production or elaboration of goods sold by the business. These items must be sold, transformed, or converted into liquid assets within a period.
• Receivables: This represents the rights and credits that the business has from completed operations, allowing it to obtain effective resources within a relatively short time.
• Available: This includes liquid assets that the business has with immediate availability.

Equity and Liabilities

Equity: This represents the resources allocated to the self-financing of the business, including items that do not need to be returned, such as subsidies and donations. The main component is capital.

Non-Current Liabilities: This includes sources of funds with a duration longer than one year, involving long-term obligations for the business.

Current Liabilities: This includes debts that the business must repay within one year, representing short-term obligations.

Accounting Principles

Accounting: This is the study of the economic heritage of a business, both statically and dynamically. It examines the heritage at a specific time and the variations that occur. Accounting provides crucial information to the company, especially given technological developments and competition.

Objectives of Accounting

• To provide sufficient information to management for decision-making and future planning.
• To inform owners or shareholders so they can monitor their interests.
• To inform workers, as the business's results affect their job security.
• To inform creditors, allowing them to assess the business's ability to provide sufficient guarantees for their credits.

Accounting Transactions

Accounting Transactions: These are all operations that transform or modify the heritage of the business.

• Permutative Transactions: These do not alter the total equity of the business. For example, purchasing a machine does not modify the total assets, as the cash decrease is compensated by the machine's value.
• Modified Transactions: These occur as a result of income or expenses, changing the equity through increases or decreases. An example is paying a worker's salary.
• Mixed Transactions: These occur when there is a change in the value of equity as a consequence of a permutative transaction.

Note: An accounting entry represents a group of assets with similar characteristics, using a common naming convention.

Double-Entry Bookkeeping: This involves recording changes in at least two accounts simultaneously, reflecting the impact on the business's heritage.

Settlement: This refers to the recording of accounting entries in the journal, following the double-entry method, to track variations in heritage caused by any type of accounting transaction.