- 1 Definition of accounting
- 2 Objectives
- 3 The main branches of accounting
- 4 The mandatory nature of the accounting
- 5 Accounting standards
- 6 Organization of accounting
- 7 The accounting control
Definition of accounting
The General Ledger is a technique that allows a company to record all transactions carried out with the different agents of the economic world following a process and a form defined by the law.
It is a written memory that accurately keeps track of values, operations and results.
It is a mandatory instrument of all traders physical or moral persons
Accounting is a technique and an indispensable tool for all agents
Useful for business owners
Accounting fills the head of enterprise and shareholders on the heritage situation (all assets and debts) and the company's financial.
It also allows him to know his result (profit or loss) generated during a given period by the activity of his company. Therefore, a decision tool which allows to determine the profit-generating activities and those responsible for loss.
It allows public authorities to find the elements for assessment of the sums which are due to the Treasury in respect of the tax (income tax) or of social charges and various taxes to settle.
Utility for the company's partners
• The employees of the undertaking sought to justify an increase in their income. The accounting will allow them to know the terms of distribution of income, more specifically, the added value generated by the activity of the company.
• Reading and analysis of accounting documents will enable the members of the undertaking's to estimate the chances of improvement or deterioration of the result in the future gr ^ this certain methods and to know the future value of the securities.
Utility for the company's creditors
The main creditors of the company (suppliers, bankers) will be able to ensure the quality of their debt. Accounting to make the point on the exact status of the company and its ability to repay. Bankers will be able to determine the level of acceptable credit based on this ability to repay.
Accounting thus periodically about the situation of the company towards third parties such as: customers, suppliers, banks, employees, the public Treasury, social organizations (social security), etc. I.e. to know what she needs or on the contrary what it is due.
It is for the leaders of the company a tool and a source of information essential for good management. All important management decisions (investment decision, funding, distribution of earnings) are based primarily on the analysis of the accounting information. Accounting is thus a management tool at the disposal of business leaders to assess the evolution of the situation of the company, and to make the decisions that are necessary
This positive aspect outweighs the negative, and even repressive accounting, tax base aspect: the annual tax declaration is in effect, only one of the applications of accounting and its main objective.
Utility between traders
Accounting is an instrument of proof between traders
Usefulness in the decision support
It is an instrument of management and cost control.
The main branches of accounting
The General Accounting
Accounting, as we have defined it earlier is the General Ledger and will partly be the subject of this course. She seized the operations of the company with the outside, external flows. Its goal is to periodically present the situation of his heritage (establishing the balance) and to determine the results of its activity (establishment of the income with the highlighting of a profit or a loss).
Cost accounting of operating
Accounting goes further in the direction of the use of accounting for the management of the company.
This is a load analysis technique and products of a company that has for object:
a) the evaluation of goods and products sold, i.e. the determination of the cost of returns;
(b)) the determination of the analytical results (profit or loss by product category).
Its major objectives are therefore the analysis of the costs of returns as well as the profitability of the main sectors of activity.
The predictive accounting
The company implements and combined in various ways, the factors of production: materials, equipment, personal. Check performance or productivity, the amount of factors spent for a unit of product. This control is based:
-on the analysis of the charges relating to each combination of factors and on the monitoring of their evolution.
-on their comparison with standards pre-established to calculate variances which one looks for the causes.
This analysis allows therefore to monitor factors of production yields to compress costs, to know the yield per products, i.e. to assess the effectiveness of management.
The mandatory nature of the accounting
The usefulness of accounting which is both an instrument of control and a tool of management of the company, which has led Governments to make its use mandatory.
In order to compare the business between them, must obviously accounts and the results have a presentation if not identical, at least in the few similar. It is necessary to 'normalize' accounting.
Standardization is the process of building a set of accounting standards driven by the harmonisation of financial information and is done through a convergence of the French rules to international standards
Normalization includes several series of measures:
a) the adoption of an identical terminology, i.e. the use of identical definitions
concepts employed. It is necessary that everyone means the same thing with the word
"depreciation" by the word "capital".
(b) it must be that the calculation rules are identical. It is necessary to measure the concepts using
the same rules (example: calculation of depreciation rates).
(c) the accounting documents of synthesis (balance sheet and profit and loss account) must have the
same form. Third parties who may, or who require communication of these documents
must be able to understand them without difficulty and without getting duped.
Main sources and standardization
- IFRS, these are internationnales can standards developed by the IASB
The several sources:
- The commercial code
- the general accounting plan (CCP CRC regulation 99-03)
- The regulations, opinions and recommendations of the CRC and the CNC
- The regulations, opinions and recommendations of the ANC since 2010 (created in 2009, the CNA to replaced the CNC and the CRC)
The general accounting plan
The general accounting plan is a set of rules, instructions and procedures relating to the keeping of the accounts.
• methods of valuation contained in the account.
• the chart of accounts, i.e. the standardized list of accounts that the company must or
• presentation of the annual summaries: balance sheet, income statement and
The accounts of all companies must obey the rules of the general accounting plan.
French accounting framework
- faithful image
- Sincerity: accounts must be prepared in good faith
- Regularity: in accordance with the rules
- Caution: avoid the transfer on the future of risks and present losses
- Independence of exercises: relocation expenses and products to the result of an exercise given
- Netting: A separate assessment of the elements of assets and liabilities, charges and products
- Continuity of operations: the company is presumed to continue operations
- Historical cost: registration of assets acquired for consideration to the cost of acquisition and retention in the balance sheet for this value
- Consistency: there is no change in method of accounting from one year to the other (except as noted)
- Inviolability of the opening balance sheet: the opening of an exercise balance sheet must correspond to the closing of the previous fiscal year balance sheet
- Materiality: balancing of the objective of sincerity on the basis of reality and the importance of recorded events
Note that the reality on the legal rule is not applicable in the individual accounts (accounts) of companies.
Organization of accounting
L #enregistrement in accounting is done gr ^ this to evidence (such as body parts, invoices, the reports of the experts…) according to a specific order.
1st step, operations recorded in the log, it is a mandatory document noting the Scriptures chronologically. It can be composed of several auxiliary newspapers (suppliers, customers, Bank, asset VMP)
second step, the General Ledger. It is a mandatory document bringing together all of the accounts of the company as well as movements of these accounts. It can be subdivided into several ancillary books.
step 3, establishment of the balance. It is a non-mandatory document highlighting the total amounts of debits and credits as well as the debit or credit balance for each account
step 4 writing and completion of the synthesis in the annual accounts documents: balance sheet, income statement and annex.
The accounting can be held manually, but in practice, it is often computerized, see outsourced. Known software comptables (ciel, sage, SAP) integrated management packages.
Main obligations of companies (abridged, there are so many)
Maintain accounting records for 10 years
Keep and maintain a document describing the procedures and accounting organization as long that is required the presentation of accounting documents to which it relates
-establishment of periodic States numbered and dated summarizing all input data, without possibilities of removing or later additions (in theory)
periodic validation of the accounting records.
It must also have a path of revision allowing any time to reconstruct the accounts or States from data
existence of a right of access to the documentation analysis, programming and execution of the treatments
The accounting control
An article or more are returning.
Be aware that mainly three people are involved
- But the accountant is already a part of the control internal through procedures, separation of functions
- The accountant in a contractual mission at the end and he shall issue a certificate (optional intervention)
- The Board of Auditors, as part of a legal mission certifies the annual accounts (sometimes his intervention is required as in the SA (limited liability companies) and in companies exceeding certain criteria for size (turnover) or number of people)
- The internal controller (optional) made of audits