1st Bac - Handling of the main accounting accounts

 The majority of productive entrepreneurships, when accounting for their financial transactions, tend to accumulate records in accounts such as: cash, banks, accounts receivable, inventory, fixed assets, depreciation, accounts payable, capital, income, costs and expenses. These accounts belong to the main accounts such as: assets, liabilities, equity, income, costs and expenses.

Plan of financial account of a business

When the entrepreneur decides to permanently record the financial movements of the business, it is important to structure, in first place, a list followed by its definition of the financial accounts involved. This practice is very useful since the person in charge of keeping the business accounting, finds within the plan of financial account the qualifying group frame. Here are located the accounts that have a direct connection with the financial movement that will be registered.

Here we have an example of the plan of financial accounts:

Framework reference account: ASSETS

·      Name of the account: Cash

•   Definition: Records the movements of cash inflows and outflows, which are generally made within the business

·      Name of the account: Accounts Receivable

• Definition: Refers to the amount in credits that the business gives to its clients

·      Name of the account: Fixed Assets

• Definition: Refers to all durable goods – machines, land, equipment, vehicles, furniture, etc – that the business uses as support for its operation

·      Name of the account: Banks

• Definition: Keeps track of the movement of deposits and payments they make through a bank account.

·      Name of the account: Inventory

• Definition: Registers the movement of purchases and producer goods and/or finished products which are available for sale

·      Name of the account: Depreciation

• Definition: Registers the decrease in value of fixed assets as a result of the passage of time.

Framework reference account: LIABILITIES

·      Name of the account: Accounts Payable

• Definition: Refers to the amount in credits that the business has received from suppliers

Framework reference account: EQUITY

·      Name of the account: Capital

• Definition: Keeps control of the contributions that the owner or group of owners have given, of their own resources for the operation of the business

Framework reference account: INCOME

·      Name of the account: Income from sales

• Definition: Registers the value of income received by the business for the sales done to the customers.

Framework reference account: COSTS

·      Name of the account: Sales Cost

•  Definition: Belongs to the amount, the cost, of the products that have been sold to the customers

Framework reference account: EXPENSES

·      Name of the account: Administrative Expenses

• oDefinition: Registers the payments the business makes for the goods and services used to carry out the administrative tasks