See also: Cost accounting

Cost accounting, or accountancy of management, is an accountancy which seeks to determine the cost price of the products and the services that a company sells.

In the case of a company which buys resells products (for example planks of wood) and them without to have modified them, the cost price is simple to calculate: it is primarily the purchase price of the products. But if the company modifies them (it manufactures pieces of furniture, for example), the cost price is much more complex: it integrates wages, expenditure of electricity, of small tools, products " consommables" (adhesives, varnished), etc If the company makes only one type of pieces of furniture, it is enough for him to divide all its expenditure by the number of pieces of furniture manufactured to know its cost price. But if it manufactures several types of pieces of furniture, the general ledger cannot give him the cost price by type of piece of furniture. It will find information in its Cost accounting, which will give him also other information of management: cost price of a center of cost, strokes realized by product, workshop, etc

It is not obligatory but in practice essential for the large companies, and its production process is complex.

Principles of financial accountancy

See also: Accounting policies

Accountancy must follow some great principles or conventions. The non-observance of these principles or conventions led to stock exchange scandals or bankruptcies pronounced against companies of international size (Enron, Parmalat, Worldcom, Vivendi, etc).

Principle of prudence

Accountancy produces information which are used per many economic actors of the countable entity, the head of undertaking, his banker, his shareholders. To overestimate the results leads to a control “at the risk” by engaging more expenditure, while being involved in debt for an expansionist growth, it leads the shareholders, if the company is dimensioned, to overestimate the value of their wallet.

Accountancy must be established on the basis of careful appreciation to avoid the risk of transfer, on periods with a future, uncertainties present likely to burden the inheritance and the results with the entity.

Principle of independence or specialization of the exercises

Let us imagine a company which signed a contract with a customer stipulating that during the two next years, it will provide a service and that this service is paid entirely on the first financial year. To allocate the totality of this benefit over the only first year results in overestimating the result in year 1 and under evaluating in year 2.

Principle of permanence of the methods

It is thus appropriate, in the case of a change of accounting method (they generally relate to the damping of the movable and real credits) to stress that there was change and to make understandable the modifications in time induced by the change of method.

Principle of sincerity

It can be trying to overlook the problems to which a countable entity faces. Let us note that the remuneration of the officers of the company with dimensions is largely related to the bottom lines of the company which they direct (either in the form of premium related to the results, or in the form of Stock-option S knowing that the value of the action is itself related to the bottom lines).

Principle of not-compensation

It is advisable for the accountant to produce detailed information and complete line of business.

Standards of financial accountancy

National standards In France, it is in 1947 qu ' appeared the first countable standard under the name of “chart of accounts” (PCG). The last overall revision of this standard goes back to 1999. At the origin, the PCG as well applied to the General ledger as with the Cost accounting. Since 1999, its field of application was limited to the only general ledger. The countable standards of the United States ( Financial Accounting Standards - FAS) have an international importance because of the economic and financial influence of this country.

See also: International Financial Reporting Standards

The establishment of international countable standards became necessary because of the universalization of the financial markets. The international comparisons of the accounts of the companies whose titles are treated on the world financial markets, require that these accounts be established according to identical rules. This is why IASB establishes " standards of publication of information financière" called International Financial Reporting Standards - IFRS, called in the past " IAS" ( International Accounting Standards ) and whose application is advised to the companies of the whole world. A European payment going back to 2002 made these standards obligatory for the companies with dimensions established in the European Union. In the United States, the stock exchange authorities (SEC) are directed towards a recognition of the IFRS by authorizing the foreign companies applying these standards, with being with dimensions to the American Stock Exchanges.

Methods of financial accountancy

In all the cases, one passes from the , quantified dated writings (amount), allocated with a Compte, clarified by the wording and corresponding to an indexed document which always must in return capacity to justify an entry (an invoice, a statement of bank account, a sheet of tax to be paid, etc). An entry thus justified can then be opposable with thirds (State, shareholders, welfare social, justice, etc).

One generally subdivides the operations of categories corresponding to Compte S numbered and made out which the Plan accountant determines. One distinguishes the “accounts from Bilan” and the “income statements”.

• the accounts of assessment correspond so that the entity has (the buildings, the machines, the clients' accounts, liquidities, various assets) and what it owes (the stockholders' equity, debts towards the suppliers, social welfare, employees, financial institutions, etc)
• the income statements corresponds to the activity of the entity to produce the richnesses registered with the assessment. One distinguishes the produced S (sale of produced matters or services, of goods or immobilized production) and the committed Charges to reach these products (purchases of supplies, energy, services, overhead, contributions of members, etc)

Simple accountancy

Each economic event is deferred on a book to two columns:

• the first column to describe the event,
• the second to put its amount, in more or less according to whether it is a question of a cashing or an expenditure for that which holds accountancy.

This type of accountancy known as “of case” does not make it possible to reveal the inventory changes (and, more generally, of the inheritance), so that it can let think that all is well whereas one is selling the " jewels of famille" (and conversely, to make believe that the situation is difficult, whereas it is simply the stock which grows bigger). It is thus appropriate only to manage a stock whose value is stable or relatively low, i.e. for private individuals or of all small companies whose economic events are very simple (for example: a café owner who boxes with the counter consumption and returns the currency).

It is however with this technique that the French State functioned until 2001. However, with this intention, it had adopted an alternative a little more elaborate. Indeed the accountancy of case can be sophisticated by the use of the Plan accountant, making it possible to determine sub-totals and balances by category. The general balance can then be subdivided between the balance of the accounts of assessment and that of the income statements.

Partly double accountancy

1. all the value which circulates in a company only makes move;
2. the enrichment of a company results from its capacity to take this richness on thirds.

Example of the purchase of a vehicle: a company which buys a vehicle 10.000 € increases its inheritance since it has a vehicle. It is a flow . N the other hand, it must pay this vehicle, therefore to make decrease its treasury, event which one registers with the credit . The following writing will be passed:

*Compte Vehicle 10.000

* on Compte of treasury 10.000

The first line represents the flow, the 2nd credit.

The operation is a little more complex if it buys the vehicle in a garage without paying it immediately: it will register the vehicle with the flow, and will note that it has a debt towards its supplier.

*Compte Vehicle 10.000

* on Compte of supplier 10.000

When it regulates, it will pass the following writing:

*Compte of supplier 10.000

* on Compte of treasury 10.000

And the operation will be finished.

This technique is quite higher than simple accountancy. Indeed, it makes it possible to record not only the immediate financial transactions, but also the operations differed in time: loans, loans and reserves or provisions for operations under consideration in an unquestionable way.

In the same way, it at any moment makes it possible to ensure that the richness and the assets (what the company has and who is with the flow ) are equal to the debts (what the company owes, and who is registered with the credit ): so of the richness is created (let us suppose the sale of services), the result of the operation will be entered with the assessment like a debt towards the shareholder. One thus always makes correspond an operation of receipt or expenditure with a means of carrying it out.

This constantly gives the most faithful possible image of the state of the richnesses of an organization and its interactions with the various actors on which it depends.

Certain operations (with VAT for example) make enter concerned several flows and several appropriations whose sums of the flows must be equal to the sums of the appropriations. She resorts to a Plan accountant to categorize the operations, but each account can be output or credited and thus has at least two columns.

The history of the writings reflects thus on each date, the photography of the financial position of the company, with its assets, the state of its treasury, the evaluation of the risks, its liabilities and its receivables. This technique offers moreover guarantees of coherence much larger than that of a simple accountancy. The equality between the flows and the appropriations indeed allows controls under several angles of the rigor of accountancy. In particular, the balance of the accounts of assessment and that of the income statements must be equal on the one hand and on the other hand to balance: one credit (nap of the appropriations higher than that of the flows) and the other debtor (nap of the flows higher than that of the appropriations).

This system does not guarantee completely against the fraud: generally the operations are technically correct (débit=crédit), but the fraud comes from invented or adulterated accounting records and/or erroneous assignments of accounts, even with breaches of trust (signature of two accounts - checks for the same operation for example). Sometimes in fact very sophisticated virtual systems are employed.

The " term; double" part; within the meaning of General ledger is sometimes taken. This association is unsuitable because there exist cost accountings held partly double.

Software package of accountancy

See also: Business package integrated

The time when the accountants still used “books” and “newspapers” on paper medium is completed. The projections in Informatique allowed phenomenal profits of Productivité on the matter. No company can today do without a countable Progiciel which automates the seizure of the accounting transactions and makes it possible to quickly establish the countable states most current: the Assessment, the Income statement, a table of the Flow of treasury.

Frequently one associates with it a more or less elaborate Reporting according to the needs for the company to synthesize the data of the Cost accounting. This software package meets sometimes more extended needs for management, such as the follow-up of the investments, the tables of loans, the financial analysis, estimated management, the analysis of the differences between forecasts and achievements, etc

The more this software comprises functions, the more it approaches the definition of a PGI (Business package integrated).

More recently, per hour of the Internet and the groupware in network (Groupware), appear the applications of accountancy in line of the type ASP ( Application Services Provider ) which make it possible to share on the Web in real-time the work of the accountant of company, the chartered accountant reviser and the listeners auditors.

The certification of the accounts

See also: To that the accountant and financial

The financial informations produced by the accountancy of a company are used per many economic actors: owners of the company in the foreground, the State, banks and other lenders, but also customers and the employees who can wish to form an opinion about the continuity and the economic solidity of their partner and employer. It is necessary for them to have an image as exact as possible accounts, it is the object of the To that the accountant and financial, carried out by the auditors, as to certify the veracity of countable and financial information published.

Trades of accountancy

• Auditor
• Police chief of the Army
• To that the or
• Certified public accountant
• Management auditor
• Consolideur

See too

Related articles

• countable Damping
• Cost accounting
• Account
• Immobilization (accountancy)
• Accounting package
• Chart of accounts
• American countable System
• générationnelle Accounts Department

External bond

• French Institute of the Certified public accountants and the Auditors (IFEC)

Simple: Accountancy