The “practitioners” say: if you have your bookkeeping under control, you have your company under control. ”Mostly, problems in the company and“ sloppy ”bookkeeping go hand in hand. Even if the bookkeeping is a very dry matter, it is the most important means of information in relation to success. Because numbers don’t lie – provided they are correct.
Corporate accounting and its areas
In 1937 there was an accounting decree and since then the operational accounting has been divided into four sub-areas:
- The bookkeeping (period calculation)
- The calculation (piece invoice)
- The statistics (comparative calculation)
- Planning (forecast)
According to topbbacolleges.com, the bookkeeping is a period calculation and the assets and capital stocks as well as their changes are recorded in order to determine the success within an accounting period (year, month). Assets and capital are recorded by quantity, type and value and success can be a gain or a loss.
Incidentally, the double-entry bookkeeping system was not invented by the Franciscan monk Luca Pacioli as early as 1494, because it had existed in Venice for two centuries, but he systematized it and contributed to its significant spread among European merchants. It was he who gave double-entry bookkeeping the layout of the double-page spread:
- Always the debit on the left and the credit on the right!
The business enterprise was made independent with the double entry bookkeeping.
The tasks of corporate accounting
The bookkeeping or business accounting is primarily used for documentation and is therefore to be viewed as an information system that contains objectively verifiable information. In addition, there is control here, because all the company’s cash and performance flows can be recorded and monitored with the help of accounting (bookkeeping).
For this reason, corporate accounting has a kind of protective function and serves as a basis for measuring earnings-related income payments. Furthermore, operational decisions are made on the basis of the accounting and the numerically processed material.
The bottom line here is that corporate accounting provides the company with information on management, capital providers, the state, customers, suppliers, unions, employees, etc.
The external and internal accounting
Corporate accounting can be subdivided into the sub-areas external and internal. External accounting includes financial accounting and accounting. The legal basis for this is formed by the HGB, GmbHG, AktG, GenG and PublG and the billing period is usually 12 months. The annual result emerges from the external accounting system, namely as annual surplus or annual deficit from the entire economic activity of the company.
The cost and performance accounting is covered by the internal accounting. As a rule, the billing period is shorter here and can be a month or a quarter, for example. For example, internal accounting can be used to determine operational success (based on the past) or also to calculate prices (based on the future).
Corporate accounting: a complex subject
The accounting obligation under commercial law is precisely defined in accordance with Section 238 (1) HGB:
Every businessman is obliged to keep books and to make his commercial transactions and the position of his assets evident in these according to the principles of proper bookkeeping. The bookkeeping must be such that it can give an expert third party an overview of the business transactions and the situation of the company within a reasonable period of time. The business transactions must be traceable in their development and processing.
To put it briefly: Every entrepreneur who is obliged to keep accounts according to Section 238 of the German Commercial Code is obliged to keep accounts. Here we speak of the derived accounting obligation according to § 140 Tax Code. Furthermore, the tax accounting obligation is not tied to the activity or the legal form, but to profit or, in agriculture, to the value of the area.
The accounting obligation arises according to § 141 Tax Code when the following limits are exceeded:
- Fiscal years beginning on December 31, 2015 at the latest – these limits have been in effect since 2008:
- Sales per calendar year 500,000 euros or
- Self-managed agricultural and forestry areas with an economic value of more than 25,000 euros or
- A profit from commercial operations of more than 50,000 euros in the financial year or
- Profit from agriculture and forestry of more than 50,000 euros in a calendar year.
- Fiscal years beginning after December 31, 2015:
- Sales per calendar year 600,000 euros or
- Self-managed agricultural and forestry areas with an economic value of more than 25,000 euros or
- A profit from commercial operations of more than 60,000 euros in the financial year or
- Profit from agriculture and forestry of more than 60,000 euros in a calendar year.
Summary:
In Germany, the external accounting system is based on the German Commercial Code and through this the financial situation of the company is mapped to the outside world. Among other things, the earnings, assets and financial position are presented using resources such as the balance sheet, the annual financial statements or the income statement. Addressees include the tax office, banks and creditors, but also investors and the general public. External accounting is also known as “financial accounting” in technical jargon.
Corporate accounting consists of the following areas:
- Financial accounting
- Part of the external accounting system (fully regulated by law).
- The amount and the change in assets / debts are recorded.
- All business transactions are documented.
- Provides the figures for all other areas of accounting
- Cost and performance accounting
- Is part of the internal accounting
- Monitoring the profitability of the company
- The operating result is determined here
- Statistics
- The determined numbers are processed (with the help of graphics / tables)
- The numbers are compared with the previous period (time comparison)
- The figures are compared with those of other companies (industry comparison)
- Planning / planning calculation
For future development, a planning calculation is made – the company’s strategy.
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- The figures are obtained from financial accounting, KLR and statistics
The tasks of accounting in a company:
- Documentation: All business transactions are recorded using documents.
- Provision of information: Information is provided to the tax authorities.
- The preparation of the annual financial statements
- Control function: The profitability and liquidity of the company are monitored.
- Disposition task: The determined numbers are processed in order to create a basis for business decisions.
