The accounting and management accounting in a company takes care of administration and management of it.

Management accounting and, therefore, accounting is one of the main instruments for the administration and management company. Thanks to accounting are classified and ranked the economic activities of the company, quantified in monetary units. The importance lies in an accounting system provide a means for economic and reliable information leading to decisions. The information that facilitates decision making should be collected, processed and interpreted.

Conditions in business accounting

A premise that accounting should have is its homogeneity, the power applied in a manner common to all companies. And only if the elements that are the subject of accounting have the same nature and root, although they have different interpretations and assessments will be possible to make a comparison of the economic state and the economy of several companies.


Chart of Accounts, basic part in the management accounting in business

In Spain, the Royal Decree 1643/1990 of 20 December Approved the General Accounting Plan (PGC), effective until December 31, 2007. And also by the Royal Decree 1514/2007 of 16 November established the new General Accounting Plan, which came into force on January first 2008. The CDP is a mandatory accounting law for all companies, regardless whatever their legal nature: individual or corporate.

Documents in the annual accounts for management companies accounting

The greatest exponent of the company books the accounts, which comprise the following documents:

1. Balance. Contains a summary of property accounts, assets and rights that are likely to be valued in monetary units at year end. According to Article 34 of the Code of Commerce, the statement must include the assets of the company, formed by the property and rights, and liabilities, which consists of the liabilities and equity.
2. Profit and loss account. Profit and loss account: According to the General Accounting Plan (PGC), the profit and loss account quantifies the business income and describes its formation. In a separate mode shows the income and expenditure for the year and their difference, the result.
3. Memory. Complete the information in the balance sheet and profit and loss account. And is that the complexity of business operations forces have a tool to clarify, explain and specify the reason for absence or quantitative situations business during a fiscal year.

These three documents were not drafted free will and no one can go without the other. The essence of the three is that it must form a unity, being clearly the hallmark of his writing and to show the true picture of the economic reality of the company’s only goal.

Accounting management principles: impartiality and objectivity

The activity book is based on a set of principles that aim to deliver the true image of the company. The postulate of true and fair view rests on two concepts: the impartiality and objectivity when conducting the annual accounts.

The General Accounting Plan (PGC) considers six binding principles in the accounts of all companies:

1. Principle of accounting: The company and its management is of unlimited duration.
2. Accruals principle: When making the allocation of income and expenditure, should always be based on the actual flow of goods and services they represent and regardless of when it occurs the cash is derived from them.
3. Consistency principle: Whenever an accounting policy is adopted within the possibilities offered by the legal framework, should always be maintained over time and apply to all elements that are part of business assets that have the same characteristics. The criteria may change when you alter the assumptions that led to choose it, pointing in the memory of this change and its consequences.
4. Principle of prudence: Only you can count the benefits that have been made at the time of year-end. This principle has a preferential basis over other principles.
5. No-netting principle: You can not ever make the asset and the liability side. Be assessed separately the elements of the various parts of the assets and liabilities.
6. Materiality principle: You may admit the failure to enforce any of the above principles, provided the quantitative importance of the non-application is low and does not alter the financial statements.

Six principles of vital importance, mandatory for companies, whether it’s simile, like the Commandments. Fundamental to carry out proper management and business management. Not met, the companies will commit a sin, not a true reflection of their heritage.