What is basic accounting?

The meaning of basic accounting is the science that deals with studying and analyzing the economic and financial transactions of companies with the aim of specifying their registration in the accounting books following the rules established in the regulation.

In the basic accounting of a company, the different operations carried out will appear clearly and precisely, in chronological order, thus being able to establish a more exhaustive control over the resources and obligations of the company. What is intended with it is to provide a real image of the financial situation of the business.

Accounting basics

There are a number of aspects related to accounting that will be of great value to better understand the concept of basic or general accounting:

  • Situation balance: collects the financial situation of a company during a certain period of time. This balance also includes the composition of the assets, the passive and net worth of the company.
  • Register of operations: the accounts of any company must be registered in the Ledger and in the Diary book, where economic operations are structured in debits and credits.
  • Accounting cycle: the different operations that a company carries out during a fiscal year, which generally runs from January 1 to December 31.
  • Balance check sums and balances: This document includes the sum of the debit and credit of the different accounts, in addition to the corresponding balance. It should be done on a monthly or quarterly basis.
  • Profit and loss account: collects both the expenses and the income of the company to record them in the financial result of the year.

Although the term basic accounting is used mostly in business, it also plays an important role in the day-to-day lives of countries, and therefore in the international economy. Many political decisions will depend on these reports that represent the thermometer of the financial situation of a territory.

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