Internal accounting is one of two types of accounting existing from the point of view of economic circulation. Based on this point of view we can divide accounting into internal or external. Internal accounting is responsible for analyzing and interpreting the economic data of what happens within the company. Its main function is to evaluate the costs and benefits derived from the different production areas.
Objectives of internal accounting
Internal accounting is used in companies in order to obtain information, make assessments and analyze the data obtained.
Information in internal accounting
Internal accounting provides information that facilitates the control of the company and the planning of actions. As well as information on the efficiency and costes of the different production centers or sections. It also allows information on the costs of the products that are manufactured or services that are offered. This information serves in turn to define commercial and industrial margins on production, that is, to establish sales prices.
Valuation in internal accounting
Internal accounting is used to carry out the valuation of stocks and finished products. The materials and the different phases of the production process. All this in turn serves to carry out the financial accounting of the company. As well as to control costs and reduce them as much as possible.
Analysis in internal accounting
Internal accounting is used to analyze the process through which the accounting result and profit of the company is obtained. In addition, the analysis of internal accounting allows making decisions about the direction of the company or organization. Such as the elimination of certain production or service lines or the determination of prices.