Getting to Know Corporate Accounting

What is meant by corporate accounting? The definition of accounting can be divided into two things, namely understanding through processes and functions. When viewed from its function, accounting is a service activity whose purpose is to provide quantitative information.

In particular, those relating to the finances of the entity. With the intent and purpose of being considered for economic decision making by related or interested parties.

Meanwhile, when viewed from the notion of accounting, the process has an understanding as an activity such as recording, summarizing, and identifying. Also classify and measure the financial transactions of a company or individual or entity.

Then report it to interested parties. By that party, this report is used as the basis for making economic decisions of the company or its entities.

From these two understandings, it can be concluded that accounting is a service activity that has the aim of producing financial information which is then packaged in the form of financial statements.

The information contained in the financial statements is the determining factor in making economic decisions.

Three Main Areas of Accounting

Before entering into corporate accounting, you should first know the three main areas of accounting, namely as follows.

1. Social accounting.

Is accounting that is applied in the national or state scope. The scope of this accounting is greater because it involves the national economy and is very influential on the country's economic development.

This accounting covers the flow of funds, balance of payments and national. Up to national income and production.

2. Government accounting.

This accounting can be regarded as accounting concerning government agencies. The characteristics of ordinary government accounting do not calculate the profit or loss in the accounting recording period.

Each country has a different form of accounting, depending on the form of the country. This government accounting example is local government accounting. Usually, it aims as a form of accountability to the center or to a higher government.

3. Corporate accounting.

Corporate accounting is also known as commercial accounting. Is accounting used by companies or business fields that are oriented to calculating profits.

This accounting is used to generate information in order to be able to read financial indicators and a company is able to generate profits. And read where the company's financial position is so that it can minimize losses and get the maximum profit.

Characteristics of Corporate Accounting

The characteristics of corporate accounting are as follows.

a. Viewed from profit and non-profit entities

This accounting obtains funding sources from debts to banks, sales of company owners' assets as capital, issuance of shares, and bonds. And divided into two, namely internal or external.

If internal, the company obtains funds from the profits collected and also the sale of company assets. As for external, the company's funding is obtained from debts to banks with or without collateral and then issuing bonds or shares from the company.

b. Judging from the entity

Company has the main objective, namely profit. Companies calculate profit and loss in order to be able to compare revenues and expenses for a period. Each company has a policy to make financial reports in the form of weekly or monthly.

c. Revaluation of company assets

This accounting allows the revaluation of company assets or recalculation due to the development of the company either forward or backward.

d. The concept of depreciation

This accounting applies the concept of depreciation, where the allocation of assets is included in costs. These terms are commonly referred to as amortization, depreciation, and depletion. And there is a matching cost against revenue or matching costs with income.

e. Financial statements

When viewed from its responsibilities, the company makes financial reports. For internal companies it is usually made weekly or monthly. The financial statements are addressed to shareholders, creditors, and company management.

f. Organizational structure

Judging from the organizational structure, the company depends on the needs of the company. If the company is on a national scale, then the organizational structure is more hierarchical.

The company structure affects the company's stakeholders. Such as company management, board of commissioners, shareholders, customers, and suppliers and creditors.

g. Characteristics of the budget

Judging from the characteristics of the budget, it is usually closed and confidential. Only users of financial information are shared, namely external and internal parties of the company.

The company's internal parties, namely company management from various levels. While external companies, such as investors, creditors, and the government.

h. Accrual-based accounting syatem

This accounting system uses an accrual-based accounting system or the so-called accrual basis and recognizes the manual reporting system to computerization using a double entry accounting system.

4. Commercial Accounting

Commercial accounting can be divided into two, namely financial accounting and management accounting. Each of these accounting supports reports to the company and the two complement each other.

More specifically, commercial accounting when viewed from users of financial statement information or the results of the process, financial accounting is more aimed at information.

That is, information for people external to the company as a form of profit or loss statement, changes in equity and financial position, and where they are flowing. Meanwhile, management from various levels receive management reports as a result of the company's management accounting process.

Following are the differences in more detail regarding financial accounting and management accounting as part of commercial accounting.

First

Financial accounting has an understanding as the process of recording or recording, identifying, measuring and performing calculations. Then release the economic information within the company.

Meanwhile, management accounting is a financial report that is prepared with the aim of producing information that supports decision making. By the management, such as planning or operations as well as calculating the company's income and expenses.

Second

Rules on financial accounting use accounting principles, namely Financial Accounting Standards or SAK. Each country uses a different standard.

The variety of users or access to external information, accountants must use the same standards as management because management is the party that makes financial statements.

In this arrangement, there are often costs versus benefits constraints, where the benefits have a greater impact than the costs during the process of producing the information.

In accounting, it can be assumed that if the needs of accessing external information such as investors and creditors are met, the information for other assessors will automatically be fulfilled.

The difference with financial accounting in management accounting, accountants do not need standard rules or follow GAAP or Generally Accepted Accounting Principles when compiling management reports.

Access to management accounting in the form of management reports are company internal people. So the form of the report is adjusted to the needs of the company.

Third

Financial accounting in the form of financial statements made or reported once a year or in annual accounting language. There is also an interim financial reporting for two periods.

Meanwhile, management accounting, as in the need factor, is made according to the company's needs. Usually companies make it in the form of monthly or weekly.

Fourth

Although it looks simpler, management accounting is much broader than financial accounting. In management accounting, starting from the managerial economic aspects of the company, it must be reported to cover all fields in the company.

And must be objective, because management accounting will influence the decision making and future policies of the company. This tends to be ignored by external parties of the company.

Thus information about corporate accounting or commercial accounting may be useful.