Analyzing Anthony (2013), accounting or financial accounting or general accounting includes the valuation, recording and presentation of transactions; is a special kind of accounting, the objective of which is to produce information directed to a specific group of stakeholders, those who are not involved with the management of entities (restriction of various stakeholders) and that should be useful for making decisions in relationship to entities (loans, investments and accountability; purpose restriction). Precisely, financial accounting emerges as a discipline whose objectives are to determine: a) Who are the users of financial information; b) What do they use the financial information for; c) The type of financial information that is necessary for them;d) The quality requirements of this financial information; e) The basic principles that the particular accounting rules must follow, f) Issue the particular accounting rules (or standards). The accounting process in general requires specifying which operations of the entities will be their object, how they should be classified, when they should be formally incorporated into the accounting records, how they should be quantified, how they should be presented in the financial statements and, finally, what disclosures should be made about reported transactions. Financial accounting standards must respond to these questions by subordinating accounting procedures to a duty to do, to achieve financial information that is useful to users. With regard to the operations that are the subject of financial accounting,It takes the concept of transactions and certain identifiable and quantifiable events that affect it (restriction of operations). In this way, financial accounting clearly defines that of all the operations carried out by an entity, only its transactions and the certain identifiable and quantifiable economic events that affect it are subject to financial accounting. The realization principle defines the transactions punctually.that of all the operations carried out by an entity, only its transactions and the certain identifiable and quantifiable economic events that affect it are subject to financial accounting. The realization principle defines the transactions punctually.that of all the operations carried out by an entity, only its transactions and the certain identifiable and quantifiable economic events that affect it are subject to financial accounting. The realization principle defines the transactions punctually.
Interpreting Argibay (2014), financial accounting is the constructive process of business information, which allows obtaining financial statements, which constitute the basis for the classification of transactions and provides the basic assumptions (the nine basic principles and prudential criteria) as conditions that must be observed by the particular rules, so that the accounting procedures arrive at the financial information in accordance with their own objectives, under the established quality conditions. The procedure for classification, recognition, valuation, presentation and disclosure of transactions and certain identifiable and quantifiable events that affect the entity, natural to the accounting procedure in general - through financial accounting standards - is aimed at its ultimate purpose:useful financial information for decision-making by certain users. In this way, general accounting is carried out for the clear and specific purposes determined by financial accounting. Therefore, Generally Accepted Accounting Principles (GAAP) are the set of criteria that are used in a certain place and at a given time, to prepare and present relevant and reliable financial information of entities. This set of criteria covers all the theoretical, regulatory and practical accounting knowledge that is necessary to apply to affirm that the financial information reasonably presents the financial situation of the entity and the changes suffered in it. These criteria are innumerable; However, they come from different sources, that when knowing them, it is feasible to deduce from them,with some precision, what are the appropriate criteria for the particular case in your circumstances.
Such sources are: The theories and technological developments that make up current accounting thinking; The legal norms; The standards of expert authority; Customary practices.
The theories and technological developments that make up current thinking are found in technical books and magazines. They include, among many things, double entry theory and bookkeeping; the theory of inventories and methodologies for the determination of unit costs; depreciation theory and accrual principles; accounting based on historical cost, replacement cost, present value, fair value, realizable value, restated historical cost, etc.
The customary practices in certain lines or for the solution of non-regulated accounting problems. They are understood as such, the general way in which problems are solved by a significant set of entities; for example, in the financial sector, insurance companies, extractive industries, fractionators, timeshare sales, repos, securities loans, factoring, power plants, etc.
Interpreting Bellido (2014), he points out that financial statements are part of the process of presenting financial information and are the main means of communicating it to parties outside the entity. These statements normally include a balance sheet, a statement of income or profit and loss, a statement of movement of equity accounts, a statement of cash flow and the notes to the financial statements, as well as other statements and explanatory material that they are an integral part of those states. The objective of financial statements is to provide information about the financial situation of an economic entity at a given date and the results of its operations and the movements of its cash for the periods then ended on that date.The financial situation of an identity is a function of the resources and economic obligations that it maintains, its financial structure, liquidity and solvency. Information about the financial resources controlled by the entity is useful to assess its ability in the past to modify those resources and to predict its ability and security to generate them in the future. The information related to the financial structure is useful to predict future financing needs and the entity's ability to meet them; It is also useful for evaluating the possibility of distributing resources among those who have an interest in said entity. The information related to liquidity and solvency is useful to determine the entity's ability to meet its financial commitments as of their expiration date.
The results of the operations carried out by the entity is information required to know the profitability of the entity and predict the capacity it has to generate cash flows from the operating resources it uses and other additional resources that it could potentially obtain. The movements of cash used by the entity are useful information to know its ability to generate cash and its equivalents and the different applications made of such cash flow through its operating, financing and investing activities during a given period.
FINANCIAL INFORMATION:
Interpreting Hernández (2014), the financial information of a company is expressed in the financial statement called the balance sheet or statement of financial position. The general balance sheet of the companies includes the accounts of assets, liabilities and equity. The asset accounts must be presented in decreasing order of liquidity and the liability accounts according to the decreasing payment requirement, recognized in such a way that they reasonably present the financial situation of the company at a given date.
The asset is the resources controlled by the company, as a result of transactions and other past events, from whose use it is expected that economic benefits will flow to the company.
Liabilities are present obligations as a result of past events, anticipating that their liquidation will produce an outflow of resources for the company.
The net worth is made up of the items that represent resources contributed by the partners or shareholders, the surpluses generated by the operations carried out by the company and other items that the legal, statutory and contractual provisions indicate, and the total of this account must be clearly indicated.
The information is also detailed in the statement of changes in equity. The Statement of Changes in the Net Equity of the companies shows the variations that have occurred in the different equity accounts, such as capital, additional capital, investment shares, revaluation surplus, reserves and accumulated results during a given period.
Another statement that presents financial information is the statement of cash flows. The Statement of Cash Flows shows the effect of changes in cash and cash equivalents in a given period, generated and used in operating, investing and financing activities.
The Statement of Cash Flows must show the following separately: Cash flows and cash equivalents from operating activities. The operating activities are derived mainly from the main income-producing activities and distribution of goods or services of the company.
The cash flows from this activity are generally the consequence of transactions and other cash events that enter into the determination of the net profit (loss) for the year. Cash flows and cash equivalents from investing activities. Investment activities include the granting and collection of loans, the acquisition or sale of debt or equity instruments and the disposition that may be given to investment instruments, real estate, machinery and equipment and other productive assets that are used by the company in the Production of goods and services. Cash flows and cash equivalents from financing activities.
Financing activities include obtaining resources from shareholders or third parties and the return of the benefits produced by them, as well as the reimbursement of amounts loaned, or the cancellation of obligations, obtaining and payment of other resources from creditors. and long-term credit.
The financial information is read in conjunction with the notes to the financial statements. The notes are clarifications or explanations of facts or situations, quantifiable or not, that are an integral part of each and every one of the financial statements, which must be read together with them for a correct interpretation.
The notes include narrative descriptions or detailed analyzes of the amounts shown in the financial statements, the disclosure of which is required or recommended by the IAS and the regulations of the Financial Reporting Regulation, but not limited to them, in order to achieve a presentation reasonable. The notes are not a substitute for proper accounting treatment in the financial statements.
The notes are disclosures applicable to transaction balances or other significant events, which must be observed to prepare and present the financial statements when appropriate. Each note must be clearly identified and presented within a logical sequence, keeping as far as possible the order of the financial statements, as shown below: General notes that include: i) The initial identification note of the company and its economic activity; ii) Statement on compliance with the IAS made official in Peru. Notes on the important accounting policies used by the company in the preparation of the financial statements; iii) Notes of a specific nature for the items presented in the financial statements;iv) Other notes of a financial or non-financial nature required by the regulations, and those that in the opinion of the board of directors and the company's management are considered necessary for a proper understanding of the financial situation and the economic result.
The report presented by the management shows the financial evaluation and explains the main characteristics of the financial situation, financial performance and the main uncertainties facing the company. This Report includes: Statement of Responsibility; and, Analysis and Discussion of Management.
The main purpose of accounting is to prepare quality financial information. For this quality to occur, a series of characteristics that give it value must be present, such as: utility, reliability and provisionality. I) Utility: The utility characteristic refers to the fact that the information can effectively be used in decision-making by users, given that it is important and that it has been presented in a timely manner.
The utility is the quality of adapting the accounting information to the user's purpose. The usefulness of this information is based on its informative content and its opportunity. Informational content basically refers to the intrinsic value of said information. And it is composed of the following characteristics:
- Significance: This characteristic measures the ability of accounting information to symbolically represent the entity and its evolution, with words and quantities, its status at different points in time and the results of its operation. Relevance: The quality of selecting the elements of the financial information that better allow the user to capture the message and operate on it to achieve their particular purposes Verity: The quality of including events that actually occurred in the accounting information and their correct measurement in accordance with the rules accepted as valid by the system.Comparability: The quality of the information to be verifiable and confrontable in time by a determined entity, and validly confrontable between two or more entities, allowing to judge the evolution of the economic entities.Timeliness: This quality of the information refers to the fact that it reaches the user's hand when he can use it to make decisions in time to achieve his goals. Reliability: It is the characteristic of financial information by which the user accepts and uses it for taking decisions. The trust that the user of the accounting information grants it requires that the operation of the system be: Stable, Objective and Verifiable; i) Stability: The stability of the system indicates that its operation does not change over time and that the information it produces is obtained by applying the same rule to capture, quantify and present data. This characteristic is also known as consistency; ii) Objectivity:This characteristic implies that the rules under which the accounting information was generated have not been deliberately distorted and that the information represents reality in accordance with those rules; iii) Verifiability: This characteristic allows tests to be applied to the system that generated the accounting information and to obtain the same result. Provisionality: This characteristic of financial information is essential for both newspaper readers and users of financial information. It refers to the fact that both types of users must be aware that what appears in a newspaper and what appears in a financial statement and provisional information; that is, it presents the information with all the elements and circumstances.
ECONOMIC INFORMATION:
Interpreting Hernández (2014), the economic information, for accounting purposes, is expressed in the so-called Statement of Comprehensive Income or Statement of Profits and Losses.
The Profit and Loss Statement includes the income, cost and expense accounts, presented according to the expense function method. The following should be observed in its formulation: i) All items representing income or gains and expenses or losses arising during the period must be included; ii) Only items that affect the determination of net results should be included.
Income represents an inflow of resources in the form of increases in assets or decreases in liabilities or a combination of both, which generate increases in equity, accrued from the sale of goods, from the provision of services or from the execution of other activities carried out. during the period, which do not come from capital contributions. Expenses represent outflows of resources in the form of decreases in assets or increases in liabilities or a combination of both, which generate decreases in net worth as a result of the development of activities such as administration, marketing, research, financing and others carried out during the period., which do not come from capital or profit withdrawals.
In accounting, the Income Statement or Profit and Loss Statement is a financial statement that shows in an orderly and detailed manner how the result for the year was obtained during a given period. The financial statement is dynamic, since it covers a period during which the costs and expenses that gave rise to the income must be perfectly identified. Therefore, it must be applied perfectly at the beginning of the accounting period so that the information it presents is useful and reliable for decision-making. The income statement includes first the total income from the main activities of the entity and the cost incurred to achieve them.The difference between the two figures indicates the gross result or gross margin on sales, which is a classic indicator of accounting information. Gross profit is typically calculated as a percentage of sales, which indicates the gross profit margin the company operated with when selling its products. Then all the selling and administration expenses are subtracted. This sub-total is called Result of ordinary operations. Finally, financial expenses are subtracted and financial products, income or income tax, and workers' profit sharing (if any) are added to arrive at the net result or result for the year.which indicates the gross profit margin with which the company operated when selling its products. Then all the selling and administration expenses are subtracted. This sub-total is called Result of ordinary operations. Finally, financial expenses are subtracted and financial products, income or income tax, and workers' profit sharing (if any) are added to arrive at the net result or result for the year.which indicates the gross profit margin with which the company operated when selling its products. Then all the selling and administration expenses are subtracted. This sub-total is called Result of ordinary operations. Finally, financial expenses are subtracted and financial products, income or income tax, and workers' profit sharing (if any) are added to arrive at the net result or result for the year.income or income tax and employee profit sharing (if any) to arrive at the net profit or loss for the year.income or income tax and employee profit sharing (if any) to arrive at the net profit or loss for the year.
Analyzing Rodríguez (2013); The accounting aspect of service companies is based on three main aspects: 1) The valuation and recognition of the transaction that is made through the International Financial Reporting Standards (IFRS); 2) The accounting record that is carried out based on the General Business Accounting Plan (PCGE) that is harmonized with IFRS; and, 3) The presentation of financial and economic information that is carried out based on the Regulation and Manual for the formulation of financial information (R / MPIF) that is harmonized with IFRS.
An instrument widely used in accounting work is the General Business Accounting Plan, for the preparation of this PCGE the nomenclature of the accounts and subaccounts, as well as the structure of the accounting codes of the company, has been preserved as far as possible and convenient. plan issued by CONASEV, in order to facilitate the transition towards the full application of this new PCGE. This General Business Accounting Plan is not intended to establish control measures or accounting policies. In the case of controls, these are due to the identification of risks by the company, considering the probability of occurrence and the impact they may cause. The accounting policies, which must be aligned with IFRS,They are selected and applied by the entities for the recording of their operations and the preparation of their financial statements. Both controls and accounting policies must be selected according to the transactions carried out by the companies and the characteristics that are their own. The PCGE has been homogenized with IFRS, considering aspects related to the presentation and disclosure of information. In the final part of the description and accounting dynamics of each account, references to IFRS have been included, which correspond to the accounting model in force in Peru, from which companies select and apply accounting policies.The PCGE has been homogenized with IFRS, considering aspects related to the presentation and disclosure of information. In the final part of the description and accounting dynamics of each account, references to IFRS have been included, which correspond to the accounting model in force in Peru, from which companies select and apply accounting policies.The PCGE has been homogenized with IFRS, considering aspects related to the presentation and disclosure of information. In the final part of the description and accounting dynamics of each account, references to IFRS have been included, which correspond to the accounting model in force in Peru, from which companies select and apply accounting policies.
What CONASEV has established in its Manual for the Preparation of Financial Information, in such a way as to make it compatible, has also been considered in this PCGE. The objective of this Manual is to facilitate the preparation and presentation of financial information, in harmony with IFRS. Although it is true, the CONASEV supervises companies that list securities in public markets, it is a reference for the majority of companies that must present financial information to different users.
General provisions for accounting treatment:
Interpreting Ayala (2012); It is a requirement for the application of the PCGE, to observe what the IFRS establishes. Additionally, and without jeopardizing the application of the provisions of IFRS, the rules of law, jurisprudence and commercial customs and practices must be considered. In general, the following should be considered:
Using the accounts
- The accounting of the companies must be sufficiently detailed to allow the accounting recognition of economic events, in accordance with the provisions of this PCGE, and thus facilitate the preparation of complete financial statements and other financial information. Operations must be recorded. in the accounts that correspond to their nature Companies must establish in their accounting plans up to five digits, those that have been established for the registration of information according to this PCGE (see numeral 3 Account Structure in the General Business Accounting Plan, of these General Provisions). In some cases, and for reasons of information detail management, companies may incorporate additional digits, as necessary, maintaining the basic structure provided by this PCGE.Such additional digits may be necessary to recognize the use of different currencies; operations in different lines of business or geographic areas; more detailed information, among others.If companies develop more than one economic activity, the subaccounts and divisions that are necessary for the separate registration of the operations that correspond to each economic activity must be established.The companies can use the codes to level of two digits (accounts) and three digits (subaccounts) that have not been established in this PCGE, provided that they request the corresponding authorization from the National Directorate of Public Accounting, in order to achieve a homogeneous use.more detailed information, among others.If companies develop more than one economic activity, the subaccounts and divisions that are necessary for the separate registration of the operations that correspond to each economic activity must be established. level of two digits (accounts) and three digits (subaccounts) that have not been set in this PCGE, provided that they request the corresponding authorization from the National Directorate of Public Accounting, in order to achieve a homogeneous use.more detailed information, among others.If companies develop more than one economic activity, the subaccounts and divisions that are necessary for the separate registration of the operations that correspond to each economic activity must be established. level of two digits (accounts) and three digits (subaccounts) that have not been set in this PCGE, provided that they request the corresponding authorization from the National Directorate of Public Accounting, in order to achieve a homogeneous use.Companies can use the two-digit (accounts) and three-digit (subaccounts) level codes that have not been set in this PCGE, provided that they request the corresponding authorization from the National Directorate of Public Accounting, in order to achieve a homogeneous use..Companies can use the two-digit (accounts) and three-digit (subaccounts) level codes that have not been set in this PCGE, provided that they request the corresponding authorization from the National Directorate of Public Accounting, in order to achieve a homogeneous use..
Accounting systems and records:
For Atanacio (2013); Accounting is a system that is based on source documents and on which you carry out accounting records in subsidiary books and main books and that for a better process, you should consider the following:
- Accounting reflects the investment and financing of companies through the double entry technique. This refers to the fact that each transaction is reflected in at least two accounts or accounting codes, one or more debit and other credit (s). The total of the debit values must be equal to the total of the credit values, thus maintaining a balance in the accounting record. The accounting record is not subject to the existence of a formal document. In cases where the essence of the operation has been carried out as indicated in the Conceptual Framework for the Preparation and Presentation of IFRS Financial Statements, the corresponding accounting record must be made, even if there is no supporting evidence. In all cases, the accounting record must be supported by sufficient documentation,many times provided by third parties, and on other occasions generated internally. The transactions carried out by the companies are noted in the books and accounting records that are necessary, without prejudice to compliance with other provisions of the law. The books, records, documents and other evidence of the accounting record, will be kept for the time that is necessary for the control and monitoring of transactions, without prejudice to what other provisions of the law prescribe.They will be kept for the time that is necessary for the control and monitoring of transactions, without prejudice to what other provisions of the law prescribe.They will be kept for the time that is necessary for the control and monitoring of transactions, without prejudice to what other provisions of the law prescribe.
Fundamental aspects of accounting treatment
For Atanacio (2013); A chart or chart of accounts is a necessary tool for processing accounting information. This accounting information responds to the application of accounting standards for the treatment of the financial effects of the events and economic estimates that the companies make, regulations that are not replaced in any of its extremes, by the issuance of this PCGE. However, for the full understanding of the latter, various concepts of the aforementioned regulations are reproduced, which includes, without limitation, the International Financial Reporting Standards - IFRS. The concepts mentioned below have been taken from the edition of IFRS published by the International Accounting Standards Board:
- Theoretical basis in force internationally. In all cases, the prescriptions of IFRS prevail over the provisions contained in this PCGE. This PCGE is consistent and is homogenized with the IFRS official by the Accounting Regulatory Council (CNC). In cases where there are no specific regulations on certain issues, such as trusts, employee participation in their deferred portions, and others, the corresponding part of the PCGE has been developed based on international experience. In addition, it takes into consideration the accounting standards of international validity (see Annex II, at the end of this PCGE). International Accounting Standards Board (IASB).Body responsible for establishing accounting standards at the international level, as of 2003. This work was in charge of the International Accounting Standards Committee (IASC). 3 IFRS and IAS have been formalized with various resolutions issued by the CNC. The accounting standards in force in Peru are shown in Annex II, in the final part of this PCGE, available and in the concepts and definitions contained in the Conceptual Framework for the Preparation and Presentation of Financial Statements (hereinafter, the Conceptual Framework).
International financial reporting standards (IFRS)
They establish the recognition, measurement, presentation and disclosure requirements regarding economic facts and estimates, which are presented in a summarized and structured way in the general purpose financial statements. IFRS are built taking into account the Conceptual Framework, which aims to facilitate the coherent and logical formulation of IFRS, based on a single theoretical structure, to resolve accounting treatment issues. IFRS are designed to be applied to all for-profit entities. However, nonprofits may find them appropriate. In this regard, the Board of International Public Sector Accounting Standards (IPSAS for its acronym in Spanish),of the International Federation of Accountants (IFAC)
Conceptual framework for the preparation and presentation of financial statements:
This framework is applicable to:
- The objective of the financial statements; The qualitative characteristics that determine the quality of the information in the financial statements; The definition, recognition and measurement of the elements that constitute the financial statements; yThe concepts of capital and capital maintenance
Interpreting Flores (2012); The objective of financial statements is to provide information about the financial situation, performance and changes in financial position to assist a wide range of users in making economic decisions. A complete set of financial statements includes a balance sheet, a profit and loss statement, a statement of changes in equity, and a statement of cash flows, as well as explanatory notes. An entity that presents financial statements is one for which there are users who use the financial statements as the main source of information for the company. Among these users we have investors, employees, lenders (banks and finance companies), suppliers and commercial creditors, clients, the government and public bodies, mainly.
Interpreting Ayala (2012); According to IFRS, the responsibility for the preparation and presentation of financial statements rests with the company's management. Consequently, the adoption of accounting policies that allow a reasonable presentation of the financial situation, management results and cash flows is also part of this responsibility. In Peru, the General Law of Companies attributes to the manager, responsibility for the existence, regularity and veracity of the accounting systems, the books that the law orders to keep, and the other books and records that an orderly merchant must keep. For its part, the Board of Directors, in accordance with the General Law of Companies, must prepare the financial statements at the end of the year.
Accrual or accrual basis: Two fundamental assumptions guide the development, adoption and application of accounting policies: The effects of transactions and other events are recognized when they occur (not when money or other cash equivalents are received or paid)
Going concern: They are also recorded in the accounting books and reported on in the financial statements of the periods to which they relate. Thus, users are informed not only of past transactions that involve the collection or payment of money, but also of the payment obligations in the future and the rights that represent cash to be collected in the future. The financial statements are prepared on the basis that the entity is in operation and that it will continue its operating activities for the foreseeable future (it is estimated at least twelve months in the future). If there is an intention or need to liquidate the company or significantly reduce its operations, the financial statements should be prepared on a different basis, which must be properly disclosed.
The qualitative characteristics of the financial statements
- Comprehension: The information in the financial statements must be easily understandable by users with reasonable knowledge of economic activities and the business world, as well as their accounting, and with a willingness to study the information with reasonable diligence. However, information on complex topics must be included for reasons of relevance, even though it is difficult for certain users to understand. Relevance (Relative Importance or Materiality):The relevance of the information is affected by its nature and relative importance; In some cases, nature alone (presentation of a new segment, conclusion of a future contract, change of cost formula, among others) can determine the relevance of the information. Information is material when, if it is omitted or presented in an erroneous way, it can influence the economic decisions of users (evaluation of past, current or future events) taken from the financial statements. Reliability:The information must be free of material errors, biases or prejudices (it must be neutral) to be useful, and users can trust it. In addition, for the information to be reliable, it must faithfully represent the transactions and other events that are intended; be presented according to its essence and economic reality, and not only according to its legal form. Likewise, it must be taken into account that in the preparation of financial information a series of situations arise subject to uncertainty, which require judgments that must be made exercising prudence. This implies that assets and income as well as obligations and expenses are not overvalued or undervalued. In order for the information in the financial statements to be considered reliable, it must be complete. Comparability:The information must be presented in a comparative way, in a way that allows users to observe the evolution of the company, the trend of its business, and, even, it can be compared with information from other companies. The comparability is also based on the uniform application of accounting policies in the preparation and presentation of financial information. This does not mean that companies should not modify accounting policies, as long as there are other more relevant and reliable ones. Users of financial information must be informed of the accounting policies used in the preparation of financial statements, of any changes in them, and of the effects of said changes. Relevant and reliable information is subject to the following restrictions: i) Timeliness: In order for financial information to be useful, it must be made known to users in a timely manner, so that it does not lose its relevance. This, without losing sight of the fact that in certain cases a fact is not fully known or a transaction has not been concluded; in these cases a balance must be struck between relevance and reliability. ii) Balance between cost and benefit: It refers to a restriction rather than a qualitative characteristic. While it is true that the evaluation of benefits and costs is a process of value judgments, it must focus on the fact that the benefits derived from the information must exceed the costs of providing it. iii) Balance between qualitative characteristics: Without losing sight of the objective of financial statements, it is proposed to achieve a balance between the qualitative characteristics mentioned. iv) Fair image / fair presentation. The application of the main qualitative characteristics and the appropriate accounting standards should result in reasonably presented financial statements.
Elements of the financial statements:
Interpreting Ayala (2012); Financial statements reflect the effects of transactions and other events in a company, grouping them by categories, according to their economic characteristics, which are called elements. In the case of the balance sheet, the elements that measure the financial situation are: assets, liabilities and equity. In the income statement, the items are income and expenses. The Conceptual Framework does not identify any unique element of the statement of changes in equity or the statement of cash flows, which rather combines elements of the balance sheet and the statement of profit and loss. For the purposes of developing the PCGE, these elements are considered for the initial classification of the accounting codes.The essential characteristics of each item are discussed below.
- a) Asset: resource controlled by the entity as a result of past events, from which the company expects to obtain economic benefits. b) Liability: present obligation of the company, arising from past events, on whose maturity, and to pay it, the entity expects dispose of resources that incorporate economic benefits c) Equity: residual part of the company's assets after deducting liabilities d) Income: they are increases in economic benefits, produced during the accounting period, in the form of inflows or increases in the value of assets, or as decreases in obligations that result in increases in equity, and are not related to contributions from assets. owners to this equity e) Expenses: decreases in economic benefits, produced in the accounting period, in the form of outflows or decreases in the value of assets, or originated in an obligation or increase in liabilities, which result in decreases in equity, and are not related to distributions made to owners of that equity.
Recognition of the elements of financial statements:
Interpreting Ayala (2012); Any item that meets the definition of an element must be recognized provided that:
- It is probable that any economic benefit associated with the item will flow to or leave the business The item has a cost or value that can be reliably measured.
Measurement of the elements of financial statements:
The measurement bases, or determination of the monetary amounts in which the elements of the financial statements are recognized are:
- Historical cost: the asset is recorded at the amount of cash and other items that represent obligations, or at the fair value of the consideration given in exchange at the time of acquisition; the liability, for the value of the product received in exchange for incurring a debt, or, in other circumstances, for the amount of cash and other equivalent items expected to be paid to satisfy the corresponding debt, in the normal course of the operation. Running cost:the asset is carried in the accounting for the amount of cash and other cash equivalent items, which would have to be paid if the same asset or an equivalent is currently acquired; the liability, for the amount, without discounting, of cash or other cash-equivalent items, that would be required to settle the liability at the present time. Realizable (liquidation) value: the asset is accounted for by the amount of cash and other cash-equivalent items that could be obtained, at the present time, by the unforced sale of the asset. The liability is carried by its settlement values, that is, by the amounts, without discounting, of cash or other cash equivalents, which are expected to be used in the payment of debts. Present value: the asset is carried at present value, discounting the net cash inflows that the item is expected to generate in the normal course of the operation. The liability is accounted for at present value, discounting the net cash outflows that are expected to be needed to pay such debts, in the normal course of operations. Fair value: This form of measurement is cited in a number of accounting standards. Fair value is the price for which an asset paid for a liability can be acquired between duly informed interested parties in a transaction under free competition conditions. Fair value is preferably calculated by reference to a reliable market value; the quoted price in an active market is the best fair value reference, meaning an active market is one that meets the following conditions: i) the goods exchanged are homogeneous; ii) buyers and sellers permanently concur; and, iii) the prices are known and easily accessible to the public. In addition, these prices reflect actual, current, and regularly occurring market transactions. In other cases,In the absence of a reference market to measure fair value, other forms of measurement based on discounted values of associated future cash flows are accepted.
Anthony, Robert N. (2013) Accounting in business administration. Mexico. Unión Tipográfica Editorial Hispano Americana.
Argibay González, María del Mar (2014) Financial accounting. Madrid. Ideaspropias Editorial.
Bellido S. Pedro (2014) Financial Administration. Lime. Editorial Técnico Científica SA.
Hernández Celis, Domingo (2014) Financial Accounting. Lime. USMP.
Hernández Celis, Domingo (2014) Managerial Accounting. Lime. USMP.
Rodríguez Gómez, Juan Carlos (2013) General Business Accounting Plan. Lime. Editorial FFCAAT.
AYALA Zavala, Pascual (2012) International Financial Reporting Standards. Lime. Editorial San Marcos.
ATANACIO Jara, Hernando (2013) Fundamentals and doctrines of financial accounting. Lime. CETE Editor.
Ibid.
FLORES, Elías Lara (2012) Financial accounting for decision making. Publisher: Trillas
AYALA Zavala, Pascual (2013) International Financial Reporting Standards. Analysis and specialized casuistry. Lime. Editorial San Marcos.
AYALA Zavala, Pascual (2013) International Financial Reporting Standards. Analysis and specialized casuistry. Lime. Editorial San Marcos.
AYALA Zavala, Pascual (2013) International Financial Reporting Standards. Analysis and specialized casuistry. Lime. Editorial San Marcos.
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