What is economic accounting?

What is economic accounting – This is one of the important issues that receives the attention of most businesses and new students when approaching the subject of business management. The article below will reveal to you the most general knowledge about accounting and the meaning of this parameter in business economics.

Learn what economic accounting is?

Accounting is an important category in business economic operations. Helps provide complete, timely and accurate important parameters for currency management. So what is economic accounting? Simply put, this is the calculation of costs and business results (also known as revenue) of a business.

In a socialist economy, this management method is applied quite commonly. Based on the combination of use with commodity-currency relationships and commercial methods, economic accounting brings quite stable results.

Some basic principles of economic accounting include:

– Take responsibility for physical, financial as well as business results according to market mechanisms.

– Compensate your own production costs and enjoy profits (if any).

– Apply material incentives and stimulate production to quickly improve economic efficiency.

Currently, economic accounting is widely applied in units, enterprises, companies, and corporations. To support the stable monetary management and operation process within each business.

Origin and meaning of economic accounting

To comprehensively and deeply understand the concept of economic accounting, you need to understand the origin and significance of this process in corporate finance. As follows: 

Origin of economic accounting

The economic accounting method first appeared in the Soviet Union, initiated by leader Lenin. According to his assessment, this is the regime associated with the country's new economic policy and will prevail in the near future.

In Vietnam, economic accounting is applied flexibly and closely linked to the market. However, in the beginning, this mechanism could not take full effect because of the limitations of bureaucratic central planning and subsidy policies. 

Up to now, when the economy has many innovations, shifting to a market mechanism, economic accounting is applied more fully and has a great influence in the business economy.

Meaning of economic accounting

The economic accounting process helps business owners take timely and quick measures to adjust business activities accordingly. Ensuring the highest profit for the company.

Through the economic accounting process, business owners can evaluate the current status of their business. Specifically:

– If the difference between revenue and expenses is a positive number, it means the business is profitable.

– On the contrary, if the difference between the above two parameters is a negative number, it means the business is at a loss.

Definition and classification of accounting 

Accounting (in English, Keep Business Accounts) is a close combination of the processes of observing, measuring, calculating and recording economic activities within a business. Ensure strict and clear inspection, supervision and management of economic activities. Collecting relevant information needs to be verified from many different sources and methods.

Accordingly, the main stages include the following:

– Observation: this is the prerequisite stage for implementing the next steps. Mainly to measure waste and revenue results in the production process of the enterprise.

– Calculation: this is the process of performing calculations combining synthesis and analysis methods for the purpose of determining minimum targets and realizing the effectiveness of economic activities in practice.

– Recording: includes the stages of collecting and processing data to store the situation and results of business economic activities in a certain period.

In short, the flexible and close combination of economic activities mentioned above is called accounting.

To observe, check and closely monitor business processes in an enterprise. Ensuring timely and sensitive utilization of capital requires the use of different types of accounting:

– Professional accounting (also fully known as technical professional accounting)

– Statistical accounting

- Accounting

Principles of economic accounting

Throughout the process of operating and business activities of a company, enterprise, and production and business organization, they must be autonomous. For issues related to the financial situation and use of capital for operating and business activities, companies, enterprises, and production and business organizations are fully responsible.

In addition,  economic accounting  also requires companies, businesses, and production and business organizations to be responsible for material issues, as well as factors related to the production situation. business and business results received.

Economic accounting  has the principle of taking responsibility of companies, enterprises, and production and business organizations for business results formed based on the operating mechanism of the market. In addition, during the process of organizing operations and development activities, companies, enterprises, and business organizations must be regulated through supervision and management activities from state agencies. .

This monitoring and management activity will be conducted based on policies, as well as proposed plans along with levers applied in the economic development situation to bring about appropriate business efficiency. most suitable and optimal.

Economic accounting also includes the principle that companies, businesses, and production and business organizations must compensate for problems related to financial shortages during the process of taking place. operations and development activities.

Principled economic accounting helps companies, businesses, and production and business organizations promote and develop production and business activities. A number of incentive activities have been proposed related to this. to the issue of physical factors to bring optimal economic efficiency.

National economic accounting

National economic accounting is a definition with a category related to accounting factors in matters related to finance, capital flows, and accounting for issues related to the income of people. domestic citizens, as well as accounting for issues related to conducting payment activities internationally, and accounting for people's income and expenditure payment activities through cash.

National economic accounting  will include the following parts:

The total quantity of all types of products in the country will be expressed based on the current market price along with the price that has been compared.

The structure of the number of types of products is calculated in terms of economic sectors, products are selected by industry, as well as products are calculated by that economic sector.

The structure of the total number of product types will be presented in a table that is balanced for product types within the country. Specifically, this table will be divided into the differential value of products formed on the market according to the nature of import and export, and the total quantity of products.

The remaining component will include products used by consumers for final products, products accumulated in the form of storage of various types of assets.

Accounting

Accounting provides support for issues related to reporting status through monitoring and management activities conducted in a continuous and comprehensive manner. It includes systems related to general issues of various types of capital related to economic sectors, as well as related material resources. 

It has the nature of reviewing, researching and evaluating types of capital for business purposes through a process of capital contribution between related individuals and organizations who want to participate in investment activities in the business market. international. It includes activities related to organizing supervision before the process of production and business activities takes place, during the process of production and business activities and after the process of production activities takes place. business.

The measure used in general purpose accounting and most commonly performed on currencies. Activities that take place to support the process of recording each value of currency through the activity performed. Therefore, it will be useful for monitoring the use of capital for financial activities of a company, enterprise, or business organization. 

These organizations will be able to monitor a company's financial and economic situation more clearly and transparently. Thanks to that, it is possible to come up with optimal solutions and timely support measures to overcome problems that affect the general development situation and bring the company's production and business process to further development. more comprehensive in the future.

Above is a summary of basic information from  a reputable law firm to help you answer questions  about what is economic accounting?  Hopefully, you can take advantage of this basic principle in your business economic operations. Guaranteed to bring high profits in production and business.

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