All legal entities and individual entrepreneurs have a need to document and reflect business transactions. The legislation of the Russian Federation obliges them to keep accounting records in all cases except those prescribed in Federal Law N 402 “On Accounting” dated 12/06/11. The definition of “accounting entries and accounts” often baffles people without accounting and economic education. Therefore, almost always individual entrepreneurs and founders of small companies hire an experienced accountant either for a fixed term or resort to his services from time to time. Novice accountants also often do not fully understand the essence and meaning of these simple terms. What is an accounting entry? In the article we tried to consider the definition as detailed as possible.
What is the concept of "account"?
An account is a certain accounting position that faithfully reflects the movement of the organization’s property, as well as ways to replenish it. In simple words, you can compare the score with a hundredth in a bee hive. Accounting is to record all the nectar entering this cell and at the same time take into account its losses for one reason or another. In the hive (which can be compared with the organization) there are many such cells (accounts), each of which differs in certain features.
In modern accounting, for a simple and clear reflection of operations on accounts, the double-entry method is used. It is so named because each operation is reflected twice. Any cash flow should be reflected twice: on the debit of one account and on a loan of another.
All the variety of accounts that are used by the accountant in accounting in commercial organizations are specially grouped and systematized in the Chart of Accounts. In this case, accounting entries fulfill the role of single operations, which are a reflection of the receipt or loss of funds to the account. Inexperienced accountants, as a rule, always keep the Chart of Accounts handy in order to prevent mistakes and not to correlate the receipt or expenditure of funds with the wrong account.
There is also such a thing as a subaccount. For example, 10.1, 50.2 and others. These sub-accounts allow you to detail the information reflected in the main account.
Classification of accounts and features of transactions on them
Accounting accounts are classified as follows (depending on the object to be displayed):
- Active are a way to display in monetary terms information about how much and what means and resources an organization owns. The most commonly used active accounts of accounting entries: materials (10), finished products (43), selling expenses (active credit account 44), fixed assets (01) and many others. The peculiarity of active accounts is that the opening and closing balances on them are reflected only in debit. At the same time, operations during the month that contribute to an increase in the organization’s funds are recorded in debit, which contribute to a decrease, - on credit. These records, either through accounting programs or manually, are called postings.
- Passive accounts reflect the state and changes in the organization’s income sources. For example, depreciation of fixed assets (02), registered capital (80) and many others. When working with passive accounts, it is important to remember that the opening and closing balances are reflected in the loan. At the same time, transactions during the month that contribute to an increase in the size of the account are recorded on credit, and contributing to a decrease in debit. This principle is used in the preparation of any transactions with passive accounts.
- Active-passive accounts are often difficult to understand and post to them for a novice accountant. Depending on the circumstances, such accounts can be either passive or active. In order to distinguish which type the account will belong to in each individual case, it is important to determine the sign of which account is triggered during posting. The accounting chart of accounts distinguishes the following active-passive accounts: settlements with debtors and creditors (76), calculations of taxes and duties (68), etc. When making transactions on active-passive accounts, the figure can be reflected both in debit and in credit.
In the past, when there were no special programs to facilitate the work of an accountant, accounting specialists were forced to make paper calculations. The invoices were represented in the form of tablets with two columns, the left reflected debit, and the right reflected credit. In common people, such scoreboards were called airplanes.
What is an accounting entry?
Regardless of the nature of financing the institution (budgetary or commercial organizations), a lot of money transactions go through its accounting department daily. What is an accounting entry? This is an operation that can reliably reflect profit, costs, expenses, etc. Roughly speaking, a posting is an entry in a money transaction program.
The economic activity of an institution is displayed using the double-entry method. It is so named because the accounting entry plan has only two columns: debit and credit. In the first, revenues are reflected, in the second (credit) - expenses of the organization.
The most common postings
What accounting entries are most often used in accounting? It is difficult to give a definite answer - it all depends on the sphere in which the organization operates. For example, if a company is actively engaged in trading and manufacturing products, then accounting is regularly forced to use the following transactions:
- D41 - K60, 71, 75 - receipt of products for sale.
- D41 - K42 - reflection of the trade margin.
- D73, 94 - K21, 41, 43 - accounting for shortages.
Chart of accounts and accounting entries are closely related. To quickly and competently make postings, it is advisable to know the Chart of Accounts by heart. Inexperienced accountants always keep it at hand, because they can unknowingly reflect the operation on the wrong account, and as a result, there will be problems with the balance at the end of the month and drawing up the balance.
Posting Classification
You can classify transactions by the nature of the transactions recorded as follows:
- real serve to reflect the actual operations performed during the reporting period;
- conditional serve to reflect such operations that were not actually performed, but should be reflected in accounting (for example, refinement and transfer of indicators - the inclusion of managerial costs in production costs);
- clarifying - to reflect corrective operations. Clarification entries in accounting are divided into additional and reversed. The former exceed the size of the account turnovers; the latter, when calculating the totals for the reporting period, must be subtracted.
The whole variety of postings can be divided into two types: simple and complex.
- Complex postings are records that involve accounting for transactions in more than two accounts.
- Simple transactions reflect transactions in which the movement of funds is reflected in only two accounts.
Asset Accounting
Fixed assets are on the balance sheet of any institution, whether budgetary or commercial. Fixed assets include all property that is involved in the implementation of activities. Fixed assets can be borrowed or leased. Office building, cars, commercial equipment - these are all fixed assets. But stationery will be taken into account already in the “Materials” account.
What is the fixed asset account entry? This is an operation that reflects the purchase or sale of buildings, cars, retail equipment, etc. Consider the accounting entries on this account.
Postings and accounts for accounting for fixed assets
Active accounts 01 and 08 are used for accounting. The peculiarity of accounting and preparation of posting is that upon receipt of fixed assets at the disposal of the organization, recording is not carried out immediately to account 01. First, the receipt is reflected in the debit of account 08.
- 08-60 - this is how the wiring will look when acquiring property.
- 01-08 - this should reflect the fact that fixed assets were put into operation.
- The fixed asset can be donated, in this case the wiring will look like this: 08-98.
- If the fixed asset is contributed as part of the share capital, the transaction is as follows: 08-75.
- The main tool (for example, a building) can be built by the labor of hired workers, in this case the wiring is as follows: 08-60.
Accounts and accounting entries for accounting of intangible assets
The main account for recording intangible assets is 04. It belongs to the group of active accounts. Its purpose is to reflect the presence and migration of intangible assets. Many accountants believe that by the principle of recording transactions, account 04 is similar to account 01. However, there are differences in the preparation of postings. The chart of accounts informs that acceptance of intangible assets to the balance sheet is always reflected in account 04. When the accounting objects are retired from the balance sheet, the loan amount 04 of the account should be reflected.
Examples of postings with 05 account:
- 05-04 - depreciation of an intangible asset as a result of sale, gift, liquidation, etc .;
- 04-08 - the facility was put into operation;
- 04-79 - reflection of the receipt of an intangible asset in trust;
- 58-04 - the residual value of the intangible asset is written off.
Inventory accounting
Almost any institution in one way or another is faced with the need to purchase materials. They, as a rule, belong to low-value property and are almost never subsequently resold. Postings on the movement of materials are displayed on account 10. There are sub-accounts for it, for example:
- 10.1 - raw materials;
- 10.3 - fuel;
- 10.5 - spare parts;
- 10.8 - building materials;
- 10.10 - special equipment.
Experienced accountants memorize all sub-accounts by heart and are able to easily post to 10 accounts. This is one of the most commonly used postings. In the plan of accounts, it is reported that the cost of materials is recorded on the balance sheet at actual cost.
Production cost accounting
Costs of production are reflected in account 20. What is it? In simple terms, production is the process of creating the cost of goods and products. Cost, in turn, is the sum of all costs of production (including payment to workers, purchase of raw materials, etc.) and implementation (payment of a trading place, the work of promoters and marketers). All these expenses are recorded in the debit of account 20, forming the cost.
When compiling transactions related to production costs, the following accounts are also used:
- 23 - auxiliary production;
- 26 - general business expenses;
- 25 - overhead costs.
These accounts are auxiliary and are rarely used. If the organization is relatively small, then it makes no sense to enter additional accounts in the transactions, you can limit yourself to using account 20.
Accounting for settlements with staff
Even in the smallest organizations, there are employees who need to somehow calculate wages, allowances and bonuses to it, deduct the amounts for damaged materials and the damage caused, and somehow reflect these expenses in the balance sheet. All types of settlements with employees of the organization are reflected in account 73. Also, expenses associated with employee loans from the enterprise, the amount of material compensation to employees from the institution, etc. may be reflected in this account.
What postings are made to account 73? The most common:
- 73-50 - a loan was issued to an employee;
- 73-94 - material damage was written off to the guilty employee;
- 50-79 - the employee compensated the damage to the cashier.
How to quickly learn accounting entries?
Novice accountants try to memorize accounts and postings on them. As a result, everything gets confused in the head, and they make unforgivable mistakes. It is much easier to understand the essence, to realize the importance and necessity of one or another account in tandem with postings. Accounts should be grouped according to the principle of use, so it will be easier to remember them, for example:
- accounts for material assets - 01, 21, 41, 43;
- cash accounts - 50, 51, 52;
- expense accounts - 20, 23, 25;
- financial result - 90, 91, 99.
It is also important to understand the basic principle of the formation of accounting entries. Debit is always reflected on the left, credit on the right. According to the results of making all entries for the reporting period, a balance sheet is formed. Any person with a higher economic education will be able to draw from this document a lot of important information about the organization. For example, how much was purchased materials for the reporting period, how much expenses the organization incurred in general and in particular for a particular item of expenses, the amount of revenue for goods sold, how much money the organization owed to suppliers and much more. In general, this is completely uncomplicated and realistic.