In management accounting, the central place is given to settlements with founders. It should be noted that the company has more founders, the less they are involved in direct management, the greater the importance of measures to prevent disagreements between them. At the same time, accounting of the organization’s equity capital is of great importance.
All calculations are carried out only on the basis of the decisions of the founders and the agreements between them and the management of the company. Accounting for the equity of the enterprise allows you to get all the necessary information to make the necessary calculations. Along with this, the correctness of the operations is carried out. Accounting for equity is especially important for those companies that raise funds through the sale of shares or shares.
The frequency and procedure in accordance with which the distribution of profit is carried out, establish the founders. This usually happens at monthly or quarterly meetings. The company carries out the accounting of equity, compiles the final and complete reporting. This reporting is provided at the meeting of the founders. Retroactive changes are not permitted.
If there is only one founder in the company, then the profit distribution is of a formal nature, therefore it can be carried out once a year.
Accounting for equity is carried out in accordance with its main components. These include:
- Contributions of the founders, expressed in cash the total amount of contributions of all participants. In this case, it is necessary to distinguish them from the authorized capital. The latter is established in the constituent documents in the process of registration of the company and can be paid in part. Accounting for equity does not include authorized funds.
- Property and cash received free of charge.
- Income remaining at the disposal of the company after tax payments.
Property and funds received from the founders are credited directly to asset accounts.
To account for the organization’s equity, the following accounts are used:
- "Settlements with the founders."
- "Distributions".
- Contributions.
- "Reserves".
- "Funds".
- "Retained earnings".
- "Starting balance."
- "Net income" (for the period since the last close).
“Settlements with founders” is a passive account. Its sub-account is “Contributions”, which is used to account for received deposits, and the “Distribution” sub-account, which is used to distribute distributed income. A positive balance for the latter indicates the current debt of the company to the founders. If the balance is negative, then there is a debt of owners to the company.
"Initial balance" is a passive account. It represents the cash equivalent of payments and assets, which is calculated in favor of the company at the beginning of accounting. The remainder can be either negative or positive.
"Funds" are a passive account reflecting the distribution of the organization’s income for subsequent targeted use (employee promotion, accumulation, consumption).
“Reserves” are a passive account. The funds are used to cover losses from active operations in case of risk or are returned to profit.
Passive accounts "net profit" and "retained earnings" are used in accounting for profits. The balance on the first account is equal to the total for the loss and profit statement for the period from the last opening to the reporting date. Postings to this account are not possible. At the end of the period, the value of income is fixed, the account is reset to zero. The remainder goes into retained earnings. From this account, the distribution of income is carried out for the payment of dividends, as well as to replenish reserves and funds.