Accounting for own capital

In management accounting, the central placeis given to settlements with the founders. It should be noted that the more the firm 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, it is important to take into account the organization's own capital.

All calculations are carried out only on the basis ofdecisions of the founders and agreements between them and the company's management. Accounting for the company's own capital 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 particularly important for those companies that raise funds through the sale of shares or shares.

Periodicity and order, according to whichprofit distribution is established, founders establish. Typically, this happens on monthly or quarterly meetings. The enterprise records its own capital, final and complete accounting is prepared. This reporting is provided at the meeting of the founders. No retroactive changes are permitted.

If the founder is one, then the distribution of profit is of a formal nature, so it can be carried out once a year.

Accounting for equity is carried out in accordance with its main components. They include:

  1. Contributions of founders expressed in cashtotal contribution of all participants. It is necessary to distinguish them from the authorized capital. The latter is established in the constituent documents during the registration of the firm and can be paid in part. Accounting for equity does not include statutory funds.
  2. Property and funds received free of charge.
  3. Revenues remaining at the disposal of the firm after tax payments.

Property and funds received from the founders are credited directly to the assets accounts.

For the purposes of accounting for the organization's own capital, the following accounts are used:

  1. "Settlements with the founders."
  2. "Distributions".
  3. "Contributions".
  4. "Reserves".
  5. "Funds".
  6. "Retained earnings".
  7. "Initial balance".
  8. "Net income" (for the period since the last closing).

"Settlements with the founders" arepassive account. Its sub-account is the "Contributions" used to account for deposits received, and the "Distribution" sub-account, which is used to pay distributed income. Positive balance on the last indicates the current debt of the firm to the founders. If the remainder is negative, then the debt of owners to the company takes place.

"Initial balance" is a passive account. It is the cash equivalent of payments and assets, which is calculated in favor of the company at the beginning of accounting. The balance can be either negative or positive.

"Funds" are a passive account reflecting the distribution of the organization's income for subsequent targeted use (employee encouragement, accumulation, consumption).

"Reserves" are a passive account. The funds are used to cover losses from active operations in the event of a risk or return to profit.

Passive accounts "net profit" and"Undistributed income" is used when accounting for profits. The balance of the first account is equal to the total for the report on losses and profits for the period from the last opening to the balance sheet date. Postings for this account are not possible. At the end of the period, the value of income is fixed, the account is reset. The balance is transferred to retained earnings. From this account, the distribution of income for the payment of dividends, as well as for the replenishment of reserves and funds.

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