What is accounting? Characteristics, classification and accounting methods

Hạch toán là gì? Đặc điểm, phân loại và phương pháp hoạch toán

Accounting plays a very important role in financial management as well as investment and development activities of businesses and organizations. So, what is accounting? What types of accounting are there? Readers, please learn about this topic through the following article by Ms. Uptalent!

3.1- Concepts
3.2- Characteristics
3.3- Classify accounting documents according to criteria
3.4- Accounting method
3.5- What is the role of accounting activities?

1- What is accounting?

Accounting is defined as a process that includes observing, measuring, calculating and recording the economic transactions of an organization or business. The objective of this position is to ensure that the economic activities of the organization are managed more strictly and efficiently.

The details of the 4 accounting activities are as follows:

– Observe

This activity aims to record the existence of objects that need to be considered and to guide the implementation of the work.

– Measure

This is the activity in which you will quantify the company’s production costs and assets according to appropriate units of measurement.

– Calculate

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The next thing you will do in the accounting process is to use appropriate calculations and analytical measures to calculate the level of performance and economic efficiency achieved.

– Files

The final activity of accounting is processing and recording the results of economic and financial transactions. It will be an important basis to help managers make production and commercial decisions in the enterprise.

What is accounting?

2- Common types of accounting

The accounting process plays a very important role in the financial management of businesses. By understanding the nature of accounting and related activities, managers can direct and plan their activities more effectively.

According to Uptalent’s research, people divide accounting into 3 main types, including:

2.1- Operational accounting

It is the process of observing, reflecting and examining the resulting economic operations and processes. Thanks to this, managers can quickly direct and well control the implementation of associated processes and operations.

2.2- Statistical accounting

Statistical accounting is defined as a scientific discipline which aims to study the quantitative aspect of socio-economic phenomena. The numbers studied are often very large and limited to a specific space and time.

Through the research process, one can grasp the deep nature as well as the laws of movement of typical economic and social phenomena.

2.3- Accounting

Accounting is carried out with the aim of reflecting the situation and changes in the assets of the enterprise during the process of carrying out production and commercial activities.

The above three types of accounting focus on collecting, recording and reporting economic and financial information. There is a relationship of supply and consistency between them in terms of data. At the same time, each type has certain uses in economic management and business decision-making activities.

Of the above three types of accounting, bookkeeping is the most popular. We will learn more in the next part of this article to better understand what accounting is.

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Types of accounting

3- Introduction to accounting

3.1- Concepts

Accounting (or bookkeeping) is a scientific subject that aims to reflect different aspects of economic and financial activities in units and organizations. This can help us receive, process and provide various information about an organization’s assets and business situation.

Accounting information is often regular, continuous and spread over a certain period of time. By understanding accounting and implementing the recording and processing process, managers can accurately understand the status of the company’s existing assets.

3.2- Characteristics

Accounting has the following 4 main characteristics:

(1) – Global, continuous and systematic reflection and monitoring of all accounting matters

The nature of accounting is to monitor and research the process of formation and movement of assets and capital in a business. At the same time, accounting must also ensure that it is carried out comprehensively and continuously for all economic entities involved.

(2) – Accounting uses 3 types of measurements

Three types of measures used in accounting include money, goods in kind, and labor. Among them, money is the most popular measure.

Most of the resulting economic transactions will be recorded in value and expressed in currency. Through this, you can use accounting to collect the data needed to manage and monitor affairs in the company.

Features of accounting

Through accounting activities, companies can quickly capture information related to the production process. Through this, they will make the necessary decisions and adjustments to ensure optimal production efficiency.

(4) – Provides managers with specific, vivid and very practical information for inspection and supervision

Accounting allows businesses to closely monitor changes in information about assets, capital, costs and business results. Through this, managers can clearly understand the company’s business situation and have appropriate development plans and strategies for the next period.

3.3- Classify accounting documents according to criteria

There are many different ways to classify accounting documents. Here are the types of accounting documents classified according to different criteria:

(1) – Depending on the level and nature of the information

Based on this criterion, accounting will include two types: general accounting and detailed accounting. In there:

– General accounting will record information in general form and use monetary measures.

– Detailed accounting will collect and provide detailed information on a general indicator and use monetary, labor or in-kind measures.

(2) – Depending on the method of collecting information

If it is based on the way of collecting information, accounting will be divided into single accounting and double accounting. Specifically:

Single accounting is the independent and separate recording and collection of economic and financial information.

– Double accounting is the recording of accounting information according to its true nature and its dialectical movement between related accounting objects.

Accounting classification

(3) – Depending on the extent of the information provided

Based on this criterion, we will have two types of accounting: financial accounting and management accounting. The details are as follows:

– Financial accounting performs the work of collecting, processing and providing economic information to audiences outside the company. The main measure used is currency.

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– Management accounting is responsible for collecting, synthesizing and providing information to business administrators. With this form, all three types of measurements are used.

(4) – Depending on the destination and characteristics of the accounting unit

Depending on the purpose and characteristics of the accounting unit, we will have two types of accounting: public accounting and business accounting. In there:

– Public accounting consists of units that operate for non-commercial or non-profit purposes.

– Corporate accountants are units and organizations operating for the purpose of production, business and profit seeking.

3.4- Accounting method

The accounting process is carried out using the following 4 methods:

(1) – Accounting documents

This is a method in which you will use paper or electronic records to reflect economic transactions occurring at a specific time and place.

(2) – Accounting accounts

This is an accounting method in which you will use an accounting account to regularly and continually reflect and monitor fluctuations in assets and capital.

Accounting accounts are organized according to a standard system and include specific rules for constitution and use. By recording operations on accounting accounts, companies will clearly see the situation and movement of each type of asset and source of capital in order to have better measures to manage and monitor the operational process.

Accounting method

(3) – Calculate the price

This is an accounting method in which you will use monetary measures to measure the value of accounting objects. This recognition must be done according to certain principles in order to create favorable conditions for the reception, processing and provision of accounting information.

(4) – Summary of the accounting balance

Book balance summarization is a method by which you summarize book data based on the balance relationship inherent in accounting.

3.5- What is the role of accounting activities?

Accounting plays a very important role in the management and development of businesses. Therefore, understanding what accounting is and using accounting methods and principles correctly will bring great benefits to businesses.

Here are the main roles of accounting:

(1) – Monitor and honestly reflect economic and financial information

Accounting honestly and promptly tracks and reflects information related to the economic activities of businesses and organizations using appropriate methods. This is very useful for investments and commercial activities of companies and for the economic management of the state.

Additionally, business leaders as well as state agencies can also rely on accounting information to make the most accurate and efficient decisions.

(2) – Continuously monitor and inspect the organization’s assets

Assets are considered important resources to help businesses survive and grow in the long term. Through accounting, company assets are always closely inspected and monitored. Through this, businesses can prevent loss of assets and ensure they are still used for their intended purpose.

(3) – Provision of information

The regular and continuous accounting process is a source of accurate data for reporting as well as for analyzing the economic and financial efficiency of the company’s business operations.

At the same time, managers and executives can also use the accounting information and reports to make investment decisions and plan appropriate business development for the company during each period.

Above is some information that Ms. Uptalent wants to share with you about what accounting is. I hope this article has provided you with a lot of useful information. Good luck!

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