To Consider:

A witty saying proves nothing.

Voltaire [François-Marie Arouet] (1694-1778) French Enlightenment writer, historian, and philosopher

Terrazas del Rodeo

The purpose of accountancy is to give a fair view of the economical performance of the organisation.

Double-entry bookkeeping is the norm to be used. Very small business with very limited turn/over can use Single-entry bookkeeping, which is like a cash book, but then it gets more difficult to keep order among the invoices since they're only booked when payments have been made or received.

Double-entry bookkeeping, in accounting, is a system of bookkeeping where every entry to an account requires a corresponding and opposite entry to a different account. The double-entry system has two equal and corresponding sides known as debit and credit. A transaction in double-entry bookkeeping always affects at least two accounts, always includes at least one debit and one credit, and always has total debits and total credits that are equal. For example, if a business takes out a bank loan for $10,000, recording the transaction would require a debit of $10,000 to an asset account called "Cash", as well as a credit of $10,000 to a liability account called "Notes Payable"



The Chart of accounts is the “back bone” of Double-entry bookkeepingThe accounts are grouped together in different account classes that corresponds to different parts of the Ballance sheet and the Income statement.

A chart of accounts (COA) is a list of financial accounts set up, usually by an accountant, for an organization, and available for use by the bookkeeper for recording transactions in the organization's general ledger. Accounts may be added to the chart of accounts as needed; they would not generally be removed, especially if any transaction had been posted to the account or if there is a non-zero balance.



The Chart of accounts is in Spain called "Plan General de Contabilidad (PGC)" and are categorized in the following main groups:

  1. Financiación Básica
  2. Inmovilizado
  3. Existencias
  4. Deudores y acreedores por operaciones del tráfico.
  5. Cuentas financieras
  6. Compras y gastos
  7. Ventas e ingresos

Computer software are commonly used for the accountancy these days. When using an accountancy software, then the financial reports can be generated automatically. First one just need to do accruals for any transactions that might be needed to be distributed between different accountancy years.

  • Accrued revenue: revenue is recognized before cash is received.
  • Accrued expense: expense is recognized before cash is paid out.


The Financial statement include as minimum the Balance sheet and the Income statement.

Financial statements (or financial reports) are formal records of the financial activities and position of a business, person, or other entity.

Relevant financial information is presented in a structured manner and in a form which is easy to understand. They typically include four basic financial statements accompanied by a management discussion and analysis



The Balance sheet shows the assets and how they have been financed.

. . . a balance sheet . . . is a summary of the financial balances . . . A balance sheet is often described as a "snapshot of a company's financial condition". . . the balance sheet is the only statement which applies to a single point in time of a business' calendar year.

A standard company balance sheet has two sides: assets on the left, and financing on the right–which itself has two parts; liabilities and ownership equity.



The Income statement shows the costs and income.

An income statement . . . is one of the financial statements of a company and shows the company's revenues and expenses during a particular period.



Both the Income statement and the Balance sheet must be included in the Financial statement to be able to get a fair view of the economical performance!


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