Bookkeeping accounts and turnover statements are fundamental elements of any accounting system, and they provide clear and structured information about the financial situation of an enterprise. Understanding their essence and function is key for both business owners and professionals who deal with finance and management. Basically, the accounting accounts serve to categorize and record all economic operations, while the working payroll represents a systematic summary of the balances and movements of these accounts within a certain period.
One of the frequently asked questions in this area includes the questions: “What types of accounting accounts exist and how are they organized?” and “What is the role of turnover payroll in the preparation of the financial statements?” Additionally, many clients are interested in the methodology for keeping these accounts in accordance with national accounting standards and how this corresponds to the requirements of international financial reporting standards. For businesses operating in Bulgaria, especially in cities such as Sofia, Burgas, Pomorie and others, it is important to know how to properly keep these reports in order to ensure transparency and accuracy in their financial records.
Accounting accounts can be divided into basic categories such as assets, liabilities, equity, income and expenses, each of them fulfilling different roles in the accounting system. On the other hand, turnover payrolls serve as a control tool to verify the correctness of accounting. Through them, inconsistencies or errors in the records can be easily identified.
In this article, we will examine in detail these key aspects, including the legal framework that regulates their use, as well as practical guidelines for their effective implementation. Elan Consulting, as a leader in the provision of accounting and consulting services in Bulgaria, will be your reliable partner in clarifying and implementing these important accounting principles.
Accounting accounts constitute a fundamental tool for the registration and processing of financial information in enterprises. They reflect the state, changes and results of business operations. The system of accounting accounts, according to Chapter Four of the documents provided, is structured in a way that allows a clear and chronological reflection of economic events.
Types of accounting accounts are classified according to different criteria. According to their relationship with balance, they are:
According to the degree of generality, the accounting accounts are:
By purpose and functions, accounts are divided into:
This classification provides flexibility and comprehensiveness in the accounting coverage of various business operations. An important element of the system is the double entry method, which guarantees a balance between debit and credit in each operation.
The reflection of primary accounting documents in the correct accounting account is essential to ensure accuracy, reliability and completeness in the accounting of the enterprise. This is an essential element for the proper functioning of the accounting system and for compliance with legal and regulatory requirements.
First, the correct reflection of documents ensures accuracy of financial statements. When business operations are recorded in the corresponding accounts, this ensures the correct presentation of financial assets, liabilities, income and expenses. This is important for the preparation of a true picture of the financial condition of the enterprise and for accountability to owners, investors and other interested parties.
Second, it is critical for tax and legal compliance. Incorrectly classified operations can lead to errors in tax returns, which can lead to penalties or revisions by the tax authorities. The Law on Accounting and other regulatory acts require that the reflection of business operations be carried out in accordance with their economic meaning.
Third, proper reflection helps control and analysis of the activity. Accounting accounts are used to track income and expenses, the movement of cash, as well as to manage assets and liabilities. If the primary documents are not correctly reflected, the managers of the enterprise will not have accurate information for making decisions.
Fourth, the double entry method, which is the basis of the accounting system, requires that each business operation be recorded in at least two linked accounts. Incorrect recording in one account can violate the balance sheet parity and lead to difficulties in closing the reporting period.
Fifth, correct coverage is the basis for effective internal control. It allows easy identification of discrepancies and errors in the accounting system, reducing the risk of fraud or abuse.
The turnover statement is a key tool in the accounting system, summarizing and systematizing information about the movements and status of accounting accounts within a specific reporting period. It is used to verify the accuracy of accounting records and to prepare financial statements.
At its core, the turnover statement is a table that includes the following main elements:
This document applies to both synthetic accounts, which provide summarized information about certain objects, and analytical accounts, which offer more detailed data about specific aspects of the same objects.
The turnover statement is an indispensable tool for the ongoing accounting service of an enterprise. It helps identify potential errors in records, facilitates the analysis of financial results, and serves as an intermediate step towards preparing annual financial statements. As part of internal control, it ensures the reliability and appropriateness of accounting information for management decision-making.
With proper preparation and use of the turnover statement, the enterprise ensures accuracy and transparency in managing its financial resources.
1. Is it possible, as a result of a business operation, to change the asset on the balance sheet in the direction of increase, and the liability in the direction of decrease?
No, this is not possible, since any change in the asset or liability must maintain balance sheet parity. Assets are resources controlled by the entity and liabilities are sources of those resources. If an operation causes an increase in the asset, it will either be accompanied by an increase in the liability (e.g. in financing) or by a decrease in another asset (when transferring funds between active accounts). A change in only one direction would upset the balance sheet balance, which is a fundamental principle in accounting.
2. When paying a liability to a supplier with funds from the cash register, does only the asset on the balance sheet change?
No, in such an operation there is a change in both the asset and the liability of the balance sheet. The decrease in assets (decrease in cash balances) is accompanied by a decrease in liabilities (reduction in liabilities to suppliers). This is a typical example of a business operation that affects two sides of the balance sheet while maintaining its equality.
3. In the event of an increase in the share capital requiring registration by means of a signature (recorded equity contributions), does only the liability on the balance sheet change?
No, the increase in fixed capital also affects the asset on the balance sheet. A claim arises against the newly subscribed capital (payment of cash or non-cash contributions by investors or partners). This means that both assets (e.g. cash, fixed assets) and liabilities (increase in fixed capital) increase simultaneously. This is a classic example of an operation in which both sides of the balance grow.
4. When buying a fixed asset paid from a current account, but with an amount due for installation, how does the balance change?
In this situation, two separate accounting operations are carried out. The first, related to the purchase of the asset, leads to a decrease in cash (asset) and an increase in another asset (eg machinery, equipment). The second operation, related to the amount due for installation, leads to an increase in assets (the value of the asset is replenished) and at the same time to an increase in liabilities (liabilities to the installation service provider). These two operations combined demonstrate the impact on both sides of the balance sheet.
5. When an advance is received from a client, does only the asset on the balance sheet change?
No, the advance from a customer entails a change in both the asset and the liability of the balance sheet. An increase in an asset (e.g. cash on a cash desk or bank account) is accompanied by the occurrence of a liability to the customer, which is reflected as a liability. This obligation constitutes an undertaking by the enterprise to perform a particular service or to deliver goods for which the advance has been received.
6. Are increases in active accounts recorded on the credit side of the account?
No, increases in assets are recorded in the debit side of active accounting accounts. Active accounts serve to account for the resources of the entity, their increases, for example, in cash receipts or the acquisition of assets, are always reflected in the debit side. The credit side of active accounts is used for reductions.
7. Should all accounting accounts have ending balances at the end of the reporting period?
No, only those accounting accounts whose reporting objects are available at the end of the reporting period have a final balance. For example, balance sheet accounts (such as those for assets and liabilities) often have terminal balances, while some operating accounts (such as those for income and expenses) may be closed to form the financial result.
8. Can an active-passive accrual account be active at the beginning of the period and passive at the end of the period?
Yes, this is possible and is a specific feature of active-passive accounts. These accounts can reflect both active and passive movements, depending on the prevailing operations at a given time. For example, an account for settlements with counterparties may show accounts receivable (asset) or liabilities (liability) at different points in the reporting period.
9. Can corrective accounting accounts function independently?
No, corrective accounts cannot exist or function independently because they are linked to the main accounts they correct. For example, an depreciation account (corrective) is a satellite of the fixed asset account (main) and reflects the accumulated depreciation of the asset.
