a method of grouping accounting information according to economic principles and maintaining current records and management control over the movement and condition of assets, the sources of assets, and economic operations.
For each grouping of accounting data, an individual account is set up, with a debit side and credit side. The total of the debit or credit entries in an account is the turnover (oborot), and the difference between the totals is the balance (sal’do). Economic transactions are recorded in accounts by means of the double entry—that is, every transaction is entered at the same time as a debit in one account and as a credit in another account. As a result, accounts are interrelated, in what is known as the correspondence of accounts. This correspondence is expressed by the accounting formula, which indicates in what total and in which accounts, as a debit or credit, a transaction is to be recorded. Account entries may be expressed in units of quantity, labor, or value.
In a system of accounts, synthetic (first-order) accounts are distinguished from analytic (detail) accounts; analytic accounts are drawn up on the basis of synthetic accounts. The accuracy of the data recorded in accounts is checked by comparison of the totals of the appropriate synthetic and analytic accounts during the preparation of turnover statements (oborotnye vedomosti). The accounts are closely linked with the balance sheet. They are opened—that is, entries are made in accounts at the beginning of the report period—using the data contained in the balance sheet; at the end of the report period, the balance sheet is drawn up from the different data contained in the synthetic accounts. The entries in synthetic and analytic accounts are reconciled every month; the balance sheet is considered correct only if the entries reconcile.
Accounts differ in purpose and structure and in economic content. In terms of economic content, that is, of what is recorded in any given account, a distinction is made between accounts of economic means, accounts of sources of economic means, and accounts of economic operations. Accounts relating to economic means are further divided into fixed-assets accounts, current-assets accounts, and diverted-assets accounts. Accounts relating to the sources of economic means are divided into “own,” or assigned (zakreplennye), assets, borrowed assets, profits, and obligations with respect to distribution of the social product. Accounts relating to economic operations are divided into production accounts and circulation accounts.
In terms of purpose and structure, accounts are classified according to the way in which they reflect accounting information, what is computed for debits and credits, and what the net remainder of each account shows. In this sense, accounts are divided into basic accounts, regulating accounts, operational accounts, accounts expressing financial results, and single-entry memorandum accounts (zabalansovye scheta).
Basic accounts are designed to provide information on the enterprise’s economic means and the sources of such means—such as the accounts for “fixed assets” and “amortization fund.” The basic accounts are divided into asset accounts (which deal with economic assets) and liability accounts (which deal with the sources of assets). Regulating accounts are used to regulate the evaluation of the various items reflected in the accounting data—such as the accounts for “depreciation of fixed assets” and “diverted assets.” Operational accounts are used to provide information on, and facilitate the management of, economic processes: supply, production, and sales. They include, for example, the accounts for “shop expenses,” “sales,” and “future expenditures.” The financial-results accounts are used to provide information on, and facilitate the management of, the financial results of economic activity—such as the account for “profits and losses.” The single-entry memorandum accounts deal with assets temporarily held by an enterprise but not belonging to it—such as the “rented fixed assets” account.
They make no use of the double-entry method in drawing up bookkeeping accounts; a transaction is recorded only as a debit or only as a credit.
The lists of accounts and the procedures for entering transactions in accounts are established by central fiat (seePLAN OF ACCOUNTS).
T. N. SUKHOVERKHOVA