Accounting for equity

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in management accounting central place is given to settlements with shareholders.It should be noted that the larger the firm founders, the less they are involved in direct management, the more important measures to prevent the differences between them.At the same time of considerable importance is given to company's own capital.

All calculations are carried out only on the basis of decisions of the founders and the agreements between them and the company management.Accounting for equity allows the company to obtain the necessary information to carry out the necessary calculations.Along with this is done to ensure the correctness of the operations.Accounting for equity is especially important for those companies that raise funds by selling shares or shares.

frequency and the order in which the profit distribution is carried out, the founders set.This usually happens on a monthly or quarterly meetings.At the enterprise accounting equity drawn final and complete reporting.This reporting is available in the meeting of the founders.Changes backdating is not allowed.

If the founder of a company, the distribution of profits is formal, so it can be carried out once a year.

Accounting for equity in accordance with its basic components.These include:

  1. Contributions founders, expressed in monetary terms the grand total of the contributions of all participants.It is necessary to distinguish them from the authorized capital.The last set in the founding documents of the company during the registration process and may be paid in part.Accounting for equity does not include the statutory funds.
  2. property and cash received for free.
  3. income remains at the disposal of the company after taxes.

property and funds received from the founders, is credited directly to the accounts of assets.

To account equity company the following account:

  1. "settlements with shareholders".
  2. "Distributions".
  3. "Contributions".
  4. "Reserves".
  5. "Funds".
  6. "Retained earnings".
  7. "Opening balance".
  8. "net income" (in the period since the last closing).

"settlements with shareholders" are the passive account.His sub-account - "Contributions" used to account for the contributions received and the sub "Distribution", which is used to pay the income distribution.Positive balance on the latter indicates the current debt to the founders of the company.If the remainder is negative, then the debt the owners of the company.

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

"Funds" is a liability account which reflects the distribution of income of the target company for future use (staff incentives, savings, consumption).

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

Liability accounts "net income" and "retained earnings" are used in accounting profit.The balance of the account is equal to the first total on the report on losses and profits for the period from the opening up of the last reporting date.The postings on this account impossible.At the end of the period fixed by the value of the income account is reset.The residue is transferred to retained earnings.On this account, distribution of income for the payment of dividends, as well as to replenish the reserves and funds.