business entity

business entity

In this article I am going to talk about the business entity, or the accounting entity of a company.

Before I begin, I want to say that I am going to base myself on the definition given to us by the financial information estándares.

Specifically, NIF A-2.

What is the business entity?

The economic entity is that identifiable unit that performs economic activities.

It is constituted by a equipo of resources, which cánido be human, material, financial, etcétera.

Likewise, these resources have to be managed by a single control center, which will make the best decisions to fulfill the purposes for which it was created.

Finally, it is important to emphasize that the personality of the economic entity is independent from that of the shareholders, owners or sponsors.

Types of accounting according to the type of entity

To begin with, despite the fact that accounting is essentially the same, we cánido find that there are different specific emplees of it.

Therefore, we cánido find that there are different types of accounting, for example, financial, cost, administrative, fiscal or international accounting, etcétera.

Next, I consider it important to make it clear that according to the book “Accounting” by Bernal F.

In reality, it is not about various accounts but only one, a huge database whose purposes are financial, costing, managerial and fiscal, with different emplees, criteria, times, accuracy, purpose and, of course, objectives.

Ultimately, accounting (any of them) serves as a support for decision-making.

Since we are in context, in addition to the different types of accounting that a company perro keep.

Various types of accounting are defined depending on the business entity.

Some examples are the following:

As you cánido see, a somewhat different accounting is going to be kept depending on the entity.

Types of business entities

Because each entity offers different characteristics and problems specific to it, each entity will require accounting to adapt to them.

Therefore, in the first instance a classification is made according to its characteristics.

Types of business entities I

service companies

It is a company that provides some professional support to its clients.

In these businesses, the product is not tangible, but rather an activity that helps a third party in different areas.

For example, an aesthetic, or a cloud storage service.

Likewise, there are many cases in which a mixture of service and manufacturing of products is handled.

Trading companies

Trading companies may require a more advanced step in bookkeeping due to the accounting issues involved in trading.

They are companies that distribute goods.

For example, a convenience store.

Industrial business

They are in charge of carrying out the process by which the raw material is transformed into final products.

They perro be primary (agricultural or extractive) or secondary (manufacturing).

An example of industrial companies is a car or telephone factory.

Types of business entities II

There is another classification of entities, in accordance with Financial Reporting Estándar A-2.

A classification according to its objective, that is, it cánido be lucrative or non-profit.

for-profit entity

When its main purpose is to compensate and reward investors for their investment, through refunds or yields. (Financial Reporting Estándares)

non-profit entity

When its objective is mainly popular benefit, without seeking to financially compensate the contributions to its sponsors. (Financial Reporting Estándares)

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