The obligation to maintain accounting records

Accounting is the compilation of complex documented information about certain objects, as well as the creation of economic reports based on this information by constant accounting of all company’s economic activities.

Mandatory accounting of economic activities

Economic activities are any actions that affect the financial resources of a particular company. This can be the following: receiving materials from the manufacturer, making a financial settlement with the consumer, paying taxes, and so on. Any financial transactions must be documented. Accounting includes the following control elements:

• Balance sheet;
• Calculation;
• Analysis and evaluation;
• Inventory management;
• Accounting statements.

The obligation to maintain accounting records lies with the chief accountant. A mandatory condition, in this case, is the existence of an employment contract. In the absence of an accountant, the general director of the company, or a specialized organization that provides these services on the basis of a contract, has the right to perform the activity in question.

What does accounting policy mean?

The complex of methods of conducting mandatory accounting by an economic entity is an accounting policy. The accounting policy is drawn up in the form of a local regulatory document that sets out all the rules and regulations for accounting and tax accounting.

The main purpose of accounting is to regulate the financial activities of the company. 

The obligation to maintain accounting records of LLC and other forms of ownership allows to:

• ensure the economic stability of the company;
• prevent negative results of economic activity by providing complete information to the management of the company, so that its representatives are able to make the most correct decisions;
• monitor compliance with current legislation when performing business and monetary transactions;
• control the rationality of the activities carried out through their multilateral research;
• keep under control the availability of company’s property;
• monitor resource usage.

Accounting is important because it allows to regulate the activities of economic entities. Taking into account the importance of the principle of good faith in civil turnover, this kind of publicity can be called reasonable. At the same time, attention should also be paid to accounting principles, which are required to guarantee the balance of interests of all involved persons.

Who should be responsible for accounting

According to the current legislation, each economic entity is responsible for maintaining the accounting records. However, there are always exceptions. Sole proprietors may not keep accounting records when they keep records of income and expenses, as well as other taxable items that characterize the established type of commercial activity. 

The obligation to maintain accounting records lies with individual branches, representative offices or other structural divisions that were formed in accordance with the legislation of a foreign state, if, in accordance with the legislation of the Russian Federation on taxation, they account for income and expenses and (or) other taxable items in accordance with the established procedure.

Principles of creating an accounting report

The principle of autonomy is based on the fact that each institution is considered an independent financial entity, as well as a separate legal entity, so the reporting reflects only the property that is the property of a certain entity.

The principle of objectivity is reflected in the fact that when conducting reports, one must remain diligent in relation to the counterparty. All transactions recorded in accounting must be documented, since imaginary transactions can cause market destabilization.

The principle of periodicity is to compile the balance sheet once a year, six months, quarter or month. Its main purpose is to ensure the reliability of the reporting.

The principle of confidentiality is characterized by the fact that the content of the accounting data is a commercial secret of the company. Disclosure of this information is subject to liability.

The Law “On Accounting” of the Russian Federation contains a list of possible requirements for mandatory accounting. The head of a company is responsible for maintaining accounting records, but, at the same time, he has the right to entrust this activity to other persons. Any business transaction made must be accompanied by a primary accounting document that contains the necessary details.