The accounting method is the configuration of an accounting monitoring system in an organization, which serves for its proper functioning and shows its true image.
Individuals and companies use a specific accounting method to give strength and discipline to their recorded events or their economic actions.
Through basic accounting techniques, they form a scheme or method that helps them organize and value their economic and financial information.
Regardless of the accounting reality in question (accounts of an SME, a public institution …), there must be a consistent method of recording.
In any case, the established accounting method must ensure that the true image of the company is shown. In other words, your accounting and financial reality.
For this, it must follow the accounting principles and adapt to the different accounting regulations of each legislation.
Main objectives of the accounting method
The configuration of a given accounting method will be strongly influenced by the following points to comply with:
- Accounting record model of economic events: For example, there are different practices such as double entry or single entry.
- Adaptability to legislation: Attending to each territory, each company must configure its method to the legal requirements it faces.
- Presentation of data and results: The accounting information obtained must serve to know the true image of the organization, as well as to provide relevant information to third parties.
- Calendar setting: The accounting monitoring must be adapted to an accounting exercise. The most common is that it resembles the calendar year in 12 months.
With all this, a well-adapted accounting method will be able to reflect the company’s equity reality, as well as its prospects in relation to its low or high profitability.
The accounting method according to the means used
Once the characteristics of the method to be followed have been defined, it is necessary to establish the means in which to reflect the accounting facts.
In this sense, this methodology can be implemented with a digital system or with a manual system. It will depend on how the accounting books will be completed.
Accounting help through software has brought accounting science to a wider range of users and has facilitated its use from the original manual books.