Currently, when considering the organization of accounting and accounting reporting in organizations, the term «accounting policy» is widely used. The accounting policy of an organization is understood as a set of accounting methods adopted by it. When forming an accounting policy, the organization has the right to choose one of several ways of accounting. The procedure for creating an accounting policy is regulated by the accounting Regulations «Accounting policy of the organization» [1].
The importance of accounting policies has increased significantly recently. Accounting policy has become a real tool for managing the organization. it is used for financial and tax planning of the organization’s activities, which allows to significantly reduce the tax burden, increase the flexibility, efficiency and effectiveness of management decisions.
At the same time, in addition to the organization’s management apparatus that forms the accounting policy, there is another side to applying its aspects — external users of accounting reports. They should understand that all the results, and especially the financial results presented in the financial statements, should be perceived through an understanding of the algorithms for their calculation [2].
Analysis of accounting methods from the point of view of forming the value of financial results in the financial statements, allows you to divide them into two opposite main groups:
- methods that increase the financial result;
- methods that reduce the financial result.
Therefore, when determining its accounting policy, the management of the organization should clearly separate the elements of accounting methods by the degree of their influence on the formation of the financial result in accounting and financial reporting [3].
Accounting methods and their elements that affect the amount of financial results in accounting include the following (table 1).
The most popular in practice is the reservation of amounts for doubtful debts, carried out on the account «reserves for doubtful debts». This is because this reserve fulfills both goals. In addition to specifying the amount of accounts receivable, the created reserve serves as a means of repaying unclaimed debts on time, and the rules of the legislation on taxation of profit within the statutory limits take into account expenses that served as a source of the created reserve when forming the taxable base [4].
Recognition of expenses using the «direct-costing» method allows you to increase the expenses of the reporting period and thereby reduce the amount of the financial result. Accordingly, the recognition of expenses based on the method of generating the total cost of output increases the amount of the financial result.
Table 1 — Accounting methods and their elements that affect the amount of financial results under the accounting rules.
|
Method of accounting policy of the organization |
The elements of the method |
|
1. Methods for calculating depreciation of fixed assets |
1.1 Straight-Forward method. 1.2 Method of reducing the remainder. 1.3 Method of writing off the cost of the sum of the number of years of useful life. 1.4 Method of writing off the cost in proportion to the volume of production. |
|
2. Methods for calculating depreciation of intangible assets |
2.1 Straight-line method based on standards calculated based on their useful lives. 2.2 Straight-Line method, based on the norms calculated for 20 years. 2.3 Method of writing off the cost in proportion to the volume of production. 2 4. Method of reducing the remainder. |
|
3. Methods for estimating material resources included in production costs |
3.1 At the actual cost of the inventory unit. 3.2 At average cost. 3.3 At the cost of first-time purchases. 3.4 At the cost of recent acquisitions. |
|
4. Ways to group production costs |
4.1 Method for generating the full cost price. 4.2 Method of forming the cost price according to the principles of «direct-costing». |
Note: compiled by the authors
In addition to the accounting methods themselves, which affect the amount of financial results, the reporting period for which the financial statements are submitted is of significant importance. Obviously, depending on the period of the business transaction, the values of financial results in the interim and annual reports will differ significantly. The most dramatic changes in the values of financial results will be presented in the interim statements [5].
Thus, depending on the choice of specific elements from each method of accounting and the period of reflection in the financial statements, the amount of the generated financial result calculated according to the rules of accounting directly depends. Using the analysis, you can create an algorithm of combinations of elements selected from the considered methods of accounting, allowing you to generate both the maximum and minimum value of the financial result of the first reporting year (table.2).
Therefore, the management apparatus of the organization has a real opportunity, depending on its goals and objectives, to influence the indicators of financial results presented in the financial statements. For example, an organization that is actively looking for an investor or lender can benefit from presenting the results of its financial and economic activities in the most favorable light, i.e., showing the highest possible retained earnings (net) in accounting statements that are focused on an external user.
In such a situation, the use of the maximum value algorithm in the accounting organization may be preferable for the organization.
It should be noted that the choice of the system of the described principles of algorithms for generating financial results is usually not used in practice. However, this does not mean that their knowledge will not be needed by a practicing accountant or a potential user of accounting reports. Reforming the accounting system means that all this will be necessary either in the very near future, or a little later, but not in the very distant future [6].
Table 2 — Combination of elements that allow you to generate both the maximum and minimum value of the financial result
|
Method of accounting policy of the organization |
The maximum value of the financial result is achieved when selecting methods: |
The minimum value of the financial result is achieved when selecting methods: |
|
I. Methods for calculating depreciation of fixed assets |
1.1 Straight forward method |
1 2. Method of reducing the balance or 1.3 method of writing off the cost of the sum of the number of years of useful life |
|
2. Methods for calculating depreciation of intangible assets |
2.2 Straight-Line method, based on the norms calculated for 20 years. |
2.1 Straight-line method based on standards calculated based on their useful lives. 2.4 Method of reducing the remainder. |
|
3. Methods for estimating material resources included in production costs |
3 3. At the cost of the first-time purchases. |
3.4 At the cost of recent acquisitions |
|
4. Differentiation of costs by time of their implementation |
4.2, 4.3 To the Current estimated reserves account. 4.3 To the «Current estimated reserves» account. |
4.1 To the accounts of accounting production costs |
|
5. Creation of estimated reserves by reference to financial results |
5 4. Not produce |
5.1 To the «Materials» account. 5.2 To the account «Current financial investments in affiliated parties». 5 3. To the account » amendments for uncollectible accounts receivable». |
|
6. Ways to group production costs |
6.1 Method of generating the full cost price |
6.2 Method of forming the cost price according to the principles of «direct-costing». |
Note: compiled by the authors
Thus, the financial result is a generalizing indicator of the analysis and evaluation of the efficiency (inefficiency) of the business entity at certain stages (stages) of its formation. In the organization’s plan of accounts, a matching synthetic «net profit of the reporting period» is opened, designed to identify the final financial result of any commercial organization. The purpose of their activities is to extract profit for its capitalization, business development, and enrichment of owners, shareholders, and employees.
Sources used
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- Lysenko D. V. Accounting management accounting, ed. — Almaty, 2008. 145p.
- Pivovarov K. V. Financial and economic analysis of economic activity of commercial organizations. — Moscow: Marketing, 2003. — 120 s.
- International financial reporting standards (IAS) in russian version 2012, official translation. — Astana (Nur-Sultan), 2012.
- Torshaeva Sh. M. Accounting Theory. — Karaganda, 2015. — 115 p.
- Arinushkin N. S. Balance sheets of joint stock companies. Legal and accounting nature of the balance sheet, in connection with the norms of the financial and tax taxation / N. S. Arinushkin. Moscow: Pravovedenie, 2018. -242 p.
