Accounting

Keeping track of money in an often conservative way. Main benefit is with protecting creditors (banks, suppliers, state).

Accounting is never correct it is based on judgments and estimates. Accounting is not about truth, it’s about drawing the picture of the company.

Types of Accounting

• Financial Accounting
  • external decision makers
    • Tax authorities
    • investors
    • banks
    • B2B partners
• Cost Accounting
  • Kostenrechnung in German
  • what the company is actually worth
    • e.g. actual market prices of real estate
• Managerial Accounting
  • providing information for the management
• Auditing
  • reviewing the accuracy of financial reports

Financial Statement

• balance sheet
  • Assets
  • Liabilities
  • Equity (Liquidity)
• income statement
  • revenues
  • costs and expenses
• cash flow statement
  • cash flowing in
  • cash flowing out

Accounting Rules

• every country has individual accounting rules
• a standardized scheme has many benefits regarding comparability across borders, economies and simply companies
  • measures for standardization
    • EU laws
    • IFRS