Accounting Concepts
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Equity, the object of Accounting, is a set of assets, rights and liabilities expressed in a determined currency and pertaining to a person and/or company.
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Assets are items capable of satisfying human needs and subject to economic assessment. They can be classified as:
| • | Material (Tangible) - meant for use (computers, tables, etc.), exchange (goods, money, etc) and consumption (cleaning material, etc.) |
| • | Immaterial (Intangible) - brands and patents, improvements, etc. |
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All values the company has to receive from third parties (Trade Notes Receivable, Rent, etc.)
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All values the company has to pay to third parties (Trade Notes Payable, Salaries, Taxes, etc.)
Balance Sheet
This reflects the company's financial position. Law nr. 6,404/76, in article 178, establishes that, in Balance Sheet, accounts shall be classified into the following groups:
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| • | Short term Assets |
| • | Long-term Realizable Assets |
| • | Permanent Assets, divided into Investments, Fixed Assets and Deferred Assets. |
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| • | Current Liabilities |
| • | Long-term Liabilities |
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| • | Share Capital |
| • | Capital Reserves |
| • | Revaluation Reserves |
| • | Accrued Profit or Loss Reserves. |
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Accounting Equation
ASSETS = LIABILITIES + NET EQUITY |
Account Balance
It is the difference between total of debit values and total of credit values posted in the account.
This balance is debit when total of debit values is greater than total of credit values posted in the same account. On the other hand, balance is credit when total of credit values posted is greater than debit values posted in the same account.