Text 24: forms of accounting

Every factory, building site, collective farm, institution or organization carries out primary recording or current registration to a definite system of economic phenomena that are either the necessary conditions for or the final results of the activity of these units. The data are then grouped and summed up in one way or another and their totals recorded in special registration documents (register books, cards, reports, etc.). This systematic recording of economic and related phenomena or processes and their subsequent • classification and summary is called accounting.

We speak of accounting in the broadest sense of the word. It is not merely a question of recording the results of the economic activity of the enterprises and organizations involved. In social life many phenomena and processes take place which are not the immediate expression of the activity of economic and other organizations. We cannot afford to disregard them, however, we must take account of them if we want, for example, to improve economic activities and carry out social reforms.

Thus, by accounting we mean a systematic recording of social phenomena and processes taking place continuously, their classification and summary with a view to using the accounting data to control and direct these phenomena and processes in the interests of society.

Three forms of accounting are to be distinguished, according to their methods and specific aims, operative technical recording, bookkeeping and statistics.

The main aim of operative technical recording is the prompt supply of technical production information required at a particular enterprise or institution. This type of information is essential for control over current production technology, for an appraisal of the quality of current output, efficiency of equipment, correspondence at any given moment of actual traffic with the fixed timetable.

It goes without saying that this form of accounting also includes registration of the findings of laboratory analyses of the composition and quality of materials and products, the results of tests conducted during the manufacture and operation of machinery and equipment. In other words, all phenomena are registered relating to the organization of production and development of technology.

Bookkeeping is conducted at all industrial enterprises, institutions and organizations. It serves as an instrument of continuous, daily control over the fulfillment of economic plans and the maintenance of material and financial resources.

The subject of bookkeeping is the movement of resources at any given economic unit. It reflects this movement of resources in value (money) form, which makes it possible to compare different types of resources and summarize the relevant data.

Bookkeeping is specific in that it groups data on the resources of economic units in two ways: on the one hand, according to their composition and distribution (fixed assets, raw and other materials, fuel, finished products, financial resources, etc.) and, on the other hand, according to the source of their origin (basic fund, depreciation and other special funds, budget financing, bank credits, debts, etc.). In other words, the same resources are regarded from two points of view, that of their composition and that of their origin.

Bookkeeping is also specific in that it registers everything in money terms. Statistical accounting or statistics registers the quantitative aspect of mass phenomena and processes of social life in their inseparable connection with their qualitative characteristics.