Foundations of Bookkeeping
Financial statement preparation begins with properly kept accounting records: the entity keeps its accounts on the basis of natural units of measurement, in generalised monetary expression, with chronological, continuous and documented reflection of events. The records may be kept through an employed accountant or an accountant providing professional services, as well as through services rendered by an accounting or an audit firm. Economic events are entered in the records under the double-entry principle, immediately upon occurrence, and are attributed to the period to which they relate. Every entry carries defined requisites — the date of the operation, the debit and credit accounts with the amounts, a short description and the reference to the primary document. A primary document confirming an economic event carries mandatory requisites: its name and number, the date of compilation, the economic content of the operation, the names and identification data of the participating persons, signatures, and monetary or quantitative data. The entity itself determines its accounting policy, develops the chart of accounts, builds the mechanism for producing and controlling documents, and establishes an internal control system that safeguards the reliability of the reporting. Accounting documents are signed by the person responsible to the management, the accountant, or other persons with the authority defined by internal policy.