ACCOUNTING BENEFIT

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I. CONCEPT

The accounting profit of a company is determined by the positive difference between the income (sales, service provision, etc.) and the expenses necessary to generate such sales (purchases, salary expenses, general expenses, etc.) during a financial year. However, notwithstanding the doctrine of the Accounting Framework, not all income and expenses for the year will be part of the result, since there may be income and expenses that have to be charged directly to equity.

It is also important to remember that the calculation period to obtain the accounting result usually has an annual duration, although it can be estimated for shorter periods.

II. THE BENEFIT AS A RELATIVE MAGNITUDE

In the words of Professor Kashif: "Accounting profit is a relative magnitude, as it is the result of judgments made by the accounting expert in his attempt to compare income and expenses." The reason for this assertion is based on the assumption that the accounting profit is not an exact amount, since its value arises from relying on valuation criteria, which implies applying measures and value judgments. In addition, in determining that the result refers to an economic year, this entails the accrual of income and expenses, i.e. applying the accrual principle, which marks a boundary between what should be imputed to the financial year, income and expenses that Regardless of whether the income has been collected and the expenses paid.

The benefit of the financial year is a very important value, because if it has been reasonably calculated and a sufficient return is obtained, the company will have reached equilibrium, and chances are that it will not have liquidity problems. However, one should not assimilate profit with treasury, an issue that constantly arises in the world of small businesses, both mercantile and individual. As already pointed out, the benefit would be the positive difference between income and expenses and the treasury, or rather, the state of the treasury, is determined by the management of the collection and payment periods. But outside the circuit of collections and payments, it should be understood that not all payments are made are expenses. It is a very common mistake to assimilate "payments" and "expenses", when neither accounting nor tax is so.

A very illustrative example would be the acquisition of an element of transport, assuming that it has been paid in cash. This fact means a payment for the company but it is not an expense, since accounting this investment will be subject to a process of amortization, which would mean that it will be transformed into expense as the transport element becomes depreciated.

III. ACCOUNTING PERIODIFICATION ADJUSTMENTS

Following the accounting doctrine, income is recognized in the profit and loss account when, based on the best estimate of the information available at the time of registration, it is probable that the company will obtain the results related to the same for the period in which the profit or loss is calculated. On the other hand, expenses must be recognized as soon as knowledge is available and a reliable estimate can be made of the possible loss that the accounting fact in question is likely to generate in the company. In addition, transactions must be recorded based on their accrual and not their collection or payment. This circumstance requires that accrual adjustments be made prior to regularization, so that the current of the transaction is taken care of, regardless of the date of its collection or payment.

IV. ACCOUNTING REGULARIZATION

The purpose of accounting regularization is to determine the profit obtained by the economic unit in a given period. With this process all the differences accounts, that is, expenses and revenues that have to be charged to the profit and loss account, are settled.

The expenses are consumption of assets and the revenues represent recoveries of assets, therefore if the latter are greater than the consumption will appear a surplus that we call profit. Otherwise, there would be a loss. Therefore, the profit at the end of the fiscal year coincides with an increase in assets and net worth, while the losses mean a reduction of the same patrimonial masses. In short, when we refer to the result, we actually mean equity variation.

V. DETERMINATION OF BENEFIT

The profit and loss account of the General Chart of Accounts includes the income for the year, consisting of income and expenses thereof, except when directly attributable to shareholders' equity in accordance with the rules of registration and valuation.