Meaning of Active and passive

What is Active and passive:

In Accounting, each of the parties that constitute the balance sheet or balance sheet of a company is known by the name of assets and liabilities. The assets would become what the company has and the liabilities that the company owes.

Active As an asset it is called the set of all the goods and rights that are owned by a company, institution or individual, which can be converted at a given moment into money. Examples of assets would be the furniture, the shares, the products that the company sells or any other type of assets that the company owns.

Passive As a liability is denominated the monetary value that, in total, sum the debts and commitments that a company, institution or individual has assumed with third parties, such as banks, credit entities, suppliers, employees, etc.

Types of accounting.

Types of accounting The accounting is classified according to the item where it is used:

• Business accounting: It includes calculations of costs, expenses, income, production of the year, expenses or extraordinary income (fiscal, operating, financial sanctions, losses and gains by exchange rate).

• Financial accounting: Includes the gross export surplus, added value, commercial margin, self-financing capacity, resources, assets, liabilities, amortization, solvency of the company, financial ratio, factors of production and the exploitation cycle.

• Bank Accounting: For the management of different business funds, loans, securities, bonds, different types of currencies. They also work with econometric models that establish market variables, because of the foregoing, rigorous accounting controls are made to avoid errors.

Accounting objectives

Accounting has clearly established its general and specific objectives, through the application of accounting standards.

Overall objective

The general objective of accounting is to provide information to management for sound decision making.

Accounting

The accounting had its origin in the development of knowledge of society and thought that deals with economic phenomena, their explanation and transformation. The need for accounting is created with the urgency of man to control and manage their resources, so that its origin goes back to the origin of trade. Some scholars claim that writing was developed in order to record the accounting information.