That internal accounting is the sub-discipline of business accounting that records, analyses and thus informs the decision-makers in the company regarding internal operations. It is also called operational bookkeeping.
The intended recipients are the management and other decision-makers, such as department or division managers. The information remains within the company and is not generally intended for outsiders. The internal accounting department provides information and tools for planning, controlling, and monitoring.
Ingredients and tasks
The central component is the cost and performance accounting. It records the incurred costs and assigns them to the departments and products of the company. Its calculation variables are costs and services; its result is the operating result. The cost accounting helps in pricing decisions, supports decisions between alternatives and compares planned costs with actual costs. Other instruments include controlling, operational statistics, and the planning accounting.
There are no legal regulations governing internal accounting. Therefore, companies manage it freely and according to their own needs. The time horizon is determined by the purpose of the information and extends into the future as well.
Reference to SAP Business One
SAP Business One provides cost accounting in the Finance module. Companies assign up to five dimensions, such as departments, branches, and product groups, and cost items within them. Segmentation rules distribute amounts, for example as a percentage or by square meters. The Cost Accounting reconciliation report compares the amounts by dimension with the GuV balances.
Demarcation
External accounting (financial bookkeeping) primarily informs external parties; it follows commercial and tax law and accounts for expenses and revenues. Cost accounting is derived from the results of financial bookkeeping: it calculates neutral expenses and revenues and additionally takes into account additional costs. This transition is called differentiation.
Link to the post
The article describes internal accounting as a tool for corporate management to plan and control operations. The professional sources confirm this.
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