What is self-financing? Definition and principles

Let's try to find out what self-financing is. This is a special economic category that expresses relations in the sphere of distribution, production, consumption, and exchange of products. Many beginning entrepreneurs try to understand what is self-financing and how to use this economic term in their activities. In conditions of transition of the country's economy to a market option, this parameter is an important economic concept.

Features of cost accounting

It is a form of economic relations, material interest and responsibility between enterprises and the state, between the base company and its structural subdivisions, between enterprises, and also within the organization.

The introduction of cost accounting assumes rational management of the economy, payback incurred costs, the implementation of the economy, guaranteed profitability of the organization.

Essence of economic calculation

It is in the aggregate of means and mechanism, thanks to which there is a final result - a full-fledged production management. It is the full cost-accounting on the basis of commodity-money relations that guarantees the conformity of the resources of agricultural enterprises with the results of their direct activity. The system of such relations reflects the constant movement of resources, the renewal of the circulation of the company's funds. Arguing that such a self-financing, we note that he expresses the production relations that develop on the basis of financial and material resources in companies of all forms of ownership.

Scale of self-financing

This term refers to the whole sphere of industrial relations, built on the basis of terms: money, value, commodity, cost, price, profit. The conditions of cost accounting are as follows: within the company, economic categories interact according to existing laws in this area. It should be noted that the organization of the union of labor and means of production, in this connection, and directly the process of manufacturing products. The enterprise can include all the basic principles of cost accounting.

Features of agricultural organizations

The main development of cost accounting for such companies is determined by important principles:

• Self-financing and recoupment of incurred costs;
• State regulation of the economy, as well as self-management of the collective;
• The material interest of individual workers for the result of production;
• Control of financial activities of the organization.

Self-financing involves covering all costs by the company at the expense of personal financial resources. The company's revenues from the sale of its products must be sufficient for the accumulation and consumption fund. The state has the right to regulate such market parameters as tax and interest rates, tariffs. Controlling their level, it gets the opportunity to create optimal conditions for the realization and production of goods.

How to make cost accounting effective

It will be effective if, in addition to the principles mentioned above, each member of the work collective will perform qualitatively the duties that are assigned to it. If an employee does not have a personal financial interest, there will be no question of efficiency. A special incentive system for employees should be established at the enterprise. It includes a variety of bonuses, additional payments at the end of the year, material assistance. Only with the interrelation between the productivity of labor and decent pay will an employee be interested in the result, and the enterprise will be able to count on a significant profit.

Interesting Facts

In addition to material interest, such a factor as the responsibility for spending money resources is also important. There should be a liability for the use of material and financial resources. In reality, this principle presupposes a comparison of costs with the results of economic activity at each stage of production. With constant control of the "ruble", a full cost accounting for state enterprises is realized.

Importance of the financial and banking system for self-financing

It is the financial authorities that constantly monitor the timely payment of taxes by public and private enterprises. The use of credit sanctions by banking structures stimulates the heads of organizations to look for an effective application of all available resources. Such methods of impact on enterprises as returnability, targeted use of loans, urgency, allow banks to influence the circulation and manufacture of goods, promptly identify and offer ways to eliminate losses of mismanagement, unproductive expenses, check accounts. Cost accounting many companies are afraid, realizing that he has a lot of "pitfalls". This system is constantly being modernized, developing, keeping up with the changes taking place in the domestic and world economy. So what is cost accounting? It is a complex system in which all elements are interrelated.

Types of cost accounting

There is a subdivision of self-financing in the form of organization for intraeconomic and general economic. The first option involves economic relations with the state or other companies of individual farms. Intra-economic calculation is related to relationships in the enterprise itself, for example between separate units. Among the current methods of management leading positions belong to three variants of calculation: commercial, intrafirm, economic.

The economic calculation is spreading nowadays to enterprises that are fully or to a greater extent owned by the state. Its task is to ensure the effective activity of the organization aimed at full payback of expenses, as well as dynamic development.

Commercial calculation functions at enterprises of all types of property, aimed at obtaining maximum material profit. Commercial structures can rely on state assistance, cash loans or transfers. Cost accounting in this case depends on the volume of output, as well as the degree of independence (financial independence) of the company.

To compensate for the costs incurred, the owners of companies are looking for ways to reduce financial, material, labor resources. The peculiarity of this variant of self-financing is the provision of operational independence to the branches and divisions.

Intrafirm calculation emerged as a kind of financial relations within the company. Its task is to create a full-fledged, balanced activity of all branches of the company.

The interrelationship of these three models is realized through an economic mechanism.

Elements of the mechanism of self-accounting

These include the following components:

• System of planning, stimulation, responsibility;
• A subsystem containing information, property, legal support;
• Subsystem, including cooperation, organization, specialization.

Conclusion

Cost accounting provides a stable operating company full recovery of incurred costs, a stable profit. The firm should receive such incomes which would completely cover production costs and had a good profit. The organization has a real possibility of complete independence in its economic activities. The company itself plans sales, production, employs employees, disposes of property. Any self-supporting enterprise has its own bank account, a full-fledged accounting system.

Each enterprise has its own settlement account with a bank, can get loans from banks and other credit institutions. It also has an independent balance and a complete accounting system. If the employees perform their duties in an improper manner, material responsibility is assumed. If the enterprise does not fulfill its production plan, if its quality deteriorates, defective products are produced, irrational application of equipment and material resources, the company's revenues are significantly reduced. As a result, relations with customers, banks, suppliers of raw materials deteriorate, problems arise with paying taxes, paying wages to employees. The results can be very bad for the company, from administrative fines to complete bankruptcy.