Basic Accounting for SMEs

ThE book, Basic Accounting for SMEs, offers a comprehensive guide designed for micro, small, and medium-sized enterprises. Its aim is to provide essential accounting knowledge that empowers business owners to manage their operations efficiently, comply with relevant regulations, and make informed decisions. The chapters cover everything from fundamental accounting principles to the financial statements necessary to comply with International Financial Reporting Standards (IFRS), ensuring transparency and clarity in financial management.

The approach is both practical and theoretical, helping entrepreneurs understand how to apply accounting tools within the specific economic context of Ecuador.

Chapter 1: Key Concepts and International Standards

This chapter introduces the core concepts of a business, its social responsibilities, and how businesses are classified based on various criteria. It also explores the legal and regulatory frameworks that govern accounting, including Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS), with a particular focus on their relevance for small businesses.

Chapter 2: Accounting Principles and the Double-Entry System

This chapter explains the fundamental accounting principles, the essential qualities of reliable accounting information, and the concept of double-entry bookkeeping. It also covers the accounting equation, key symbols used, and the types of accounts and journal entries that businesses must manage to accurately record their financial transactions.

Chapter 3: The Accounting Cycle

Here, the full accounting cycle is outlined, covering the stages of analysis, journal entries, posting, trial balance, and the preparation of financial statements. Emphasis is placed on the importance of each stage to ensure consistency and accuracy in the company’s financial records.

Chapter 4: Basic Financial Statements

This chapter provides guidance on preparing and using the main financial statements, including the income statement, the balance sheet, and closing entries. It also addresses how to manage adjustments such as accruals, amortizations, inventories, and provisions, ensuring proper financial resource management and compliance with tax obligations.