Heritage Concept In Accounting

Heritage Concept In Accounting

We explain what is heritage and what are the elements of heritage in law. In addition, its main characteristics.

The heritage has a close relationship with what we know today as an inheritance.

1. What is Heritage?

The word heritage comes from the Latin patrimonĭum , and refers to the set of goods that a person acquires through the corresponding property title.

In the epistemological sense of the word, heritage is understood as that which is obtained through the line of the father , that is to say that it has a close relationship with the term we now know as an inheritance. This term was already used since the time of ancient Rome, where family property could be inherited.

• Expand: What is equity in accounting?

2. Heritage in Law

The rights and obligations should be subject to a value expressed in currency.

In the field of law, the concept of heritage acquires great importance, especially in the field of civil law and in relation to private law institutions . Although it is also defined as the set of goods, the right is added to its definition the rights and obligations of a person, whether the same physical or legal , which can be externalized in monetary value.

In any case, this definition is always subject to changes according to the author who treats it . However, there is a point in common in the three basic elements that make up the heritage, which are:

• Set of rights and obligations.  These two elements act unitarily, that is, they can not be separated from each other.
• Monetary value.  The elements mentioned in the previous point must be subject to a value that can be expressed in the currency of use.
• Title.  In order for these rights and obligations to be valid, the title that proves or credits them must exist. In the case in which the subject who owns the estate is a creditor must prove it, in case of debtor there must be another subject that demonstrates the debt that the former has to him.

3. Characteristics of the Heritage

From this definition it is also possible to distinguish between assets and liabilities of equity:

• The assets refer to the rights and assets that the subject owns, whether real or credit.
• The liabilities refer to the debts, charges and obligations of the subject.

See: Elements of heritage .

Certain authors give certain characteristics to heritage, such as:

• Indivisibility.  that is to say that a single person can be the possessor of a certain patrimony.
• Intransmissibility  that is, that the patrimony can not be inherited if the person who owns it has not yet died. When the individual has died his ownership over the patrimony is extinguished, being able in this way to inherit his descendants.
• Impossibility of embargo  in this case, when the right to inherit has not yet been acquired, the good, meanwhile, can not be seized.

The patrimony can be classified in different ways according to the characteristics that it has, some of them are the residual, the collective, the heritage of nasciturus and the administration , also known as the destination.

We explain what an inventory is and how this asset register is composed. In addition, the types of inventory that are usually used.

An inventory provides specific information on the purchase and sale actions.

1. What is Inventory?

Inventories are real and concrete goods, that is, movable and immovable property. These form the commercial flow of a person or a company . These goods are for sale, hence the commercial character, or for the consumption of goods and / or services. The inventories are made in a certain period of time .

If a company is commercial, its livelihood is always the purchase and sale, that is, the exchange of goods and also of services. With the inventory the company carries out an exhaustive control of merchandise  during the commercial period, and at the end of it has the "final balance", that balance is comparable with that of other years and serves to draw conclusions and from there take certain actions depending of the result When the goods are being counted for a certain economic period, it is necessary that they appear in the "Current Assets" group, this means that it is all the merchandise at the cost that is in the hands of a company.

The concept of inventory has to do with accounting , which is a system of control and recording of profits ( income and expenses), as well as economic operations, in this case carried out by a company or association, reflecting the financial movements they carry out.

The direct relationship between inventory and accounting is the core of commerce . The aforementioned companies as commercials must without fail have a tenacious control in their operations, the inventory provides summary and also concrete information on the actions of purchase and sale of goods or services.

Concrete information has pillars on which it is based. For example, each inventory has in its interior:

• The initial inventory, then you begin to place the valuation of the goods you have when the accounting period begins.
• The purchases represent the merchandise acquired by the company in order to market it.
• Returns and purchase expenses.
• The sales are the transfer, in this case, of a good to another person after the payment of a price already agreed.
• Sales returns
• Goods in transit (are those that are on track to reach the company but have not arrived yet).
• Goods on consignment that do not belong to the company, and finally
• The final inventory, which is an analysis comparison of the goods at the beginning of the period and at the end of it, where yields results profits and losses registered.

See also: Cost Accounting .

2. Types of inventories

Although it is not the same inventory for all types of companies, inventories vary depending on the specialty or particularity of each company. Not all are dedicated to the same and that is why they correspond an inventory according to their merchandise. Some are dedicated exclusively to the sale of finishedproducts and these correspond to inventories of finished products .

Different is an inventory of raw materials , which are the elements that once processed will be a product. There are products that are not in a state of raw material or finished product, are in an intermediate process, that is to say that they are being carried out or being formed, and these correspond to a determined inventory, in this case the inventory of products in manufacturing process .