Accounting Plan

Accounting Plan

An Accounting Plan, also known as a “Plan Comptable” in France, is a comprehensive guide provided by several European countries such as France and Spain. These plans serve to harmonize and standardize accounting practices within the country, ensuring uniformity in how financial information is recorded, measured, and reported. The Accounting Plan typically includes the following components:

1. Definitions of Accounting Terms: Clear and precise definitions for key accounting terms as used within that country.

2. Rules for Valuation and Measurement: Detailed guidelines on how different assets, liabilities, revenues, and expenses should be valued and measured.

3. Model Financial Statements: Templates and formats for standard financial statements which all organizations within the jurisdiction are required to follow.

4. Chart of Accounts: A structured list of all the account titles in the ledger used by an organization, categorized systematically.

This legalistic approach contrasts with the more principles-based approach found in the UK, where the primary focus is to ensure that financial statements present a “true and fair view” of the financial status of an organization.

Examples

1. France’s Plan Comptable Général (PCG):

   • Definitions: PCG provides specific names and descriptions for each type of asset, liability, and equity.
   • Valuation: Fixed assets are generally valued at historical cost.
   • Model Financial Statements: Balance sleeves and profit & loss statements must follow the prescribed format.
   • Chart of Accounts: Divided into classes, including assets, liabilities, and equity.

2. Spain’s Plan General de Contabilidad (PGC):

   • Definitions: Specific to Spanish accounting standards.
   • Measurement: Includes rules on how to measure inventory, receivables, etc.
   • Financial Statements: Includes models for income statements and balance sheets.
   • Chart of Accounts: Structured similarly to international standards, with detailed account codes.

Frequently Asked Questions

Q1: Why do some countries use an Accounting Plan? A1: Countries like France and Spain use an Accounting Plan to ensure uniformity, comparability, and transparency in financial reporting across all businesses operating within their jurisdictions.

Q2: How does an Accounting Plan differ from International Financial Reporting Standards (IFRS)? A2: An Accounting Plan is jurisdiction-specific and may have more rigid and detailed rules compared to IFRS, which provides a global framework for financial reporting with a focus on principles rather than specific rules.

Q3: Is the Accounting Plan mandatory? A3: Yes, in countries where it is prescribed, adherence to the Accounting Plan is typically mandatory for all businesses.

Q4: Can a company deviate from the Chart of Accounts provided in the Accounting Plan? A4: Usually, the Chart of Accounts needs to be followed strictly. Some flexibility may be allowed in certain countries but generally within the predefined framework.

Q5: Do Accounting Plans evolve over time? A5: Yes, Accounting Plans undergo revisions and updates to adapt to changes in the economic environment, regulatory requirements, and international accounting practices.

Related Terms

• Chart of Accounts: A systematic listing of all accounts used in the general ledger of an organization, typically structured to conform to regulatory standards.

• Financial Statements: Formal records of the financial performance and position of a business, including the balance sheet, income statement, and cash flow statement.

• True and Fair View: A fundamental concept in UK accounting, requiring financial statements to represent the factual financial status of a company, without any intentional misstatements.

Online Resources

• Investopedia: Accounting Plan
• International Accounting Standards Board (IASB)
• French Plan Comptable Général (PCG)

Suggested Books for Further Studies

• “International Accounting” by Timothy Doupnik and Hector Perera
• “Accounting Principles” by Jerry J. Weygandt, Paul D. Kimmel, and Donald E. Kieso
• “Intermediate Accounting” by Donald E. Kieso, Jerry J. Weygandt, and Terry D. Warfield

Accounting Basics: “Accounting Plan” Fundamentals Quiz

Thank you for exploring the concept of an Accounting Plan. We hope our explanations and quizzes helped enhance your understanding of this essential accounting framework!