Accounting is the backbone of any enterprise, serving as a mirror reflecting every economic transaction and pivotal event shaping the entity’s financial landscape. In Latvia, the organization of accounting is governed by the Law On Accounting and Cabinet Regulations.
For Businesses and Private Individuals: Every enterprise, big or small, is obligated to maintain accounting records that offer a clear depiction of its economic activities. Whether you’re a business entity or a private individual engaging in economic activities, the precision of your accounting matters. Individual merchants, farming enterprises, and other natural persons with a turnover below 300,000 euros (among others) may utilize the simple entry system, as per Cabinet procedures.
Associations, foundations, trade unions, and religious organizations with a turnover below 40,000 euros can also opt for the simple entry system.
Key Principles of Accounting:
- Double Entry System: Accounting registers must adhere to a double-entry system.
- Financial Transparency: Accounting should enable a qualified third party to understand the financial position, results of activities, and cash flow at a specific date.
- Truthful and Comprehensive Reporting: Accounting information should be truthful, comparable, timely, significant, understandable, and complete.
- Income and Expenditure Allocation: Accounting ensures proper allocation of income and expenditure by accounting periods.
Responsibility of Enterprise Heads: The head of an enterprise bears the responsibility for maintaining accurate accounting records and preserving all documents substantiating economic transactions.
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