Equity accounting as part of business administration

N.V. Bondarchuk



Introduction. As an economic category, capital expresses social relations in production. The fact that no a clear and uniform definition of capital and some of its components, inclusive of equity, exists causes problems in the fields of accounting and financial reporting.

Purpose. The aim of this paper is to study the existing accounting system equity and the development of practical recommendations to improve its efficiency in managing the business.

Results. It has been determined that equity serves as the basis for creation and maintenance of an enterprise and is the main lever of development of business (entrepreneurial) activities. The difference in the way in which the term “equity” is used by different scientists has been established. Different approaches to defining the essence of equity, which have allowed the author to form her own definition of the term “equity,” have been considered; according to the author: “equity is the amount of advanced capital of an enterprise, i.e. the capital that must be invested in activities in order to obtain the first results (revenue) and net assets of the enterprise.”  The order of display of information on availability of and changes in equity in the accounting system has been considered. Practical recommendations on the use of analytical accounts to the account 43 «Reserve capital» have been provided.

The author has noted that the development of an enterprise requires, first of all, mobilization and efficient use of equity, which ensures financial stability and sufficient solvency of the enterprise. This, in turn, requires evaluation of efficiency of the use of equity in terms of both its individual elements and overall. In order to determine the efficiency of the use of equity, the author has suggested conducting a financial analysis of performance of the enterprise using the following indicators: the indicator of financial stability; the business activity (turnover) indicator; the cost effectiveness indicator; and the capital payback indicator.

Necessity of equity accounting management in the company has been established. Enterprise-wide capital management can be organized by type of activities or by the amount of capital indicators.

Originality. The novelty of this study is provision of practical recommendations on equity accounting for the purposes of effective enterprise management.


Conclusions. The author suggests opening the following analytical accounts for the “Reserve capital” account at enterprises: the profit used for dividend payments; the profit reinvested into the authorized capital; and the profit used for replenishment of the reserve capital. For the purposes of efficient equity management at enterprises, the author has suggested organizing and maintaining an equity management accounting at the enterprise.

Ключові слова

accounting; equity; registered capital; reserve capital; unpaid capital; retained earnings (uncovered loss); financial statements.



1. Yaremko, I.Y. (2006). Capital management company: economic and financial instruments : monograph, Mason, Lviv, (in Ukr).

2.Slav'yuk,  R.A. (2004). Finance Companies, Kyiv: TSNL, (in Ukr.).

3. Gusev, A.A. (2005). ЕVA concept of the effectiveness and evaluation of activities company. Finansoviy menedgment (Financinal management), 1, 57-66 (in Ukr).

4. Hurnak, O.V. (2003). Formation of an optimal capital structure based on the increase in bank lending. Naukovi praci Doneckogo nacionalnogo tehnichnogo universitetu (Scientific Papers of Donetsk National Technical Univercity, 65, 96 (in Ukr).

5. Lelyuk, O.O. (2007). Methods of systems analysis of agricultural enterprises of capital,  Agroinkom, 11-12, 78-85 (in Ukr).

6. Kaminska, T.G. & Tsaruk, N.G. & Ilchak, O.V. & Harapko, & N.I., Melnik, Z.Y. (2015) Activation of circulation of capital, accounting and control aspect: monograph, Nizhyn: Publisher PE Lysenko M., (in Ukr).

7. Kryvuts, Y.M. & Kuznetsova, T.V. (2004). Model optimization of capital structure, Visnik Mignarodnogo slov'yanskoho universitetu (University (Bulletin of the International Slavic Univercity), Vol. 2., p. 11 (in Ukr).

8. Verkhoglyadova, N.I. & Shilo, V.P. & Il'ina, S.B. & Kisla, V.I. (2010). Accounting Financial Accounting,  K .: TSUL (in Ukr).

9. Kyaran, B. (2001). Key financial indicators : analysis and development management company. Kyiv: Vseuvyto; Naukova dumka (in Ukr).

10. Ohiychuk, M.F. (2007). Accounting on farms. Kyiv: High School (in Ukr).

11. Andreychuk, V.G. (2002). The economy of agricultural enterprises. Kyiv: KNEU (in Ukr).

12. Accounting Accounting (2009). In F. Butynets (Ed). Zhitomir: PE “Ruta”  (in Ukr).

13. Sopko, V. (2006). Accounting capital company ( property, liability ). - Kyiv: Centre textbooks (in Ukr)

14. National provision (Standard) 1 “General Requirements for Financial Reporting” Retrieved from http://zakon5.rada.gov.ua/laws/show/z0336-13 (in Ukr).
15. Instruction on the application

of the Plan of Accounts for assets, capital, liabilities and business

operations of enterprises and organizations. Retrieved from: http://zakon3.rada.gov.ua/laws/show/z0893-99

(in Ukr).

Повний текст: PDF (English)


  • Поки немає зовнішніх посилань.
2015 4 12   24 33
2016 1 2   3 4
2017 1 2 2 (Ч.2) 3 4 (Ч.1) 4 (Ч.2)
2018 1 2   3 4  
2019 1          



Зміст журналу