Accounting Basics: Principles, Accounts and Entries for Beginners

Who keeps accounts and what is recorded

Accounting entities are state authorities and administrative bodies, legal entities registered in Uzbekistan, their subsidiaries, representative offices, branches and other units. Individual entrepreneurs, citizens' self-government bodies, and branches and representative offices of foreign companies keep accounts and submit reports in the manner established by law (Article 6).

The objects of accounting are assets, liabilities, equity, reserves, income, expenses, profits, losses and the business transactions related to their movement (Article 7). Synthetic accounting summarizes data by economic characteristics in the manner established by law. Analytical accounting provides detailed information, and the company determines its procedure itself (Article 8).

Double entry — the foundation of everything

Accounting is kept by the double-entry method: each transaction is recorded simultaneously and interconnectedly, in monetary terms, in at least two accounts (Article 4). The amount debited to one account always equals the amount credited to another — which is why the balance sheet balances.

Active accounts (used for property and resources) increase on the debit side and decrease on the credit side. Passive accounts (liabilities and equity) work the other way round: the balance and increases are recorded on the credit side, decreases on the debit side (NAS No. 21, paragraph 3).

The chart of accounts: what it consists of

Since 1 January 2025, a new version of NAS No. 21 «Chart of Accounts for Business Entities and Instructions for Its Application» has been in effect (Order No. 191 of the Minister of Economy and Finance, reg. No. 3593 of 27.12.2024). The chart is grouped by elements of the financial statements: Chapter 1 — assets (long-term and current), Chapter 2 — liabilities (current and long-term), Chapter 3 — equity, Chapter 4 — income and expenses, Chapter 5 — off-balance-sheet accounts. Based on it, the company draws up its own working chart of accounts (paragraph 4 of NAS No. 21).

The standard divides accounts into types (paragraph 3):

• permanent — shown in the balance sheet and carrying a balance at the end of the period: active (A), passive (P), contra-active (CA) and contra-passive (CP). An example of a contra-active account is 0200 «Depreciation of fixed assets», which reduces the value of 0100 «Fixed assets» in the financial statements;
• transit (T) — temporary income and expense accounts that have no balance at the end of the reporting period;
• off-balance-sheet — property that does not belong to the company but is temporarily at its disposal, as well as contingent rights and obligations.

Primary documents and registers

Every entry is based on a primary accounting document recording the fact of a transaction (Article 14). Mandatory details: the company's name; the title, number, date and place of the document; the content of the transaction and its measurement in physical and monetary terms; the positions, surnames and signatures of the responsible persons. Primary documents may be prepared in electronic form, and the persons who prepared and signed them are responsible for their timeliness and reliability.

Data from primary documents are systematized in registers — journals, statements and books kept by the double-entry method, which may be electronic (Article 15). Unsupported corrections in registers are not allowed.

Stocktaking

The accuracy of accounting data and financial statements is confirmed by a mandatory stocktake of assets and liabilities; the items covered, the procedure and the timing are set by the stocktaking standard (Article 16) — currently NAS No. 19 «Organization and Conduct of Stocktaking». In practice, before the annual financial statements, warehouse balances, cash, fixed assets and settlements with counterparties are reconciled.

Financial statements and the reporting period

The annual financial statements include the balance sheet, the statement of financial results, the cash flow statement, the statement of equity, and notes, calculations and explanations (Article 22).

The reporting year is the calendar year, from 1 January to 31 December. For a new company, the first reporting year runs from the date of registration to 31 December; if a legal entity (other than a budget organization) is registered after 1 October, the first year ends on 31 December of the following year (Article 24).

Primary documents, registers and financial statements are kept for the periods established by law, but for no less than five years after the reporting year (Article 29).

Sample journal entries for beginners

Account numbers and names follow NAS No. 21 (the English names are our translation; the original is in Uzbek). The entry «Dr 1010 Cr 6010» means: debit account 1010, credit account 6010.

• Materials received from a supplier: Dr 1010 «Raw materials and supplies» — Cr 6010 «Accounts payable to suppliers and contractors».
• Supplier paid from the bank account: Dr 6010 — Cr 5110 «Settlement (bank) account».
• Finished goods shipped to a customer (revenue): Dr 4010 «Accounts receivable from buyers and customers» — Cr 9010 «Income from sales of finished goods».
• The customer paid: Dr 5110 — Cr 4010.
• Wages accrued to main production workers: Dr 2010 «Main production» — Cr 6710 «Payroll settlements with staff».
• Tax withheld from employees' income: Dr 6710 — Cr 6410 «Payables to the budget».

Where to start in practice

• Adopt an accounting policy and a working chart of accounts based on NAS No. 21.
• Set up the flow of primary documents: contracts, e-invoices (ESF), acts, delivery notes, cash and bank documents.
• Choose accounting software in which registers are kept by double entry.
• Reconcile settlements with suppliers, customers and the budget every month.
• Before the annual financial statements, carry out a stocktake and close the transit income and expense accounts.