4.1 Cost planning and cost accounting

Cost plans record all costs and expenses of service production from different contexts. The costs of developing a business idea must be recorded in the same way as the pre-financing of the creation of the products themselves. Capital requirements must be determined. Profit and loss must be calculated on a monthly basis. An entrepreneur must constantly know the liquidity. Final accounts are required at the end of the year. Cost accounting forms the basis for the following detailed accounts: 

•  the implementation of the calculation,
•  the calculation of the investments,
•  the calculation of the capital requirement,
•  the calculation of profit and loss,
•  the calculation of liquidity,
•  the preparation of the balance sheet,
•  the preparation of annual financial statements.

The calculation includes the determination of the costs; it is also required for a cost estimate.

Investing means investing capital profitably. Investment is defined as a medium to long-term capital investment. 

The capital requirement for investments, purchase of goods, start-up financing, participations, etc. is to be calculated. The capital requirement is covered by equity capital and borrowed capital. Every company needs capital.

The profit and loss account (P&L) determines the annual result of the business activity. The annual result is obtained when all expenses (costs) are deducted from the sales revenue.

The liquidity calculation determines whether the company can always meet all payment obligations.

The balance sheet is the comparison of the company's assets and liabilities for a business year.

Annual accounts must be prepared at the end of the year. The annual financial statement of a company can vary in scope. It usually includes the profit and loss account, the liquidity statement and the balance sheet.