reikningsferli

Reikningsferli is the systematic process by which an organization records, monitors, and reports its financial transactions. It covers the collection, classification, recording, and communication of financial information to internal and external stakeholders. The process is typically based on double-entry bookkeeping and guided by applicable accounting standards and regulations in Iceland.

A standard reikningsferli includes several stages. First, transactions are identified and documented through source documents such as invoices and receipts. Second, these transactions are journalized, with debits and credits recorded in journal entries. Third, amounts are posted to the general ledger, where accounts are summarized. Fourth, a trial balance is prepared to check that debits equal credits. Fifth, period-end adjusting entries are made to reflect accruals, deferrals, depreciation, and provisions. Sixth, an adjusted trial balance is used to prepare financial statements, including the income statement, balance sheet, and cash flow statement, as well as any required statements of changes in equity. Seventh, closing entries finalize temporary accounts for the period and a post-closing trial balance may be prepared. Finally, financial reporting, analysis, auditing, and compliance activities are carried out, often with internal controls and reconciliations to ensure accuracy.

Key concepts in the reikningsferli include the double-entry system, the chart of accounts, accrual versus cash accounting, and internal controls such as reconciliations and separation of duties. The purpose is to provide reliable financial information for decision-making, performance assessment, compliance with laws and standards, and transparency for investors, lenders, and regulatory authorities. In Iceland, the framework is influenced by national accounting rules and may align with international standards (such as IFRS) for larger entities, with domestic rules governing smaller organizations.