How did the accounting and capital organization system work in communist countries like the USSR? Did ideology justify or undermine the system?

The Soviet Union used cash accounting instead of accrual accounting, and with a uniform Chart of Accounts developed (probably by GOSPLAN) in Moscow. In consequence there was no matching of revenues against expenditures against revenues by accounting period (typically either a calendar month or fiscal month of exactly 4 weeks).

Cash accounting is done without many of the usual Balance Sheet control accounts such as Accounts Receivable, Accounts Payable, Prepaid Assets, Accrued Expenses, Accumulated Depreciation, Accumulated Amortization, Current Portion of Long Term Debt, and Deferred Revenues. I can't even begin to imagine what pretended significance Cost of Goods Sold is without employing the matching principle - but it's almost unrelated to actual cost of goods sold. Book learning (of accounting) in USSR would simply not have covered such unused topics.

Therefore there was no (natural, at least) distinction between long-lived assets requiring amortization and short-lived assets (such as inventory, accounts receivable, and cash) that don'; and no concept of amortization because that is an accrual accounting term that doesn't exist in cash accounting.

The closest one finds in Western economies is perhaps in the tax ledgers of Canadian corporations, as Revenue Canada requires income tax to be calculated on a cash accounting basis. However this is not strictly true: Capital Assets are entitled to tax relief in the amount of a Capital Cost Allowance calculated annually. Unfortunately this amount is set on the basis of social engineering principles rather than sound business practice, which is not so different but simply lesser in significance from the Soviet Union.

As an example of the absurdity of cash accounting in the modern world, consider the construction of a new factory over a two year span. That entire capital expense must be recognized in the (24 monthly) periods in which it is incurred - long before any revenue flows from the new factory.

In contrast, under accrual accounting those expenditures sit in a Capital Asset account until production begins. Then an amortization formula is applied to that asset each period, expensing a portion deemed to have been "consumed" in the period to generate an associated revenue. (The amortization formula attempts to spread the entire Capital Cost over the anticipated life of the asset.)

Note that the above is a very simplistic look at a complex topic. Proper justice would require me to advance my accounting background much further than I am interested in doing; and to re-open books I haven't looked at in nearly two decades.

The economy of Soviet union was not based on relations which you mention, in particular the word "capital" makes no real sense when we are talking about Soviet economy.

It was a "planned economy". There was a state institution called Gosplan which determined what and how many of goods had to be produced, and how the resources had to be allocated, and how the product had to be distributed. The factory managers did not care so much about "profit" as for "fulfillment of the plan", that is achievement of certain production goals. Everyone, including managers were receiving salary, and this salary depended on the fulfilment of the state plan. Necessary resources had also to be obtained by non-economic means (by lobbying with Gosplan).

It is true, in this economy money existed, but emission of money and workers salary were decided by another state planning agency (Minfin). So some enterprises could be unprofitable for a long time.

Of course it did not work well, or as intended, and there were multiple attempts to reform the system, or introduce some means to measure profit, and to allow some limited economic exchange, especially on the later stages of existence of this state.

The Soviet Union had a continuously functioning value-form ("capitalism") society, using state ownership and conflicting sub-state ("bureaucratic") competitive control of state owned instruments to co-ordinate a generalised "commodity bundle" simulation plan for the economy. In addition in areas of direct state control ("tractor" production ie: tanks; "war industry" post 1945) the state conducted a control more analogous with the military industrial complex.

1. Wage labour existed in the soviet union, this was acknowledged by the state and party apparatus as to be "not capitalist" in nature because there was generalised state control from "a certain point." Other marxists, anarchists, etc. disputed this.

2. Wage labour was coordinated by banks, bonds, firms, contracts, delivery windows, etc. Another poster has talked about accounting in the soviet union, which unfortunately I know too little about because it is interesting as all get up. But the point being that the Soviet Union's firms and instrumentalities ("companies") accounted for themselves as if money was changing hands. Because money did change hands between firms. See Coatse 1937.

3. The state attempted to control the economy. They did this in multiple ways: the state conducted state economic planning of broad expenditures. State institutions conducted commodity bundle ('micro') economic planning. State banks conducted bond issues. The state used the party to embed state minded persons throughout every low level firm to achieve state outcomes.

4. The state failed to control the economy. Capital as a social relationship found ways to subvert control. Often this was quality minimisation due to lack of inspection or partly closed markets. Labour conducted traditional tactics against employers "they pretend to pay us we pretend to work."

5. Why didn't the nomenklatura just declare themselves to be bosses before 1991? Because their power depended on it, its why they killed themselves off to maintain power in the 1930s, Sheila Fitzpatrick is the dead set go to historian on this point.

The Soviet Union was capitalism which denied that it was capitalism, which used techniques which the US State used in the military industrial complex, and which often had better firm level control. However in the anti-fordist crisis of the 1970s the Soviet Union could not simply liquidate social democracy: they feared they would be murdered by workers, and social democracy was baked into firms in the soviet union, not into the state. In the West destroying social democracy at the state level was much easier, and the fear of being murdered was much less.