Understanding Annual Accounts: Structure, Filing & Components

Annual Accounts

A. Model Structure and the Annual Accounts

These should be prepared in accordance with the Commercial Code, the Revised Corporate Law, and the Law of Limited Liability Companies as provided in the General Accounting Plan.

They should be formulated within a maximum of three months after the end of the fiscal year.

The General Accounting Plan provides two different models of annual accounts:

• Normal
• Abbreviated

Abbreviated annual accounts facilitate this requirement for individual entrepreneurs and small and medium-sized corporate businesses.

B. Depositing Accounts in the Commercial Register

Once developed, the annual accounts may be filed and advertised in the Commercial Register.

Sole proprietors are not required to deposit their annual accounts in the Commercial Register, but they can if they wish.

Companies, however, are required to submit their accounts to the Commercial Register within one month of their adoption.

D. The Balance Sheet

The balance sheet must distinctly register the assets, liabilities, and net assets of the company.

The balance sheet follows a formally established model. The General Accounting Plan provides two official balance sheet models:

• Normal Balance Sheet Model
• Abbreviated Balance Sheet Model

The various items are entered in the balance sheet in the following order:

• In the assets section, from low to high liquidity.
• In the liabilities section, from low to high chargeability.

E. The Profit and Loss Account

The profit and loss account is the document that sets the accounting profit, separating revenue and corresponding expenditures. The result will consist of income and expenditure for the year (except where necessary to tax them directly to equity, as set by valuation rules).

This account follows a formally established model. The General Accounting Plan offers two models of profit and loss accounts:

• Normal Model
• Abbreviated Model

F. The Statement of Changes in Equity

This statement shows the changes in equity and consists of two documents:

• Statement of Income and Expenses
• Statement of Changes in Equity

Statement of Income and Expenses

This document contains the income and expenses generated by the company's activity earned in the year, distinguishing between those recognized in the profit and loss account and those registered directly in equity.

Statement of Changes in Equity

This document contains all the movements that have occurred in equity, including those from transactions with shareholders or owners of the company.

G. The Statement of Cash Flows

The statement of cash flows is a document showing the company's ability to generate cash and cash equivalents and the cash requirements of the same, ordered into three categories:

• Cash flows from operating activities
• Cash flows from investing activities
• Cash flows from financing activities

H. Notes to the Financial Statements

The notes are a supplement that extends and discusses the information contained in the documents that are integrated into the annual accounts. This document is produced following the formal model established for it. The General Accounting Plan establishes two models of notes to the financial statements:

• Normal Model
• Abbreviated Model