Understanding Balance Sheets and Profit & Loss Accounts

Balance Sheet

Assets

A) Non-Current Assets

• Intangible Assets:
  • Research and Development
  • Industrial Property
  • Goodwill
  • Computer Applications
  • (- Accumulated Amortization of Intangible Assets)
• Tangible Fixed Assets:
  • Land and Buildings
  • Machinery
  • Transportation Components
  • Equipment
  • Information Processing
  • Furniture
  • (- Accumulated Amortization of Tangible Assets)
• Investments in Group Companies
• Long-Term Financial Investments:
  • Long-Term Credits
  • Long-Term Investments in Equity Instruments

B) Current Assets

• Stocks:
  • Merchandise
  • Raw Materials and Supplies
  • Work in Progress
  • Finished Products
  • Advances to Suppliers
• Accounts Receivable:
  • Customers
  • Trade Bills Receivable
  • Discounted Trade Bills
  • Trade Bills Receivable Under Management
  • Outstanding Commercial Effects
  • Other Receivables from Social Security
  • Tax Authority, Debtor
• Short-Term Investments:
  • Short-Term Investments in Equity Instruments
• Treasury:
  • Cash
  • Banks

Liabilities

A) Equity

• Capital:
  • Share Premium
  • Reserves
  • Results of Previous Years
  • Profit or Loss
  • Other Equity Instruments
  • Grants and Donations

B) Non-Current Liabilities

• Long-Term Provisions
• Long-Term Debts with Credit Institutions
• Long-Term Liabilities with Banks
• Long-Term Bonds and Debentures
• Long-Term Suppliers of Fixed Assets

C) Current Liabilities

• Short-Term Bonds and Debentures
• Short-Term Debts
• Suppliers of Fixed Assets
• Suppliers
• Other Payables to Social Security
• Tax Authority, Creditor
• Customer Advances

Profit and Loss Account

1. Net Sales Turnover:
   • Sales
   • Sales Returns
   • Sales Rebates
2. Change in Stocks of Finished Goods and Work in Progress
3. Work Performed by the Company for its Own Assets
4. Procurements:
   • Consumption = Opening Stock + Purchases of Merchandise +/- Change in Inventory
5. Other Operating Income: Subsidies for Operations
6. Staff Costs:
   • Salaries and Wages
   • Social Security Provided by the Company
7. Other Operating Expenses:
   • Supplies
   • Leases and Royalties
   • Insurance Premiums
   • Taxes
   • Repairs and Maintenance
   • Advertising
8. Amortization of Tangible and Intangible Assets
9. Allocation of Capital Subsidies to the Income Statement
10. Excess Provisions
11. Impairment Losses on Fixed Assets
12. Other Results

Operating Income

13. Financial Income:
    • Income from Shares
    • Income from Debt Securities
14. Financial Expenses:
    • Interest on Debt
    • Other Financial Expenses
15. Variation of Fair Value on Financial Instruments
16. Exchange Rate Differences
17. Impairment Losses on Investments

Financial Result

Profit Before Tax = Operating Income + Financial Result

18. Taxes on Profits
19. Profit for the Year from Discontinued Operations, Net of Tax

Profit/Loss for the Year