Understanding the General Accounting Plan and Financial Statements

The General Accounting Plan

The General Accounting Plan is mandatory for all companies that must keep records in any legal or corporate form. The conceptual framework consists of the fundamentals, principles, and basic concepts that inspire the entire plan.

Components of the Conceptual Framework

It is possible to distinguish seven parts within the conceptual framework:

• Annual accounts
• Information requirements for annual accounts
• Social principles
• Elements of the annual accounts
• Registration or recognition criteria
• Accounting standards generally accepted

Annual Accounts for SMEs

The annual accounts for SMEs include:

• Balance sheet
• Profit and loss account
• Statement of changes in equity
• Memoria (Notes to the financial statements)

These financial statements report on the company's results, assets, and financial situation. The chart of accounts provides a detailed and consolidated list of all company assets, expressed in various accounts and subdivisions.

The Profit and Loss Account

The profit and loss account is a statement intended to calculate the result a company has obtained during a financial year, explaining the composition of results and the operations performed to reach that outcome.

Structure of the Profit and Loss Account

The profit and loss account reflects the result of the exercise, consisting of income and expenditure. For SMEs, it is calculated as the sum of the operating result and the financial outcome to obtain the result before tax, from which income tax is calculated.

Memory and Other Financial Statements

The Memoria is an explanatory document that extends the content of other annual accounts. More extensive comments help recipients and users better understand the company's situation.

Contents of the Memory

While the content is not strictly limited, it should at least provide information about:

• Business activity
• Bases of presentation of annual accounts
• Application of results
• Registration and valuation standards
• Tangible and intangible property
• Financial assets and liabilities
• Equity and fiscal location
• Income and expenses
• Grants, donations, and bequests
• Related party transactions