We explain all those aspects about the annual accounts report that no entrepreneur or small businessman should be unaware of.
- The report expands and comments on the information contained in the other documents that make up the annual accounts.
- In addition to numerical data, the memory provides a lot of qualitative information of great interest
Post content
- What is the annual accounts report?
- How important is the annual accounts report?
- What is the content of the memory?
- The report in the normal annual accounts model
The annual accounts report It is one of the most important accounting documents. However, many entrepreneurs have doubts not only about what content the one they present should have, but also about the reading that can be done of those of other companies with which they relate and whose accounts arouse interest.
Without a minimal knowledge about the role of memory of the annual accounts runs the risk of drawing hasty or incomplete conclusions from the analysis of other financial statements, such as the profit and loss account, the balance sheet, the statement of changes in equity or the statement of cash flows.
1. What is the annual accounts report?
The Commercial Code itself and, in its development, the General Accounting Plan, define it when they say that “expands and comments on the information contained in the other documents that make up the annual accounts. That is, it adds explanatory texts to the mere figures that appear in other documents. In addition, it offers us additional numerical data to those included in other financial statements.
The objective is for the annual accounts to reflect the Faithful image of the assets, financial situation and results of the company. In that sense, there are two especially important particularities:
- Memory can reflect complementary information that contribute to achieving the objective that the accounts represent a true image.
- In exceptional cases, so that the annual accounts convey a true image, some accounting standards may no longer apply. This circumstance is also reflected in memory.
2. How important is the annual accounts report?
The annual accounts contain various balances. One of them is related to the extension of information. On the one hand, they try to summarize in the most concise way possible what is most important about the situation and evolution of the company. But it is also necessary to go into some detail in certain aspects to understand the accounts. This mission is fulfilled by the annual accounts report.
Second, the other financial statements are numerical. The memory is also a memory in some cases, such as, for example, in the information on the application of the result or in the breakdown of items that have been grouped in other accounting statements. However, the memory additionally offers information of accounting and financial interest that is not transferable to figures. We can say that memory provides notes and texts that allow us to understand the whole.
Furthermore, it helps maintain the balance between transparency that all those interested in the company need and the need that its managers have to maintain a certain confidentiality. The other financial statements, having much more defined content, may not offer all the relevant information. In that sense, memory adds flexibility. In this way, we can know relevant aspects without having to add too many details when they are not essential to convey a faithful image.
3. What is the content of the memory?
He memory content It not only varies depending on factors such as the applicable legislation, the size of the company or the fact that the accounts are individual or consolidated. It also does so due to the company's own circumstances, which lead to the introduction, expansion, elimination or reduction of certain sections.
In the case of the Spanish General Accounting Plan, it is noted that the established content is a minimum required. However, sections that do not show significant information can be omitted.
We can say that, in general terms, among other aspects, we find in memory:
- Identification data.
- Explanation of how accounting principles and registration and valuation standards have been applied.
- Game breakdowns.
- Details and qualitative information on different items that appear in other statements of the annual accounts.
- Explanation of how the results have been applied.
- Information on post-closing events.
- Information on operations with related parties.
4. The report in the normal annual accounts model
In this case, 25 sections are included in the content of the report:
1. Company activity
2. Bases for presentation of the annual accounts
3. Application of results
4. Registration and valuation standards
5. Property, plant and equipment
6. Real estate investments
7. Intangible assets
8. Leases and other operations of a similar nature
9. Financial instruments
10. Stock
11. Foreign currency
12. Tax situation
13. Income and expenses
14. Provisions and contingencies
15. Information about the environment
16. Long-term compensation to staff
17. Transactions with payments based on equity instruments
18. Subsidies, donations and legacies
19. Business combinations
20. Joint businesses
21. Non-current assets held for sale and discontinued operations
22. Events after closing
23. Transactions with related parties
24. Other information
25. Segmented information
The most interesting analysis of the annual accounts requires examining them in depth as a set. In that sense, the role of memory is very important because it allows us to understand quantitative and qualitative details that help shape knowledge about the situation and results of the company.
Fountain: SAGE
