Accounting involves the formatting of many documents in order to analyse the economic health of a business. The annual balance sheet and income statement are undoubtedly the backbone of the accounts of an organisation. These documents reflect the activity of the company in detail and allow its leaders to take appropriate decisions based on the company’s standing.
Accounting management of a company is a complex process that requires the participation of professionals who have the appropriate expertise in order to produce quality balance sheets in Spain.
The balance sheet is an accounting document that details the financial and economical situation of a company at a certain time. It consists of two pools of assets called “active” and “passive”. Meanwhile, the net worth is the difference between the assets and the company’s liabilities. This includes the capital, depreciation and grants, donations and inheritance.
In Spain, the regulation that controls the format of the balance sheet and income statement is defined by the standards of the Bank of Spain. The accounting regulations are well implemented by this institution while still respecting the European Union’s instructions.
Assets are formed from a set of property and materials that are owned by the company and that generate income. Within this category, we differentiate between current and non-current assets (also called fixed assets). Non-current assets are property acquired by the company for a period exceeding one year. Conversely, current assets have all been owned by the company for less than a full year. Be aware that assets can be tangible, intangible (e.g. a license or a patent) or financial. Specifically, these assets refer to cash in a bank account, the amounts charged to corporate clients, raw materials in stock, machinery and other kinds of equipment, vehicles, furniture, land and buildings belonging to the company.
Liability is a category formed from a set of expenses that the company must face to develop its business. The financial resources of the liability are classified according to their chargeability. This means that we can differentiate between those belonging to the owners of the capital and those from third parties that are not part of the company. The capital provided by the investors from outside the organisation is called net worth. Equally, we can distinguish between current and non-current liabilities, depending on if the payment period is greater than or less than one year. o Deductible fees Various tax returns are required in managing a company, regardless of the country in which it operates. Yet, there are many ways to reduce the taxable amount by declaring certain expenses that the company was able to pay. Here, we explain exactly what deductible fees are in Spain.