| It is the basic accounting element of
the Company. It reflects, clearly and precisely, general financial
situation of the Company at the moment of the year-end closure;
the 31st of December of the previous year. The contents of
the balance sheet are broken down into two parts: assets and
liabilities. The assets represent what the Company has and
what is in its favour (client debts etc…) The liabilities,
on the other hand, are what the Company owes or what is held
against it. |
| This is the accounting element that
sums up the positive and negative results of every year-end
closure that is presented to the shareholders. According to
Commercial Law, the loss and profit account should also show,
with the necessary separation, the income and expenses of
each financial year and the difference which would be the
result, (profit or loss). |
This is more of a literary document, which
explains at length, how the Balance Sheet, Profit and Loss
accounts have been formulated. The Annual Report should complete,
expand on and state the contents of the Balance Sheet and
the Profit and Loss account. |
In order to gain the necessary approbation
of the yearly accounts, it is essential to follow the following
procedure:
Call a Stockholders Meeting that has to take
place within the first six months of the following accounting
year For example, in order to approve the financial year for
2000, the shareholders would have to meet during the first
six months of 2001. The meeting must be called according to
the requirements, period and public awareness established
by law to guarantee the rights of all the shareholders.
The Stockholders Meeting must take place
with the quorum stated by the law or a higher quorum if so
stated in the articles of association. Those who attend will
decide by majority vote, if the accounts are to be passed
or not. |
Once the accounts have been approved, they
then proceed to their deposit in the Mercantile Registry.
One copy of each of the elements, which
make up the Annual Accounts (Balance Sheet, Profit and Loss
Account and the Annual Report) must be deposited.
Once the Mercantile Registry has verified
the registration it will then carry out the registry report,
which will be noted down in the Libro Deposito de Cuentas
(a book which records the registration of the yearly accounts).
The accounting documents must be kept in
the Mercantile Registry at the disposition of those who wish
to consult them for a period of six years.
The first working day of each month, the
Mercantile Registry will remit a list of all the Companies
who, during the last month, have complied with their obligation
to register the annual accounts, to the Central Registry.
The Mercantile Registry sends the Tax Authorities a list of
the Companies that are registered and that have not deposited
their accounts. If a Company has not rightfully deposited
its annual accounts in the Mercantile Registry it is quite
probable that it will be inspected by the Tax Authorities.
|
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ANNUAL
BUSINESS ACCOUNTS 
June 2001
What
is the balance sheet?
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