FINANCIAL STATEMENTS AND THE CHART

OF ACCOUNTS
EXPLAINED SUMMARY

This is a summarized chart of accounts ONLY INCLUDING subgroups of accounts (2

digits) and accounts (3 digits) that we are going to use during this course.

For each group of accounts (1 digit) and for each subgroup of accounts (2 digits) you will
find a brief explanation and what type of accounting element is.

 Elements of the Balance Sheet: equity, non-current liabilities (NCL), non-current

assets (NCA), current liabilities (CL) and current assets (CA).
 Elements of the Income Statement: costs of goods sold (COGS), operating expenses,
financial expenses, tax expenses, net sales, operating revenues, financial revenues.

BALANCE SHEET

EQUITY
(10 + 11 + 12 + 13)
NCA
(Group 2)

NCL
(14 + 17 + 18)

CA
(Group 3 + 43 + 44 + 46 + CL
47 + 54 + 56 + 57) (40 + 41 + 46 + 47 +
50 + 52 + 56)
 INCOME STATEMENT

+ Net Sales (70)

- COGS (60, 61)

= GROSS MARGIN
+ Other operating revenues (74, 75 & 77)
- Other operating expenses (62, 64, 65 & 67)

= EBITDA
- Depreciation & amortization (68)

= EBIT (OPERATING INCOME)

+ Financial revenues (76)

- Financial expenses (66)

= EBT (INCOME BEFORE TAX)

- Income tax (63)

= NET INCOME (129)

  GROUP 1:
BASIC FINANCING (EQUITY + NCL)
 INTERNAL FINANCING (EQUITY): capital, reserves, current period profit/loss,
prior periods’ earnings and losses, grants, subsidies and donations.

 LONG-TERM EXTERNAL FINANCING (NON-CURRENT LIABILITIES):

LT provisions, LT debt, LT financial securities issued and other LT payables.

10. CAPITAL (EQUITY)

Owners’ monetary and non-monetary contributions in exchange of business equity.
100. Share capital
104. Uncalled non-monetary contributions

11. RESERVES AND OTHER EQUITY INSTRUMENTS (EQUITY)

Financial reserves available to the company. Share premiums.
112. Legal reserve
113. Voluntary reserves
114. Special reserves

12. PROFIT/LOSS PENDING DISTRIBUTION OR APPLICATION (EQUITY)

Retained earnings of prior periods. Prior periods’ losses. Net income of the year.
120. Retained earnings
121. Prior periods’ losses
129. Profit/loss for the period

13. GRANTS, DONATIONS AND VALUATION ADJUSTMENTS (EQUITY)

Capital grants, donations, subsidies and bequests.
130. Government capital grants
131. Capital donations and bequests

14. PROVISIONS (NCL)

Explicit or implicit non-current obligations for which the exact amount or due date is uncertain/unknown.
140. Provisions for long-term employee benefits
141. Provisions for taxes
145. Provisions for environmental actions
146. Provisions for restructuring costs
17. NON-CURRENT PAYABLES FOR LOANS, DEBENTURES AND OTHER (NCL)
Non-current obligations with non-related parties: banks, leasing companies, suppliers of fixed assets, etc.
170. Non-current debt with financial institutions
171. Non-current payables
173. Non-current payables to suppliers of fixed assets
177. Bonds and obligations

18. NON-CURRENT GUARANTEES, DEPOSITS AND OTHER LIABILITIES (NCL)

Non-current obligations from received guarantees, deposits or sales advances.
180. Non-current guarantees received
181. Advances of long-term sales
185. Non-current deposits received

 GROUP 2:
NON-CURRENT ASSETS (NCA)
 FIXED ASSETS: tangible and intangible LT assets.

 REAL ESTATE INVESTMENTS: investment in land and buildings.

 LONG-TERM FINANCIAL INVESTMENTS: LT loans, LT deposits, LT financial

securities purchased and other LT receivables.

20. INTANGIBLE ASSETS (NCA)

Non-monetary fixed assets without physical substance.
202. Administrative concessions
203. Industrial property
205. Leaseholds
206. Computer software
209. Advances for intangible assets
21. PROPERTY, PLANT AND EQUIPMENT (NCA)
Non-monetary fixed assets with physical substance not included in subgroups 22 or 23.
210. Land and natural resources
211. Buildings
213. Machinery
216. Furniture
217. Information technology equipment
218. Motor vehicles
219. Other property, plant and equipment

22. INVESTMENT PROPERTY (NCA)

Real estate assets held to earn rental income and/or for capital appreciation .
220. Investments in land and natural resources
221. Investments in buildings

25. OTHER NON-CURRENT INVESTMENTS (NCA)

Long term investments in non-related parties.
250. Non-current investments in equity instruments
251. Non-current debt securities
252. Non-current loans
253. Non-current loans for disposal of fixed assets
254. Non-current loans to personnel
258. Non-current deposits

26. NON-CURRENT GUARANTEES AND DEPOSITS EXTENDED (NCA)

Long term extended guarantees or deposits.
260. Non-current guarantees extended
265. Non-current deposits extended

28. ACCUMULATED AMORTISATION AND DEPRECIATION (NCA)

Accumulated loss of value of fixed assets due to the use and other irreversible causes.
280. Accumulated amortisation of intangible assets
281. Accumulated depreciation of property, plant and equipment
282. Accumulated depreciation of investment property
  GROUP 3:
INVENTORIES (CA)
 CURRENT ASSETS: materials, goods, supplies, merchandises and other ST tangible
asset that the company will use or sell during the ordinary activity of business.

In this course we shall not work with manufacturing companies. During this course, we shall work
with service or trading companies. Thus, the only type of inventories that a company may have (for
this course) is GOODS FOR RESALE (merchandises).

30. GOODS FOR RESALE (CA)

Merchandise acquired by the company and intended for sale without any further transformation .
300. Merchandise A
301. Merchandise B
309. Merchandise J

 GROUP 4:
TRADE PAYABLES AND TRADE RECEIVABLES (CL + CA)

 CURRENT LIABILITIES: amounts payables in the ST originated during the

ordinary activity of the business.
 CURRENT ASSETS: amounts receivables in the ST originated during the ordinary
activity of the business.

40. SUPPLIERS (CL)

Amounts payable (due) to suppliers of inventories.
400. Suppliers
401. Suppliers, trade bills payable
407. Advances to suppliers (CA)

41. OTHER PAYABLES (CL)

Amounts payable to service providers and other creditors (not considered suppliers of the company).
410. Payables for the rendering of services
411. Trade bills payable
43. TRADE RECEIVABLES (CA)
Amounts receivable (owned) from clients.
430. Trade receivables
431. Trade receivables, trade bills receivable
436. Doubtful trade receivables
438. Advances from customers (CL)

44. OTHER RECEIVABLES (CA)

Amounts receivable from other debtors (not considered clients of the company).
440. Receivables
441. Receivables, trade bills
446. Doubtful receivables

46. PERSONNEL (CA & CL)

Amounts payable and receivable related to the company’s personnel.
460. Salary advances
465. Salaries payable
466. Employee benefits payable through defined contribution schemes

47. PUBLIC ENTITIES (CA & CL)

Amounts payable and receivable related with public institutions.
470. Taxation authorities, receivables
471. Social Security, receivables
472. Input VAT
474. Deferred tax assets
476. Social Security, payables
475. Taxation authorities, taxes payable
477. Output VAT
  GROUP 5:
FINANCIAL ACCOUNTS (CL + CA)
 SHORT-TERM EXTERNAL FINANCING (CURRENT LIABILITIES): ST
provisions, ST debt, ST financial securities issued and other ST financial payables.
 SHORT-TERM FINANCIAL INVESTMENTS (CURRENT ASSETS): ST loans,
ST deposits, ST financial securities purchased and other ST financial receivables.

 CASH (CURRENT ASSETS): bills and coins (cash), amounts in saving and current
accounts and highly liquid financial assets.

50. CURRENT DEBENTURES, PAYABLES OF A SPECIAL NATURE AND

SIMILAR ISSUANCES (CL)
Other short term financial obligations not included in subgroup 52.
500. Current bonds and obligations

52. CURRENT PAYABLES FOR LOANS AND OTHER (CL)

Short term financial obligations with banks and other entities.
520. Current debt with financial institutions
521. Current payables
523. Current payables to suppliers of fixed assets
525. Current bills payable

54. OTHER CURRENT INVESTMENTS (CA)

Short term financial investments in non-related parties.
540. Current investments in equity instruments
541. Current debt securities
542. Current loans
544. Current loans to personnel
548. Current deposits

56. CURRENT GUARANTEES, DEPOSITS, PREPAID EXPENSES AND

DEFERRED INCOME (CL & CA)
Short term guarantees and deposits given or received.
560. Current guarantees received
561. Current deposits received
565. Current guarantees extended
566. Current deposits extended

57. CASH (CA)

Cash and cash equivalents.
570. Cash, euros
572. Banks and financial institutions, demand current accounts, euros
  GROUP 6:
PURCHASES AND EXPENSES

 PURCHASES (COSTS OF GOODS SOLD): Acquisition of merchandises or other

inventories that will be used or sold by the company during the period.1
 CHANGES IN INVENTORIES (COSTS OF GOODS SOLD): Changes in
inventories at the end of the period of subgroups 30, 31 and 32 (only subgroup 30 for
this course).
 EXPENSES (OPERATING, FINANCIAL AND TAX EXPENSES): Other
operating expenses (other than purchases) + tax expenses + financial expenses.

60. PURCHASES (COGS)

Procurement of goods included in subgroups 30, 31 and 32 (only subgroup 30 for this course).
600. Merchandise purchased
606. Prompt payment discounts on purchases
608. Purchase returns and similar transactions
609. Volume discounts

61. CHANGES IN INVENTORIES (COGS)

Changes between the closing and opening balances of subgroups 30, 31 and 32.
610. Changes in inventories of merchandise

62. EXTERNAL SERVICES (OPERATING EXPENSES)

Services contracted by the company during the period, not included in subgroup 60.
620. Research and development expenses for the period
621. Leases and royalties
622. Repairs and maintenance
623. Independent professional services
624. Transport
625. Insurance premiums
626. Banking and similar services
627. Advertising, publicity and public relations
628. Utilities
629. Other services

1
At the end of the period, if inventories are not sold or used, then they will be registered as current assets inside GROUP 3 of
accounts.
63. TAXES (TAX EXPENSES)
Income and other tax expenses incurred during the period.
630. Income tax

64. PERSONNEL EXPENSES (OPERATING EXPENSES)

All types of employee remuneration, Social Security contributions payable by the company and other employee
benefits expenses incurred during the period.
640. Salaries and wages
641. Termination benefits
642. Social Security payable by the company
645. Equity-based employee benefits
649. Employee benefits expense

65. OTHER EXPENSES (OPERATING EXPENSES)

Expenses not included in other subgroups.
650. Losses on irrecoverable trade receivables
659. Other operating losses

66. FINANCE EXPENSES (FINANCIAL EXPENSES)

Expenses arising from financial instruments during the period.
661. Interest on bonds and obligations
662. Interest on payables
668. Exchange losses
669. Other finance expenses

67. LOSSES ON NON-CURRENT ASSETS AND EXCEPTIONAL EXPENSES

(OPERATING EXPENSES)
Losses arising from the disposals of fixed assets and exceptional losses.
670. Losses on intangible assets
671. Losses on property, plant and equipment
672. Losses on investment property
678. Exceptional expenses

68. AMORTISATION AND DEPRECIATION (OPERATING EXPENSES)

Irreversible losses of the period related to fixed assets and real estate investments.
680. Amortization of intangible assets
681. Depreciation of property, plant and equipment
682. Depreciation of investment property
  GROUP 7:
SALES AND INCOME
 SALES (NET SALES): Sales of inventories during the period. Includes sales
discounts or returns.
 INCOME (OPERATING AND FINANCIAL REVENUES): Other operating
revenues earned during the period + grants + financial revenues.

70. SALES OF MERCHANDISE, WORK CARRIED OUT BY THE COMPANY FOR

ASSETS, SERVICES, ETC (NET SALES)
Transactions involving the outflow or delivery of goods and services forming part of the company’s trade
operations, where a price is attached to those goods or services.
700. Merchandise sold
705. Services rendered
706. Prompt payment discounts on sales
708. Sales returns and similar transactions
709. Volume discounts

74. GRANTS, DONATIONS AND BEQUESTS (OPERATING REVENUES)

Amounts to be recognized in the income statement in connection with grants, donations and bequests.
740. Operating grants, donations and bequests

75. OTHER INCOME (OPERATING REVENUES)

Income not included in other subgroups.
752. Income from lease agreements
753. Income from transfer of industrial property rights
754. Commission income
755. Income from services to personnel
759. Income from other services

76. FINANCE INCOME (FINANCIAL REVENUES)

Returns and gains from financial investments.
760. Dividends
761. Income from debt securities
762. Income from loans
768. Exchange gains
769. Other finance income

77. GAINS ON NON-CURRENT ASSETS AND EXCEPTIONAL INCOME

(OPERATING REVENUES)
Gains arising from the disposals of fixed assets and exceptional gains.
770. Gains on intangible assets
771. Gains on property, plant and equipment
772. Gains on investment property
778. Exceptional income