Three groups of countries can be distinguished with similar cultural and economic situations and similar approaches to the accounting and reporting system. This makes it possible to combine national accounting systems, classifying them according to a number of characteristics. Leading scientists from various countries are working on the classification of accounting and reporting systems. In our domestic literature, three models of accounting systems are usually distinguished:

• · Anglo-American;
• · Continental;
• · South American.

Characteristics of accounting models

Anglo-American model

• · Orientation of reporting, first of all, to the needs of investors and creditors of the enterprise.
• · Professional regulation of accounting methodology is applied, rather than government regulation
• · The task of providing information to the needs of the state represented by the tax authorities is taken beyond the framework of the system of financial accounting and preparation of financial statements.
• · Calculation of the real financial result of the enterprise's activity is of particular importance.
• · In the leading countries of this model, securities markets are well developed, and not only accountants are highly professional, but also users of accounting information.

Continental model

• · Accounting statements are focused on meeting the needs of tax and other government authorities.
• · Accounting is regulated by law, is characterized by significant conservatism and a high degree of government intervention in accounting practice.
• · Focusing financial reporting on investor needs is not a priority.
• · The accounting practices of one country differ significantly from the accounting practices of another.
• · Business has close ties with banks

South American model

• · In general, accounting is focused on the needs of government and tax authorities.
• · Accounting is regulated by law.
• · Accounting methods used at enterprises are fairly unified.
• · A distinctive feature of these countries is the adjustment of financial statements to inflation rates.

Anglo-American model

Countries using this accounting model include: Australia, Great Britain, Israel, USA, and other countries.

The basic principles of this model were developed in the UK and the USA, with the participation of Holland. The main idea of ​​this model is the orientation of accounting towards the information needs of investors and creditors. In countries using this model, securities markets are well developed, through which, to a greater extent, financing of organizations is carried out. They are also distinguished by a high level of professional education system. This model is not characterized by strict accounting regulations. She is the most flexible and liberal. The largest number of countries in different parts of the world gravitate towards it. However, in all countries of this model the influence of the USA and Great Britain is strong.

Continental model

This model is used in most European countries: Australia, Italy, Denmark, France..... and Japan. What this model has in common is the large dependence of organizations on bank lending, which is reflected in the accounting concept. Focusing on the management needs of creditors (unlike the Anglo-American model) is not a priority accounting task. The continental model is characterized by fairly strict government regulation and is conservative. Relevant regulations regulate the activities of professional accounting organizations and audit rules. The accounting system is aimed at meeting the macroeconomic needs of planning, regulation and taxation. The accounting practices of one country may differ significantly from the accounting practices of another. The chart of accounts can be unified or professional. The level of training of professional accountants is quite high, but professional accounting organizations themselves play a smaller role than in England and the USA.

South American model

This model is used by: Argentina, Brazil, Peru, Chile and other countries in this region. They are united by language. With the exception of Brazil (Portuguese), these are Spanish-speaking countries. In addition, these countries have common economic problems, primarily inflation.

The main difference between this model and those described above is the permanent adjustment of the impact of accounting data on inflation rates. Inflation accounting has been traditional in Latin American countries, and Argentina, Brazil, Uruguay and Chile have introduced inflation accounting standards and national legislation. In these countries, the official index of the general price level is used as the main adjustment index, on the basis of which data on share capital and fixed (non-current) assets are recalculated, inventories are revalued at replacement cost. Liabilities in foreign currency are translated at the exchange rate at the end of the reporting year.

In general, accounting is focused on the needs of government and tax planning authorities, and the accounting methods used by enterprises are fairly unified.

Government bodies in these countries practically regulate accounting methods. Professional accounting organizations do not have any significant influence on accounting methodology and practice.

The distribution of countries and regions according to the above models is shown in the table.

Table No. 1. Three Basic Organizational Accounting Models

South American model
Australia Bahamas Barbados Bermuda Botswana Great Britain Venezuela Dominican Republic	Zimbabwe Indonesia Ireland Cayman islands Colombia Malaysia	Netherlands New Zealand Pakistan Papua New Guinea Puerto Rico Singapore Tanzania Trinidad and Tobago
Anglo-American-Dutch model
Philippines	Central America Sri Lanka	South America
Continental model
Ivory Coast Bulgaria Burkina Fasso Germany	Luxembourg Norway	Portugal Sierra Leone Switzerland
South American model
Argentina Brazil	Paraguay

It should be noted that the above division is very arbitrary. For example, accounting regulation in Japan follows a continental model, but at the same time there is a strong influence of the United States, which is an objective consequence of the interpenetration of the capitals of these countries into each other’s economies. In addition to those listed, some countries use mixed systems with characteristic local specifics. As a result of the collapse of the socialist camp in countries that previously belonged to it, transformations are being carried out in the field of accounting, and they accept one or another model or are guided by international standards.

1.1. Anglo-American model

The basic principles of the Anglo-American model were developed in the UK, USA and Holland, which is why it is also called the Anglo-American-Dutch model. This model is characterized by loose accounting regulations. The main idea is to focus accounting on the information requests of investors and creditors. In countries using this model, as a rule, the securities market is well developed, where most companies find additional sources of financial resources.

Countries with the Anglo-American accounting model include: Australia, Great Britain (including countries in the Bahamas and Bermuda), Zimbabwe, Israel, India, Ireland, Canada, Cyprus, Mexico, New Zealand, USA, Venezuela, Iceland, the Netherlands, Pakistan, Panama, Tanzania, Uganda, Fiji, Philippines, Central American countries, South Africa, Jamaica, Ghana, Zambia, etc.

English-speaking countries are characterized not by state regulation of accounting, but by professional regulation: the best specialists in the field of accounting unite in an association and develop fundamental accounting principles, and government bodies recognize them. At the same time, accounting is maintained in the interests of investors and creditors.

Countries with the Anglo-American model build accounting based on established practice. It is necessary to distinguish between English and American versions. The first is typical for countries such as

Great Britain, South Africa, New Zealand, Australia, Ireland; the second is for the USA, Canada, Japan, Mexico and the Philippines.

Holland is usually included in the English-speaking system, but this country of continental Europe is characterized by an approach not from practice to theory, but, on the contrary, from theory to practice. In other words, in this country they are guided primarily by the deductive rather than the inductive method.

1.2. Continental model

The continental model is typical for European countries. Here, business has close ties with banks and the state, which mainly satisfy the financial needs of companies. In this system, accounting is regulated by law and is characterized by significant conservatism. Accounting practices are aimed primarily at satisfying government requirements, especially with regard to taxation in accordance with the national macroeconomic plan. Focusing on the management needs of creditors is not a priority accounting task.

The continental accounting model is typical for countries with regulated economies and strong influence from the banking system or countries that impose strict accounting and reporting requirements.

This model is used by Austria, Belgium, Greece, Denmark, Egypt, Spain, Italy, Norway, Portugal, France, Germany, Switzerland, Sweden, Japan, Algeria, Democratic Republic of the Congo, Cameroon, Luxembourg, Mali, Morocco, Senegal, Togo.

In continental Europe, accounting is carried out according to principles formulated by government agencies and mandatory for all business entities. In this case, accounting is carried out in the interests of government regulators, including tax authorities.

Countries that adhere to the continental model can also be divided into two groups: 1) those recognizing the primacy of the correct reflection of accounting data, mainly legal (Germany); 2) proclaiming the primacy of tax fiscal law (France, Italy, Spain, Belgium).

1.3. South American (Latin American) model

The main difference between the South American (Latin American) model and other models is the permanent adjustment of accounting data to inflation rates. In general, accounting is focused on the needs of state planning bodies, and accounting methods are unified. The information necessary to monitor the implementation of tax regulations is well reflected in accounting and reporting.

The South American accounting model is typical for countries with high inflation and unification of accounting principles.

In Latin America, accounting has one main goal - to reflect inflationary processes, and the accounting methodology is completely subordinate to this goal.

The South American model is used by Argentina, Bolivia, Brazil, Paraguay, Peru, Uruguay, Chile, Ecuador, Guyana.

1.4. Islamic and international models

The newly created models include the Islamic and international models.

The Islamic model develops under the enormous influence of theological ideas and has a number of features. In particular, companies are prohibited from receiving dividends for the sake of dividends themselves. Market prices are preferred when valuing the assets and liabilities of companies.

The need to develop an international model arises from the need for international accounting consistency, primarily in the interests of multinational corporations and foreign participants in the international foreign exchange market. Only a small number of large corporations can currently claim that their annual financial statements meet international financial accounting standards.

Thus, having considered the existing accounting models, it cannot be said that accounting in one country or another is better or worse than in others. Accounting models and systems are created to achieve specific goals. Accounting is determined by the environment in which it operates. The variety of social, political and economic conditions gives rise to a variety of ideas and corresponding methods for their implementation in the theory and practice of accounting.

2 Comparative characteristics of the balance sheets of different countries

2.1. Characteristics of the balance sheet in the Anglo-American system

A feature of accounting in the Anglo-American system is the strong influence of international standards on it, which is reflected in the reporting of companies.

Financial statements published by Western companies are colorfully designed booklets that, in addition to the forms of financial statements certified by an auditor, contain a lot of other information. As a rule, this is an address from the president of the company to shareholders, a report from the board of directors, an analysis of the company’s development over the previous years, a forecast for the near future, a description of the geography and size of investments, international relations, information about the company’s social policy with various graphs, diagrams, diagrams, photographs and etc. Such information is not regulated and is presented at the sole discretion of the company. However, it is very important for users as an additional source of data for decision making.

Financial statements of US companies show account balances and changes in them, as well as aggregates across several accounts, such as net income.

Financial statements include the following reports:

- balance;

- Profits and Losses Report;

– a report on changes in financial condition or on the use and sources of funds (currently little used; instead, a cash flow statement is compiled);

– statement of changes in equity;

– explanatory note;

– conclusion of an audit firm.

The balance sheet (balance sheet) reflects the state of the company's finances as of a specific date - the end of the reporting period and is dated to this day. The data source for the balance sheet presentation is the General Ledger.

There is no standard form of balance sheet. The standards define the minimum data that a report must contain. The balance sheet includes information about the company's resources, liabilities and equity. It is based on a basic accounting equation that shows the relationship between a company's assets, liabilities and equity.

In accordance with GAAP, the main components of the balance sheet are grouped in the following order:

– assets should be reflected in descending order of their liquidity;

liabilities should be reflected in an order that reflects the proximity of their maturity date. The closer the deadline, the earlier the obligation must be shown;


– equity capital should be reflected as follows: its varieties that are least susceptible to changes are shown first.


The structure of the balance sheet headings must meet the specifics of a particular company and be established in accordance with the principle of full disclosure of the necessary information. Differences in the balance sheets of different companies, due to industry and other characteristics of their activities, nevertheless fit into the structure characteristic of all companies in the financial sector.


Assets, like liabilities, are divided into current and long-term.


The property of companies represents their assets, which can be current or long-term.


Current assets include cash and other assets that can be converted into cash, as well as assets held for sale or consumption during the company's normal operating cycle or within one year after reporting. Most companies consider the duration of their business cycle to be one year.


Current assets	Current responsibility
cash, short-term investments	accounts payable for goods and services used in the company's core business cycle
accounts receivable or accounts receivable	short-term accounts payable for goods and services not used in the company's core business
inventory, prepaid operating expenses	short-term bills
other assets	current payments to repay long-term obligations (including lease obligations)
Long-term assets	receipt of prepayment for goods not yet delivered or services not yet provided or other prepaid income
fixed assets, or property, buildings and equipment	accrued but unpaid costs for wages, interest and taxes
intangible assets	current payments of deferred tax payments
prepaid expenses of several periods	other obligations
investments and funds	long term duties
other assets	long-term loans and credits
	lease obligations
	bonds
	other obligations
	Equity
	share capital at par, non-par and declared value, contributed or paid-up capital
	contributed or paid-up capital in excess of the par or stated value of the share capital
	other contributed or paid-in capital
	retained earnings

Figure 1 – Balance sheet structure in the Anglo-American accounting model


Sometimes the same assets can be in circulation for either a year or a longer period. In this case, their classification as short-term current or long-term assets depends on the intention of the company's management regarding their use.


When reflecting receivables, their possible non-payment is not taken into account. Receivables used as collateral for the company's fulfillment of its obligations to third parties (promissory note), as well as the amount of impairment of receivables, are reflected as a deduction from accounts receivable or in the notes to the balance sheet.


Inventories are stated at the lowest price prevailing in the market for similar inventories. If inventories are used in production, the degree of completion of their processing (raw materials, work in progress, finished goods) is indicated.


In foreign practice, the Anglo-American model uses the following estimates of inventories when they are written off for production:


– at average cost;


– FIFO;


– at the cost of each unit.


The FIFO method, or the first-price method of valuing inventory, is based on the assumption that the cost of goods purchased first should be attributed to goods also sold first. When using the FIFO method, the movement of value, not goods, is taken into account.


Most companies consider the FIFO method to be the most suitable for inventory. It assumes the most realistic assessment of the company's assets.


The main disadvantage of the first purchase price method is that it increases the impact of the economic cycle on the company's profitability.


Long-term assets include fixed assets, intangible assets, etc.


Fixed assets: property, land, buildings and equipment - long-term assets that are not intended for sale in a given reporting period and are used in the company's activities.


Fixed assets are reflected in the balance sheet as one line at book value (minus depreciation) based on accounting data. When valuing land and buildings, the market value at the balance sheet date may be used.


Intangible assets are reflected in the balance sheet at acquisition cost less depreciation. The value of intangible assets is shown under two headings: 1) goodwill (goodwill) and 2) other intangible assets. The explanatory note provides information on the value of goodwill and the approved timing of its write-off.


Methods of accounting for goodwill are still a subject of dispute among accountants who use the Anglo-American accounting model. Some believe that goodwill arises when one company purchases another as the difference between the price paid and the current value of the assets of the purchased company. Thus, they interpret this difference as additional costs that should be covered from a special reserve fund and written off immediately.


According to other experts, goodwill is no different from intangible assets. Goodwill is an additional asset acquired when a company is purchased. It can be accounted for as trademarks and licenses, depreciated over a specified time frame (no more than 20 years).


Some people suggest writing off goodwill immediately upon acquisition of a company to the Profit and Loss account.


Currently, all three options for accounting for goodwill are allowed, but most companies with the Anglo-American accounting system prefer to include goodwill as part of intangible assets, followed by depreciation.


Prepaid multi-period expenses typically include prepayment of long-term expenses aimed at generating economic benefits in the future (prepayment of insurance services, costs of relocating equipment, etc.). The desire to classify long-term investments as this item on the balance sheet is usually due to the desire to avoid complications due to their uncertain nature and presence in many situations, for example, items such as long-term investments.


Investments include shares of subsidiaries, loans to subsidiaries, shares of associated companies, treasury shares, other loans provided, other investments in short-term securities, investments in real estate.


If investments are expected to be used for more than one year, they are recorded as long-term assets. Long-term investments are reflected in the balance sheet at the purchase price. Long-term investments are allowed to be revalued depending on market price fluctuations. They are usually only overvalued downwards. If investments are shown on the balance sheet as current assets (short-term), then they should be reflected at the lower of estimates (either acquisition cost or market value).


Treasury shares repurchased from shareholders must be shown as a short-term investment at the purchase price.


Real estate investments are land or buildings that a company owns, but from which it plans to generate income in the distant future. Real estate investments are reflected in the balance sheet at market value. The explanatory note discloses information about the appraisers and the valuation base.


Other assets include assets that do not fall into the listed sections, for example, long-term debt of the company on the part of its employees, arising during the company’s implementation of programs for motivation and social support of personnel. Sometimes other assets include temporarily idle production facilities, provided that they should bring economic benefits in the future.


Liabilities can be current or long-term.


Current liabilities are subject to repayment by using current assets for these purposes or refinancing by accepting other current liabilities. In the report, current liabilities are usually reflected in the order in which they are repaid.


Paying long-term liabilities does not require using current assets or increasing current liabilities during the company's subsequent operating cycle or accounting period.


Long-term accounts payable are reflected in the balance sheet under two headings: 1) part of long-term accounts payable that must be repaid before the expiration of the next 12 months after the reporting date; 2) part of long-term accounts payable that must be repaid more than 12 months after the reporting date.


Long-term accounts payable include long-term commercial loan debt, reorganization reserves, and capital lease debt.


The explanatory note must provide information about the conditions for obtaining loans and their breakdown into two groups: 1) loans listed on the balance sheet with a repayment period of up to five years and 2) beyond this period.


In terms of the authorized capital, only the paid part is shown. If the capital is not share capital, its value is reflected according to the constituent documents in the part paid by the founders as of the reporting date. Share capital is shown under two headings: 1) paid at par and 2) paid in excess of par.


There are a number of rules in accordance with which this section is prepared. The authorized capital, shares issued (quantity and par value) and outstanding shares must be indicated.


The Anglo-American accounting model provides for the creation of the following types of reserves:


– for revaluation of fixed assets;


– for depreciation of securities;


– for extraordinary losses;


– under contingent liabilities;


– equalizing (for vacation, repairs, interest to the bank, overhead costs, etc.).


Contingent liabilities include obligations of a company that may result in losses as a result of actions taken during the reporting period. Such obligations include the following: possible penalties for claims that were pending at the reporting date; obligations issued by structural divisions of the company on its behalf; possible obligations under contracts under which violations were committed during the reporting period, for which the contract provides for penalties; other obligations. Reserves in the balance sheet of companies using the Anglo-American model are reflected in one line.


Equity is profit. If a company incurred a loss during the reporting period, it is reflected in the financial statements as a negative amount.


In reporting prepared in accordance with international standards, as well as in the Anglo-American accounting model, it is not customary to divide retained earnings into the profit of previous years and the profit of the reporting period. If in the previous period the company had losses and profits in the reporting period, or vice versa, then these results do not overlap each other, but are shown separately.


Retained earnings represent the balance of net income at the disposal of the company. At the end of the reporting period, it is equal to retained earnings at the end of the previous accounting period plus net profit for the period minus dividend payments on shares. Before calculating this profit for a given period, retained earnings for the previous period are adjusted in accordance with the amendments made related to changes in the principles of accounting for certain indicators, correction of accounting errors, etc.


The retained earnings indicator, taking into account its changes and adjustments, serves as a link between the balance sheets of the previous and current periods.


If a company recalculates the financial statements of its subsidiaries, compiled in a foreign currency, then the item “Profits (losses) from the translation of financial statements” is separately reflected in the balance sheet.


Some balance sheet indicators are of an estimated nature. Thus, bonds are reflected at their discounted present value, accounts receivable - at their estimated net realizable value, shares - at the lowest market price, fixed assets - at their book value, which in turn depends on their estimated service life. To ensure the reliability of the balance sheet information, it must be accompanied by comments indicating the methods by which a particular indicator was assessed. Sometimes events occurring after the reporting date require adjustments to the balance sheet (Table 1).


Table 1 – Accounting for events that occurred after the reporting date


Events leading to balance adjustments	Events that do not lead to balance adjustments
1. Latest update of the purchase price or proceeds from the sale of fixed assets that were purchased or sold before the end of the year 2. Obtaining information indicating a decrease in the value of assets owned by the company 3.Identification of errors and abuses that could lead to distortion of reporting	1. Merger or acquisition of companies 2Issue of shares, bonds 3.Actual or proposed reconstruction 4. Loss of fixed assets as a result of natural disasters and emergencies 5.Change in the volume of current trading activity 6.Government actions 7. Sharp changes in foreign exchange rates

In order to ensure the most complete disclosure of information about the company’s economic activities and to provide the user with the opportunity to make decisions based on a comparison of information for different years, it is recommended to prepare balance sheets indicating the indicators reflected in them not only for the reporting period, but also for the two preceding ones, i.e. for three years.


2.2 Accounting in the German accounting system


In Germany, the state does not interfere in the internal affairs of companies, but establishes certain general requirements that must be observed for organized and successful business. These general requirements are mandatory for all business entities and must be strictly observed. Such requirements are enshrined in legislation relating to management, taxation and business conditions.


Accounting is based on the provisions of the Commercial Code, which contains requirements for accounting and auditing, the Sales Tax Act, the Income Tax Act and the Corporation Tax Act. In addition, since 1986 the Law on Balance Sheets has been in force, in accordance with which the basic provisions for accounting and drawing up balance sheets have been adopted.


General accounting principles and standards are approved by the Law on Joint Stock Companies, enacted in 1937. The adoption of these principles and standards is associated with the bankruptcy of a large number of companies in the 20-30s of the 19th century and the centralization of government administration. In 1937, a decision was made on state standardization of accounting and a unified Chart of Accounts was approved.


Currently, a single Chart of Accounts is not used in Germany, but rather there are several recommended Charts of Accounts.


According to German business law, accounting data is considered as:


– information for the entrepreneur about the company’s property, debt, profits, losses, expenses, and income;


– evidence in case of litigation;


– report of capital managers to investors;


– basis for calculating tax amounts and financial management;


– information about the company’s creditworthiness and the use of loans.


Germany is characterized by the simultaneous application of traditional German and modern European standards, which is influenced by EU directives. At the same time, the country does not regulate the preparation of primary documents, accounting registers, or accounting procedures. This also applies to the timing of the formation of primary documents and accounting registers: daily accounting is required only when recording funds.


A feature of German accounting is the preparation of two types of reporting:

Commercial;


Tax (based on commercial reporting data, adjusted in accordance with tax rules).


Commercial reporting can be prepared as a balance sheet and a balance sheet of assets. The distribution of items across reporting periods between adjacent periods is applied when compiling only the commercial balance sheet and includes deferred taxation.


The development of accounting in Germany has recently been associated with the use of international financial reporting standards (IFRS), US GAAP, but in general the German accounting system continues to remain purely national.


Small companies have the right to prepare only tax reports, large joint-stock companies must form a consolidated balance sheet. For limited liability companies, joint stock companies and limited partnerships, reporting is mandatory. The annual report of these organizations consists of a balance sheet, profit and loss account, and appendices thereto.


Appendices are an equivalent part of the annual report. They disclose balance sheet data, as well as the income statement, in particular, information is provided on methods for assessing property and liabilities, participation in other companies, long-term liabilities, number of personnel, as well as salaries (income) of managers and board members.


Based on the annual report, a report on commodity (warehouse) inventories is compiled. This report does not form part of the annual report. It is intended to obtain the necessary additional information for making management decisions.


The same role is played by data on sales at home and abroad, personnel development, the company’s liquidity and prospects for its development.


Reporting benefits for small and medium-sized companies depend on a number of indicators.


Small companies can publish an abbreviated balance sheet, large companies must take the full balance sheet as a basis, medium-sized companies must also develop a balance sheet according to the full framework, and can publish an abbreviated balance sheet.


For each balance sheet item, the previous year's indicator should be given. The reflection of funds should represent their development. Long-term claims and liabilities must be shown. Estimated liabilities of all types are indicated as a total amount.


The liability of shareholders is limited to the amount of the company's authorized capital. Until recently, this amount had to be a minimum of 50,000 euros for limited liability companies and 100,000 euros for joint stock companies.


The authorized capital is reflected at par.


Reserve capital is formed when additional funds are contributed by shareholders or when shares are issued. It is intended to strengthen the company's equity base. The accumulation of profits reflects only the amounts that were received as an annual total. They increase the company's capital investment. The Law on Joint Stock Companies specifies that reserve capital must be 10% of the fixed capital. It is created from profit shifting or from voluntary contributions.


Transfer of profit (loss) is the balance of profit (loss) of the previous year.


For a limited liability company, the amount of reserve capital is not established by law. This size must be such that the upcoming economic deficit can be overcome without changing the amount of fixed capital.


Capital reserves and accumulated earnings form open reserves, which must be presented separately on the balance sheet. Hidden reserves are not reflected in the balance sheet. They arise when property is undervalued or when contributions to the reserve fund are overestimated. A complete write-off of low-value funds in the first year is a legitimate opportunity to create hidden reserves.


Companies are required to present in the balance sheet or in an appendix to it data on the dynamics of individual items of fixed assets. Reflection of fixed assets gives a complete picture of the policy of writing off their value and the company’s investment.


Annual report of a limited liability company. This report is prepared by the business manager. For small companies, the deadline for submitting an annual report is six months, for other organizations - three months.


The annual report and inventory report of small and medium-sized companies, after preparation, are checked by an auditor who has special permission to do so. For small companies, mandatory verification is not required.


If the limited liability company has an internal control body, it must evaluate the annual report, stock report and auditor's control report. These documents are presented to shareholders, who make an opinion on the annual report and the use of profits.


Typically, the annual report is prepared before profits are distributed.


The sequence of calculation is from determining the annual result to transferring profit (loss). The result of the business year is the annual surplus (+) or deficit (-).


Formula for calculating the transfer of profit (loss):


Transfer of profit (loss) from the previous year + Withdrawals from reserve capital + Withdrawals from profit accumulation - Contributions to the profit accumulation fund - Distribution of profit (dividends) = Transfer of profit (loss).


For the board of directors of a joint stock company, the same rules for working on a report apply as for a limited liability company. The final balance sheet, however, is often drawn up after using part of the annual profit. The control conditions correspond to the control conditions in a limited liability company. The profit indicated in the balance sheet is the profit that the general meeting proposes for distribution.


Any change in the use of property or debt leads to a change in the outcome of the financial year. To ensure that creditors' interests are protected and annual tax is paid correctly, statutory assessment requirements must be adhered to. These requirements apply to all companies, regardless of their legal form and size.


The commercial balance is the basis of the tax balance. Only those companies that are required to publish an annual report prepare a separate tax balance.


When drawing up the annual report, the requirements of tax legislation are taken into account regarding the assessment of the indicators included in it, in particular, the cost of acquisition and production, the residual value of acquisition and production, and the value at the time of assessment. The acquisition cost includes all costs that are necessary to acquire the object and bring it to a condition in which it is suitable for use. This also includes the acquisition price, overheads, subsequent acquisition costs and impairment costs.


The cost of production includes, at a minimum, all direct production costs. Related indirect costs may also be taken into account.


Residual value refers to the difference between the acquisition cost and the cost of planned or unscheduled write-off of an object.


The value at the time of valuation is recognized as the generalized exchange or market price.


When assessing assets and liabilities, it is necessary to comply with a number of established rules (principles), the main of which are: the principle of separate assessment; principle of caution; principle of constancy; the principle of undervaluation for fixed and current assets; the overvaluation principle for debt; lost profits should not be reported; unrealized losses must be reported.


Let us give an approximate composition of indicators of the main forms of annual financial statements of joint-stock companies, which are formed in the German accounting system (Figure 2).


Assets	Liabilities
Fixed capital and financial assets: real estate, machinery and equipment; land and other real estate: a) with administrative, factory buildings, b) with residential buildings, c) without development; – buildings on areas not owned by the company; machines and machines; production and office equipment; construction in progress and advance payments for buildings and equipment; financial assets; investments in subsidiaries and branches; investments in long-term securities; loans for a period of at least four years, including with a mortgage	Shareholder ownership and liabilities: 1. Capital: ordinary shares; preference shares.
2.Current assets	2 Retained earnings
inventories; raw materials and supplies; unfinished production; finished products and goods for resale; spare parts; advance payments to suppliers; accounts receivable for goods and services; bills receivable; checks; cash at the cash desk, Federal Bank and current accounts; cash in banks; temporary investments in securities; treasury bonds; accounts receivable from branches; accounts receivable from members of the board of directors; other current assets	in accordance with the charter of the joint stock company; balance at the beginning of the period; income from the sale of shares at the market rate; deductions from net income; reserve for investments in treasury bills; balance at the beginning of the period; deductions from net income.
3. Advance payments and deferred expenses	3.Special capital reserves
	4. Reserve for covering non-cash debts
	5. Other reserves: pension reserve; operating cost reserve; other reserves
	6. Liabilities with a period of at least four years: obligations to the bank; other obligations.
	7. Obligations to the joint stock company
	8. Other liabilities: accounts receivable from trading enterprises; bills receivable; advance payments received; accounts receivable from branches; other obligations
	9. Deferred loans
	10. Remaining retained earnings
TOTAL assets	TOTAL shareholdings and liabilities

Figure 2 – Structure of the balance sheet of a joint stock company in the German accounting model


Let's move on to the characteristics and features of drawing up a balance sheet in the French accounting model.


2.3 Accounting in the ahfywepcrjq accounting system


The main feature of the French accounting system is its legal nature, since accounting is regulated by commercial and tax legislation. Moreover, the legal space is such that the very existence of a regulatory norm does not necessarily mean that companies follow it unquestioningly. There are no penalties for failure to comply with certain legal requirements. Sometimes a mechanism for ensuring compliance with legal norms has not been developed, and in some cases there are unspoken agreements that allow one to ignore certain regulations.


Accounting aims to reflect and classify the information necessary to achieve its objectives, to the extent that the information can be quantified, in particular:


– information about the main transactions must be immediately reflected in accounting so that it can be used in a timely manner;


– accounting information should allow users to obtain a reliable, unambiguous and complete view of business transactions, events and circumstances;


– the sequence of reflection of accounting information for a number of financial years presupposes the continuity of application of rules and procedures. Any departure from the principle of consistency must be explained by appeal to better information;


– If accounting rules are modified in the period in which the change is recorded, all relevant information about the accounting adjustments associated with the modification should be shown along with the information prepared on the basis of the new accounting rules.


The principles of building French accounting can be divided into traditional and those determined by accession to the EU regulatory framework.


The main directions of development of accounting in France are to bring it into line with current changes in commercial legislation and to develop a uniform approach to reporting consolidation.


In the accounting of most large companies, elements suddenly appeared related to traditional French accounting practices, to which they did not fully comply, and there was also a tendency to follow US accounting practices and apply international financial reporting standards.


The classification and procedure for reflecting individual accounting objects in France are quite specific. The accounting process is inextricably linked with the approved working chart of accounts, which must comply with the requirements of the unified national Chart of Accounts.


Reporting compiled on the basis of individual accounts is subject to mandatory requirements established by law. The reporting must comply with the Accounting Act, the 1983 Decree and the Fourth EU Directive. The balance sheets of individual companies, compared to consolidated ones, are more detailed and are compiled according to the established format


The classification of financial accounts comes down to distinguishing two classes of balance sheet elements:


Assets showing the amount of investment in the company;


1. Share capital and external liabilities showing their financing.
   

   In turn, investments are divided into current and non-current assets, and sources of financing - into current and long-term. From these individual accounts, tax liabilities are calculated.
   

   The implementation of the Seventh EU Directive into the national system had its own characteristics.
   

   First, although the requirement to show all deductions required for tax purposes remains in effect, companies are free to decide whether to include individual account amounts in their consolidated accounts.
   

   Secondly, the reporting of a group of companies does not necessarily have to comply with French accounting principles. It may be prepared according to accounting rules adopted in other financial markets. Companies operating in foreign markets have the right to prepare group reports according to the rules of the relevant market.
   

   Thus, the accounting practices of a group of companies are very diverse due to the lack of formalized requirements. Companies preparing consolidated statements, in most cases, do so on a voluntary basis and, therefore, use those accounting rules that seem more convenient to them.
   

   However, the freedom to choose accounting methods does not mean that there is no regulation of reporting consolidation in France. Mandatory requirements include, in particular, the rule that determines that companies over which the parent company exercises exclusive control must be reflected as subsidiaries in the accounting of the parent company.
   

   Exclusive control may be exercised through the possession of:
   

   – direct or relative majority of votes;
   

   – by a direct or relative majority of votes of 40%, if none of the partners or shareholders has a larger share (in percentage);
   

   – controlling influence that results from a management agreement or other similar agreement (provided that the parent company has an interest in the capital of subsidiaries).
   

   Subsidiaries whose nature of activities differs significantly from the nature of the parent company may be accounted for using the equity method. Associates over which the parent company has significant influence (ownership of 20 percent or more of the capital) must also consolidate using this method. .
   

   Joint ventures use the proportionate consolidation method. A company is defined as joint if the business is conducted by a limited number of partners and decisions are made jointly.
   

   Thus, individual accounts play a major role in generating long-term information about dividends and taxes, while consolidated accounts contain only additional information of an economic nature.
   

   The annual report includes the following forms:
   

   – individual reports of the parent company;
   

   – management report;
   

   – group reports, if any;
   

   – group management report;
   

   – the opinion of the auditor appointed by law on the annual reports;
   

   – a report on the directions for using profits, proposed for consideration at the annual general meeting of shareholders, as well as their resolution on the proposed option for distribution of profits.
   

   Consolidated accounts consist of a balance sheet, income statement, statement of changes in equity (voluntary breakdown) and statement of cash flows (not required for shareholders, but many French companies publish one).
   

   The forms of the consolidated balance sheet and income statement comply with the requirements of the Fourth EU Directive. The income statement should highlight operating income and expenses, financial income and expenses, extraordinary items, and taxes.
   

   A group of companies prepares a report on changes in share capital, showing its dynamics over three years. However, neither the balance sheet nor the notes to the financial statements provide information on how the share capital was formed (number of shares issued, premium per share). More detailed information is contained in the reporting of the parent company.
   

   Depending on the size of the company, there are three options for individual reporting.
   

   The balance sheet provides a picture of the financial position of a company at a particular date, including assets, liabilities and capital, which indicate the rights and obligations of the company and reflect the funds it uses. The balance sheet reveals the composition of assets: land, buildings, structures, other objects.
   

   The accumulated depreciation amount is shown for both non-current and current assets. Information on current assets is followed by detailed information on prepayments, deferred expenses, and translation differences.
   

   The capital section contains information about issued shares and their par value.
   

   Let us give an approximate composition of the indicators of the annual financial statements of companies that are formed in the French accounting system.
   

   The French Chart of Accounts was developed in 1979 and adopted by the French National Accounting Council in 1982. Over the next two years, it was introduced into practice.
   

   The chart of accounts, called the “General Chart of Accounts” (Plan Comtable General - PCG), takes into account the requirements of the Fourth Directive of the European Union (EU) on the annual reporting of limited liability companies. It was adopted in July 1978 with the aim of presenting reliable and objective data on the results of operations, property and financial position for the reporting year in limited liability companies.
   

   Assets	Liabilities
   issued unclaimed capital; sustainable assets; intangible sustainable assets; costs of setting up a company; research costs; patents, licenses, trademarks and other rights and assets; goodwill; other intangible sustainable assets; installment payments towards amounts due; tangible sustainable assets; Earth; building; machines, equipment and tools; other tangible assets; tangible sustainable assets under construction; installment payments towards amounts due; investments; shares of associated companies; amounts receivable from associates; other investments in sustainable assets; other debts receivable; other investments; current assets; inventories and work in progress; raw materials; unfinished production; finished products; goods for resale; payments on bills and deposits; debtors; debt of trading enterprises; other debtors; declared outstanding share capital; investments; investments in own shares; other investments; cash in the bank and cash desk; advance payments and accumulated income; advance payments; accumulated income; exchange rate difference	capital and reserves; paid-up share capital; stock premium; revaluation reserve; legally established reserve; reserve provided for by the company's charter or contract; other reserves; profit and loss account balance; profit or loss for the reporting period.
   	Total equity:
   	subsidies; costs associated with legislative acts; reserve for future payments; reserve for repayment of obligations; reserve for repayment of penalties; creditors; easily marketable bonds; other bonds; loans and individual lenders; deferred payments; debt to trade enterprises; taxes and social security contributions; debt on fixed capital; other creditors
   TOTAL assets	TOTAL liabilities

   Figure 3 – Structure of the balance sheet of companies in the French accounting model
   

   This document defines the requirements for generating data for each item of the balance sheet and profit and loss statement. Moreover, the requirements of the directive apply not only to limited (partial) liability companies, but also to joint-stock companies, limited partnerships, etc. This directive contains the methodological basis underlying the order of entries in the accounts presented in the French national chart of accounts. The fact is that the chart of accounts contains not only the nomenclature of accounts and instructions for its use in practice, as well as notes for each account, but also unified forms of accounting statements and guidelines for their preparation.
   

   Balance sheet accounts are used in the process of financial accounting to compile a balance sheet, which, along with the profit and loss statement and its annexes, is the main source of analysis and financial diagnostics, as it represents a numerical model of the financial life of an enterprise. Balance sheet accounts include accounts of classes 1-5 (see Fig. 4).
   

   
   

   Figure 4 – Classification of balance sheet accounts in the French national chart of accounts
   

   Class 1 “Capital accounts”, the number of which begins with the number one, includes the capital account itself, accounts of financial results of both past and reporting periods, accounts of types of valuation reserves, long-term and short-term loans and equivalent accounts payable.
   

   Class 2 “Accounts of tangible and intangible fixed assets and financial investments” contains not only direct accounts of intangible assets, fixed assets, financial investments (in authorized capital, bonds, shares, shares, bonds, etc. with a maturity of more than a year), but and accounts for accounting for incomplete capital investments, depreciation of assets, and estimated reserves for them.
   

   Class 3 “Accounts for inventories and work in progress” includes accounts for types of inventories: raw materials, materials, finished products, goods, materials in transit, as well as reserve accounts for impairment of both working capital and work in progress.
   

   In class 4 “Settlement accounts”, the main groups of debtors are identified, who are debtors and creditors in relation to the company. These groups are used to organize accounting for the accounts of suppliers, buyers, personnel, the state, social organizations, reserves for depreciation of accounts, etc.
   

   Balance sheet accounts that record investments in financial assets, commercial liabilities for a period of less than one year, as well as cash accounts are included in class 5 “Financial accounts”.
   

   The operational accounts used in the French chart of accounts include accounts combined into classes 6 and 7 (Fig. 5).
   

   
   

   Figure 5 – Classification of operational accounts in the French national chart of accounts
   

   Accounts included in class 6 “Cost accounts by element” are used to generate costs in the context of purchases (material assets acquired for production and business needs), external services, taxes, personnel costs, depreciation and valuation reserves, financial expenses, extraordinary expenses, income tax.
   

   Class 7 “Income accounts by type” combines income in the form of sales revenue, other income, for example from financial activities, unused valuation reserves, income from long-term contracts of an incomplete (partial) nature, etc.
   

   Special accounts, which are grouped into class 8, are off-balance sheet and are used to account for liabilities, property, and sources of its formation that are not the property of the company.
   

   Class 9 “Analytical Operations Accounts”, or operational accounting accounts, consist of a set of accounts used in management accounting to generate information necessary in making operational, tactical and strategic decisions. In addition, the goals of management accounting, implemented, in particular, with the help of operational accounting accounts, are calculations of financial results of activities by responsibility centers, profit centers and activity segments.
   Accounting objects and their classification

   2013-10-10

National principles governing record keeping vary significantly. But it is possible to identify groups of countries that adhere to the same type of approaches to building an accounting system, and there are no two states where the accounting rules would be absolutely identical.

The need to classify accounting models is as follows:

The classification helps to more accurately determine the similarities and differences between countries and accounting systems;

The classification assists in choosing the system that is most suitable for the country;

The classification provides the opportunity to select an example country for the formation of a certain type of accounting system.

The most general accounting classification models are:

1. British-American (Anglo-Saxon) model focuses on information requests from investors. For this model to function, the country must have a developed stock market, and companies do not have the right to inflate investment attractiveness (profit). This model is not characterized by rigid accounting regulation. This model in most countries involves the use of historical cost accounting principles.

Most industrial enterprises in the countries of the Anglo-Saxon group use a permanent inventory accounting system, which is based on their continuous accounting (that is, all current changes in inventories of raw materials, work in progress and finished goods are displayed in the accounts of the corresponding inventories).

The basis for the allocation of accounts for accounting for enterprise costs in this system is a functional attribute. For this purpose, the accounts “Production”, “Production Overhead”, “Sales Cost” and “General Administrative Cost” are used. The first two accounts display the costs associated with production. Direct production costs are displayed directly on the “Production” account, and indirect ones are accumulated on the “Production overhead costs” account, and at the end of the reporting period they are written off to the “Production” account and distributed among costing objects.

The costs of departments that perform non-production functions (management, sales, etc.) are not included in the production cost of products. These costs are written off to financial results in the reporting period in which they were incurred.

This model is typical for countries such as the USA, Canada, the Netherlands, Australia, the Bahamas, Barbados, Benin, Bermuda, Botswana, Venezuela, Ghana, Hong Kong, the Dominican Republic, Zambia, Zimbabwe, Israel, India, Indonesia, Ireland, the Cayman Islands, Kenya , Cyprus, Colombia, Liberia, Malawi, Malaysia, Mexico, Nigeria, New Zealand, Pakistan, Panama, Papua New Guinea, Puerto Rico, Singapore, Tanzania, Trinidad and Tobago, Uganda, Fiji, Philippines, countries Central America, South Africa, Jamaica.

2. Continental (Franco-German, or European) model typical for European countries where there are close ties between companies and banks and the state. These countries have strict tax policies, so the accounting system is characterized by significant conservatism.

In the continental model, government agencies have a significant influence on the reporting process. This can be explained by the priority of the state’s task of collecting taxes. Basically, countries with this model are also guided by the principle of unchanged initial assessment. This accounting model is characterized by the separation of two autonomous systems of accounts, respectively, for the purposes of financial and management accounting.

In the system of financial accounting accounts, periodic accounting of inventories is carried out, costs are grouped by elements (materials, wages, depreciation, etc.), and income models are grouped by type of activity (main, financial, emergency), settlements with debtors and creditors are displayed , the overall financial result is determined.

In the system of management accounting accounts, a constant record of inventories is maintained, the cost of production is calculated and accounting is carried out by responsibility centers, and the financial result of the main activity of the enterprise is determined.

Financial and management accounting accounts do not correspond with each other. The relationship between them is achieved using special (displaying) accounts (“Displayed inventories”, “Displayed purchases”, “Displayed costs”, etc.). Financial accounting data on cost elements and inventories are transferred haphazardly (without accounting records) to these accounts, which are then regrouped for management accounting purposes.

This model is typical for countries such as Austria, Spain, Italy, Denmark, France, Germany, Japan, Switzerland, Sweden, Egypt, Luxembourg, Mali, Morocco, Norway, Portugal, Russia, Belgium, Algeria, Angola, Burkina - Faso.

3. South American model. Inflationary processes had a key impact on the development of accounting in South American countries. Therefore, a distinctive characteristic of this model is the method of adjusting reporting indicators taking into account changes in the general price level. Adjustment for inflation is necessary to ensure the reliability of current financial information (especially for long-term assets). Adjustment of reporting is focused on the needs of the state for the execution of the revenue side of the budget.

The South American model is used in the countries: Argentina, Bolivia, Brazil, Guyana, Paraguay, Peru, Uruguay, Chile, Ecuador.

In addition to the listed models, some countries use mixed systems with national specifics. For example, experts highlight the Islamic model, which developed under the strong influence of the Muslim religion.

Islamic model develops under the influence of theological ideas, according to which it is prohibited to receive financial dividends for the sake of one’s own profits (Iraq, Iran, Afghanistan, Pakistan).