What is an income statement? Filling out the financial results report line by line - filling out the form. Report and accounting documents

Statement of financial results (Form 2) is a form of strict financial statements, including information on income received, expenses incurred and the final results of the financial and economic activities of the institution.

Income Statement: Form and Detailed Examples

Form code 2 for OKUD is 0710002, the form was approved by order of the Ministry of Finance of the Russian Federation dated July 2, 2010 No. 66n (as amended by orders of the Ministry of Finance of the Russian Federation dated October 5, 2011 No. 124n, dated April 6, 2015 No. 57n). In the article you can download the financial results report form.

When reporting on financial results is generated

To disclose data on income received from business activities, reporting on the intended use of funds is used. And for detailed data in the event that excess profit is received, the rate of which is determined in the accounting policy (clause 1 of article 13 of Law No. 402-FZ, clauses 6 and 11 of PBU 4/99, information of the Ministry of Finance dated December 4, 2012 No. PZ- 10/2012), a report on financial results is prepared.

Use the generally established form - Form No. 2 from Appendix 1 to Order No. 66n. An exception is consumer cooperatives (CMP), which can use a simplified accounting system. A special form has been developed for them, enshrined in Appendix 5 of Order No. 66n.

How to fill out

The preamble to the financial statements must indicate:

• reporting period, date of completion;
• full name of the organization, TIN, KPP;
• organizational and legal form, type of ownership;
• type of economic activity;
• codes according to all-Russian classifiers;
• unit of measurement;
• location.

Next, a table of 4 columns with key reporting values ​​is filled in. It includes explanations for the reporting, line code (Appendix 4 of Order No. 66n), name and comparable values ​​of indicators for the current and similar last year periods (clause 10 of PBU 4/99).

The reporting of financial results is approved by the head of the organization.

In the report on Form No. 2 you must fill out:

1. Revenue - line 2110: profitability from ordinary activities.
2. Cost of sales - 2120: information on expenses for ordinary activities that formed the cost of goods, work or services.
3. Gross profit/loss - 2100: data on the gross profit (loss) of the institution.
4. Selling expenses - 2210: expenses directly related to the sale of goods, work or services.
5. Management expenses - 2220: costs associated with managing the enterprise.
6. Profit/loss from sales - 2200: income or loss from business activities.
7. Income from participation in other organizations - 2310: income received from participation in the authorized capital of other institutions.
8. Interest receivable - 2320: information about interest received, which is one of the types of income.
9. Interest payable - 2330: expenses incurred as interest accrued payable.
10. Other income - 2340.
11. Other expenses - 2350.
12. Profit/loss before tax - 2300.
13. Current income tax - 2410: the amount of calculated tax from the tax return.
14. Permanent tax liabilities - 2421.
15. Other - 2460.
16. Net profit/loss - 2400.
17. The total financial result is 2500.

If the institution does not have actual numerical data, dashes are entered in the columns.

Who doesn't write the report?

Reporting in Form No. 2 on financial results is not provided by:

• credit organizations;
• insurance organizations;
• state (municipal) institutions.

Form 2

Sample of filling out the OKUD form 0710002

METHODOLOGY FOR COMPLETING THE REPORT “ON FINANCIAL RESULTS” IN RUSSIAN AND INTERNATIONAL PRACTICE IN THE GANNOVSKY COLLECTIVE FARM, ODESSA DISTRICT, OMSK REGION

Zakharova S.

In accordance with PBU 4/99 “Accounting statements of an organization” (approved by order of the Ministry of Finance of the Russian Federation dated July 6, 1999 N 43n), the following definition can be given:

Accounting statements are a unified system of data on the financial and property position of an organization and the results of its economic activities, compiled on the basis of data accounting according to established forms.

Also, in accordance with PBU 4/99 and the Federal Law “On Accounting”, financial statements consist of:

— balance sheet;

— financial results report;

— statement of changes in capital;

— cash flow statement;

— appendices to the balance sheet;

— explanatory note;

— auditor's report.

The financial results statement is one of the main forms of accounting reporting that characterizes the financial results of the organization for the reporting period and contains data on income, expenses and financial results in an accrual amount from the beginning of the year to the reporting date, that is, in a cumulative manner for the reporting period .

In accounting, the final financial result is expressed in terms of profit or loss. This information is accumulated on an accrual basis during the reporting year, that is, in a cumulative manner, on account 99 “Profits and losses”. Based on this, the net profit or loss of the reporting year is determined, which is calculated as the sum of the differences between debit and credit turnover.

The report “On financial results” according to Russian standards must contain the following numerical indicators of the organization’s income and expenses:

Income reflected in the financial results report:

Sales proceeds (less VAT and other mandatory payments);

Interest receivable;

Income from participation in other organizations;

Other income.

Expenses reflected in the financial results report:

Cost of goods sold;

Business expenses;

Administrative expenses;

Interest payable;

Other expenses.

Let’s look at it in more detail using the example of the “Gannovsky” collective farm for 2013.

“Revenue” = “Cost of sales” + “Gross profit or loss”

The line “Cost of sales” reflects the amount of 60,210 thousand rubles.

The line “Gross profit” is obtained as the difference between the lines “Revenue” and “Cost of sales”, that is

The lines “Commercial expenses” and “Administrative expenses” are missing in the report “On financial results” of the “Gannovsky” collective farm.

In order to calculate the indicator for the line “Profit or loss from sales”, you need to subtract the lines “Commercial expenses” and “Administrative expenses” from the line “Gross profit”. Since these expenses are absent, the line “Profit or loss from sales” is equal to the line “Gross profit”, namely, 6129 thousand rubles.

There are no indicators for the line “Income from participation in other organizations”.

The line “Interest receivable” is 5 thousand rubles. This line shows the turnover on the credit of account 91 subaccount “Other income” from the debit of the interest receivable accounts.

The line “Interest payable” indicates the interest that the organization must pay on shares, bonds, as well as loans and borrowings. On this line you need to show the debit turnover on account 91 “Other income and expenses” in terms of accrued interest payable; this report indicates the amount of 908 thousand rubles.

The value of the line “Other income” is determined on the basis of data on the total credit turnover for the reporting period in account 91 subaccount “Other income” minus VAT and other mandatory payments. This line is reflected in the amount of 6,763 thousand rubles.

The value of the line indicator “Other expenses” is reflected in the amount of 3341 thousand rubles. and is determined on the basis of data on the total debit turnover for the reporting period on account 91 subaccount “Other expenses” for analytical accounts on which other expenses are reflected.

The line “Profit or loss before tax” is determined by adding to the indicator the line “Profit (loss) from sales” the values ​​of the lines “Interest receivable”, “Income from participation in other organizations” and “Other income” and subtracting the value of the lines from the resulting amount “Interest payable” and “Other expenses”. This line shows profit in the amount of 8648 thousand rubles.

The lines “Change in deferred tax liabilities” and “Change in deferred tax assets” are not completed.

The line “Net profit or loss” is reflected in the amount of 8648 thousand rubles. Calculated by subtracting the “Current income tax” line from the “Profit or loss before tax” line. The line indicator “Current income tax” is missing in this case.

The following items must be presented in the financial results report in accordance with international standards:

1. revenue;

2. operating results;

3. financing costs;

4. share of profits and losses of associated organizations and joint ventures accounted for using the participation method;

5. tax expenses;

6. profit or loss from ordinary activities;

7. results of emergency circumstances;

8. minority share;

9. net profit or loss for the period.

In the statement of financial results and in the notes to it, it is necessary to provide an analytical description of income and expenses. The standard recommends two approaches to classifying costs:

1. classification by cost elements;

2. cost of sales method.

Using the example of the “Gannovsky” collective farm, a report “On financial results” was compiled in accordance with international financial reporting standards (IFRS).

The “Revenue” line reflects the amount of 66,339 thousand rubles. (amount excluding VAT).

“Revenue” = “Cost of sales” + “Gross profit (loss)”

66339 thousand rubles. = 60210 thousand rubles. + 6129 thousand rub.

“Cost of sold products, goods, services” is defined in the “Report on Financial Results” and amounts to 60,210 thousand rubles. It can be calculated as debit turnover on account 90 subaccount “Cost of sales” minus turnover to the debit of account 90 subaccount “Cost of sales” from the credit of account 26 “General expenses” minus turnover to the debit of account 90 subaccount “Cost of sales” from the credit of account 44 “Expenses” for sale."

The line “Gross operating result from sales” is obtained as the difference between the lines “Revenue” and “Cost of products, goods, services sold”, that is

6129 thousand rubles. = 66339 thousand rubles. - 60210 thousand rubles.

The lines “Commercial expenses” and “Administrative expenses for the reporting period” are missing in the report “On financial results” of the Ganovsky collective farm.

The line “Profit or loss from ordinary activities” is determined by adding to the indicator of the line “Profit or loss from sales” the values ​​of the lines “Interest receivable”, “Income from participation in other organizations” and “Other income” and subtracting the value of the lines from the resulting amount “Interest payable” and “Other expenses”. This line shows profit in the amount of 8648 thousand rubles.

8648 thousand rubles = 6129 thousand rubles + 5 thousand rubles + 6763 thousand rubles - 334 thousand rubles - 908 thousand rubles

The line “Net profit or loss for the period” is reflected in the amount of 8648 thousand rubles. This amount is calculated by subtracting the “Current income tax” line from the “Profit or loss from ordinary activities” line. The line indicator “Current income tax” is missing in this case.

How to Write an Income Statement

In order to calculate the indicator of the line “Operating financial result from sales”, you need to subtract the lines “Commercial expenses” and “Administrative expenses” from the line “Gross profit”. Since these expenses are absent, the line “Operating financial result from sales” is equal to the line “Gross profit”, namely, 6129 thousand rubles.

Based on the foregoing, we can conclude that as a result of the accounting changes that have already occurred, the existing reporting differs little in composition from the reporting that relates to international financial reporting standards (IFRS). The reporting forms are also similar.

Based on the existing differences, different understandings of accounting and accounting are formed. A specific manifestation of these differences is the procedure for assessment, recognition and reporting individual species assets, liabilities and transactions.

Form No. 2 (OKUD code 0710002) was approved by order of the Ministry of Finance No. 66n dated 07/02/2010. The indicators of the financial results report contain a breakdown of the results of the institution’s activities in terms of income, expenses and other information for the reporting period and the previous year.

Translation of the financial results report into English language may be required by companies whose owners, founders or shareholders are foreign citizens or economic entities.

Key indicators of form No. 2

The “Revenue” line includes total numerical data on the institution’s income from its main activities: sales of goods, works or services, reduced by the amount of calculated tax liabilities for the period for VAT and excise taxes.

“Cost of sales” in the financial results statement is filled in with data on the total volume of costs incurred for the production and sale of goods, works and services for main activities. Expenses for the purchase of materials for production or provision of services are also included in this line. Moreover, the balance at the beginning of the billing period should also be taken into account, but the balance at the end of the year must be subtracted.

In addition to direct production (sales) costs, you should include:

• remuneration of key personnel;
• tax deductions and insurance premiums with payroll;
• depreciation of fixed assets used in production;
• production overhead.

“Gross profit” is equal to the difference between the lines “Revenue” and “Cost”, determines the profit or loss from the main activities of the institution before deducting commercial and administrative costs.

“Selling expenses” on the income statement consist of the costs of selling goods, work, or services produced.

Profit and loss statement form 2 - filling out rule

For example, expenses for sales and delivery of products.

“Administrative expenses” in the income statement include administrative expenses:

• salaries and insurance premiums of administrative and management personnel, accounting, and human resources departments;
• depreciation or rental of office space;
• expenses for legal or information support, court costs, etc.

“Profit or loss on sales” is equal to the difference between the lines “Gross profit” and “Commercial ...” and “Administrative expenses”.

“Other income” includes data on the institution’s receipts and income received from other types of activities. For example, interest on bank deposits, positive exchange rate differences when converting currencies, etc.

The line “Other expenses” includes types of company expenses that cannot be classified according to specific criteria or attributed to the above types of expenses.

Structure of the income statement

Title part	To be filled in with the basic details: name of the organization; TIN, OKVED, OPF, OKPO; form of ownership; unit of measurement; date of compilation
Tabular part	Accounting data of the institution in the context of profit and loss indicators, income and expenses, tax and other obligations
Signature of the responsible person	The completed form is signed by the head of the organization or other responsible person. Indicate the transcript and date of signing
Decoding by individual form indicators	Based on the provisions of PBU 4/99, general indicators can be detailed in the transcript of the financial statements

Form No. 2

Let's look at how to check an income statement generated in the usual manner.

You will learn:

• what data should be reflected in each line;
• how to quickly and efficiently check your financial results report.

Income (expenses) from ordinary activities

Line 2110 Revenue

• CT turnover 90.01 minus Dt turnover 90.03 VAT minus Dt turnover 90.04 excise taxes.

Line 2120 Cost of sales

Line 2100 Gross profit (loss)

• page 2110 “Revenue” minus line 2120 “Cost of sales”.

Line 2210 Commercial expenses

Line 2220 Administrative expenses

Line 2200 Profit (loss) from sales

• Row sum:

• page 2100 “Gross profit”;
• page 2210 "Business expenses";
• page 2220 "Administrative expenses".

Other income (expenses)

Line 2310 Income from participation in other organizations

• CT turnover 91.01 according to subconto:

• Income (expenses) associated with participation in other organizations;
• Income (expenses) associated with participation in Russian organizations;
• Income (expenses) associated with participation in foreign organizations.

Line 2320 Interest receivable

• CT turnover 91.01 for subaccount “Interest receivable (paid)”.

Line 2330 Interest payable

• Dt turnover 91.02 under subconto “Interest receivable (payable)”.

Line 2340 Other income

• CT turnover 91.01 for all other subaccounts minus dt turnover 91.02 VAT.

Line 2350 Other expenses

• Dt turnover 91.02 for all other subaccounts.

Line 2300 Profit (loss) before tax

• Row sum:

• page 2200 “Profit (loss) from sales”;
• page 2310 “Income from participation in other organizations”;
• page 2320 “Interest receivable”;
• page 2330 “Interest payable”;
• page 2340 “Other income”;
• page 2350 “Other expenses”.

Current income tax

Line 2410 Current income tax

• if PBU 18/02 applies:

• Dt account turnover 68.04.1 minus Kt account turnover 68.04.2.

if PBU 18/02 does NOT apply:

turnover Dt 99.01.1 with a score of 68.04.1.

Lines 2421 incl. permanent tax liabilities (assets), 2430 Change in deferred tax liabilities, 2450 Change in deferred tax assets are filled in if PBU 18/02 is applied.

Line 2421 incl. permanent tax liabilities (assets)

• rpm difference:

• Dt 99.02.3 Kt 68.04.2 – PNO;
• Dt68.04.2 Kt 99.02.3 – PNA.

Line 2430 Change in deferred tax liabilities

• rpm difference:

• Dt 68.04.2 Kt 77 – accrual of IT;
• Dt 77 Kt 68.04.2 – repayment of IT.

Line 2450 Change in deferred tax assets

• rpm difference:

• Dt 09 Kt 68.04.2 – accrual of ONA;
• Dt 68.04.2 Kt 09 – repayment of ONA.

Line 2460 Other

• other income and expenses not mentioned above are indicated.

Line 2400 Net profit (loss)

• Row sum:

• page 2300 “Profit loss before tax”;
• page 2410 “Current income tax”;
• page 2430 “Change in Deferred Tax Liabilities”;
• page 2450 “Change in deferred tax assets”;
• p.2460 “Other.”

Section Information

Line 2510 Result from the revaluation of non-current assets, not included in the net profit (loss) of the period

• reference information on the additional valuation (depreciation) of fixed assets and intangible assets classified as additional capital:

Line 2520 Result from other operations not included in the net profit (loss) of the period

• reference information on other operations related to additional capital:

• Kt 83.02 + Kt 83.03 + Kt 83.09.

Line 2500 Cumulative financial result of the period

• Row sum:

• p.

  Preparation of the financial results report

  2400 “Net profit”;

• page 2510 “Result from other operations not included in the net profit (loss) period”;
• page 2520 “Result from other operations not included in the net profit (loss) of the period”;

Line 2900 Basic profit (loss) per share

• JSC only - the amount of profit per ordinary share.

Many Russian enterprises are required to prepare a document such as a profit and loss statement. This source assumes the inclusion of figures reflecting how efficiently the company operates - in terms of generating revenue and ensuring business profitability. This information may be useful to investors, lenders and partners. The need to compile an appropriate report may also arise due to the company’s obligations to provide data to government agencies - the Federal Tax Service, statistical institutions. What features characterize the document in question? How to compose it correctly?

Essence of the report

An income statement is an example of the most important document that forms financial statements. It may be noted that another name for the source is more common, namely, “statement of financial results.” This is exactly how it sounds in many sources of law.

Sometimes the document is referred to as a “financial income statement.” Regardless of the name, the corresponding source contains: monetary indicators of the company’s activities for the reporting period, information on income with a cumulative total.

The legislation of the Russian Federation defines a standardized document that reflects the relevant information - Form 2. The profit and loss statement compiled according to it includes the following main parameters: profit (losses) based on the results of sales of goods, operating revenue and costs, income and expenses arising as a result non-operating activities, the organization's costs of producing products at full cost (or production), commercial and administrative costs, net income from sales, income tax amounts, various liabilities, assets, net profit. In general, all this information allows us to fairly adequately assess the effectiveness of the company’s business model.

Significance of the document

The income statement is an example of the most important document from the point of view of enterprise analysis. This source also includes figures by which you can determine the profitability of a company or individual production (sales) areas.

The general work of the company is thus characterized by the amount of profit, as well as the profitability indicator. The first criterion can be determined based on the dynamics of sales, rental of certain funds, exchange activities and other types of activities aimed at making a profit. The second one also depends on the level of costs.

Report Analysis

Analysis of the organization's profit and loss statement allows us to determine how effectively management carries out activities within the framework of certain business processes - production, supply, solving marketing and personnel problems. Possession of relevant information will allow the organization’s management or, for example, investors to assess how competently the company’s specialists and managers act, and to determine priorities in optimizing the enterprise’s development strategy. The profit and loss statement of an enterprise allows you to identify what factors influence the implementation of the company’s business model, what additional resources the company has to improve financial performance. This information is important both for management and for investors or creditors.

Report and accounting documents

A profit and loss statement is an example of a document that, as we noted above, is included in the financial statements. It is comparable in importance to a source such as the Balance Sheet. However, the principles for drawing up these documents vary greatly. Thus, the balance sheet involves the inclusion of data as of a specific date. In turn, the profit and loss statement must contain information with a cumulative total - for the 1st quarter, half a year, 9 months, as well as the tax year.

The balance sheet and profit and loss account are prepared by all companies that maintain accounting records. The main task in drawing up the first type of document is to reflect information about the company’s property and its activities. In turn, the profit and loss statement records the results of the company's activities and is used to assess the effectiveness of the enterprise's business model. Very often, both documents are submitted to the relevant government authorities at the same time. The mentioned sources are also extremely important, as we noted, for investors, as well as partner organizations planning to cooperate with the company.

Should the data in the report be considered official?

The income statement is a completely official source. It is certified by the signatures of the organization’s management, and therefore cannot contain data that is presented for the purpose of deliberately distorting the idea of ​​how things are going in the company. In some cases, firms involve external partners in the preparation of the relevant document in order to improve the quality of the analysis of the enterprise’s business model. This is carried out in the interests, first of all, of the company itself, which draws up the document - the attitude of other market players towards it often depends on how responsibly the organization approaches the formation of this report.

Document structure

The general principle of structuring the report is to reflect indicators that allow you to get an idea of ​​whether the company is unprofitable or profitable. Key information related to this is recorded at the very beginning of the document (this is revenue, sales data, expenses - including management).

After the basic information reflecting the efficiency of the enterprise is recorded in the document, additional indicators related to the formation of income or expenses are entered into the report - for example, interest on deposits (or, conversely, debt obligations), figures reflecting the results of business activities companies before taxes. Then the profitability of the company after paying the necessary fees to the budget is calculated and also recorded in the report. Thus, the final financial result is formed - net profit (or, conversely, loss) for the tax period.

Specifics of defining indicators for a report

What should you pay attention to when determining indicators to include in a document such as Form 2? The income statement should primarily be prepared on an accrual basis. What does it mean? Revenue should be accrued at the moment when the buyer or customer of the organization begins to fulfill obligations related to payment for goods or services. As a rule, they arise after products have been shipped or services have been provided. Documentedly, this is usually accompanied by the presentation by the customer of the necessary calculation sources.

So, now we know what Form 2 is - the income statement. Let us now study the nuances of drawing up this document. The form of the corresponding report is standardized and recommended by the Ministry of Finance. The document must be prepared before March 30 of the year following the reporting year - if we are talking about providing data for the tax year. It may be noted that the corresponding form of the profit and loss statement can be adjusted by the specialists drawing up this document. Certain lines can be deleted (for example, if there is nothing to reflect for certain indicators) or, conversely, added by employees of the relevant departments of the company.

How to fill out the report?

How to correctly fill out a profit and loss statement? Form 2 is the first thing we need. You can request it at the nearest branch of the Federal Tax Service or download it on the department’s website - nalog.ru. The first thing you should pay attention to when filling out the corresponding document is that the total indicators are recorded in each line.

It may be noted that general information about the organization indicated in Form No. 2, in general, are similar to those recorded in the balance sheet, or Form No. 1. These include: the reporting period, the name of the company (in accordance with the constituent documents), OKVED codes and others that are required in accordance with the form, the legal status of the company, as well as the units of measurement used in the document.

In what sequence can such a document be filled out - a profit and loss statement? We will study an example of an algorithm for drawing up a corresponding document based on the key points of Form No. 2.

Item 2110 indicates the organization's revenue. It represents the amount of income generated by the sale of goods, provision of services, or performance of work by the reporting firm. VAT must be deducted from this amount. Information for filling out the corresponding item should be taken from account 90 (that is, “Sales”).

Item 2120 records the cost. Information for filling it out should also be taken from account 90 (from debit). At the same time, costs associated with the sale should be excluded (these can, in principle, include all costs, except for management and those associated with transport and procurement activities - for them the income statement form provides separate lines).

At point 2100 (or loss) is recorded. The corresponding value is easily calculated - as the difference between the indicators in lines 2110 and 2120.

Item 2210 indicates selling costs. They may be expenses associated with the main types of business activities of the company, with the exception of those related to transportation and procurement. Information for the corresponding item must be taken from (its debit). These expenses are also included in the cost reflected on account 90.

Paragraph 2220 records administrative expenses - those associated with the organization of the management system in the company. This may be related to rent, payment of labor compensation to employees, transfer of relevant taxes to the budget. The numbers must be taken from account 26 (that is, “General business expenses”). Note that this data is also included in the debit of account 90.

Point 2200 records the profit resulting from sales. Of course, it can also be a loss. To obtain the necessary figures, it is necessary to use the indicators of the profit and loss statement, which are contained in paragraphs 2100, 2210, and 2220. The second indicator must be subtracted from the first indicator, and the third from the resulting figure.

Item 2310 reports revenue from other entities. Its appearance is possible if a company invests money in the authorized capital of other enterprises, as a result of which it receives dividends or part of the profit. This type of income is also recorded on account 91 (on a loan).

Item 2130 records interest receivable. They may be associated with the presence of bank deposits, bonds or, for example, bills of exchange. The corresponding information can be obtained from account 91 (as with the previous indicator, from a loan).

Adjacent to the indicated figures is item 2330, which reflects interest payable. They may be related, for example, to loans. The necessary information can also be taken from account 91 (from debit).

Item 2340 records other income. The figures are formed from revenue, which is listed on account 91 (on credit), with the exception of VAT and other fees that are taken into account in the debit of this account, and are also not recorded in other indicators that include the profit and loss statement (lines 2310 and 2320 ). Item 2350, in turn, reflects other expenses. These are costs that are recorded in account 91 (by debit), not counting the indicators from line 2330.

Item 2300 records the profit (or loss) that appeared before tax. To calculate it, you need to add up several indicators that the profit and loss statement form includes, namely those reflected in lines 2200, 2310, 2320, and then subtract from the resulting figure the amount on lines 2330 and 2340. But that’s not all. . From the resulting figure you need to subtract the value from line 2350.

Paragraph 2310 reflects income tax for the reporting period for which the organization draws up the document in question. The source of the necessary data can be account 68 (that is, “Taxes and fees”). If a company pays tax according to PBU 18/02, then items 2421, 2430, and 2450 can also be filled out. What are their specifics?

Paragraph 2421 records the company's permanent tax obligations. How? For example, if, when calculating income tax, discrepancies are recorded between the indicators that are included in accounting and tax accounting, then the difference discovered between them receives the status of permanent. If you multiply it by the tax rate, then the corresponding amount will have to be paid by the enterprise to the budget. The corresponding obligation will be recorded on The specific figures that must be indicated in the paragraph under consideration can be defined as the difference between the debit and credit indicators of account 99 (more precisely, the subaccount “Fixed tax liabilities”). This is the specificity of filling out a document if, for example, a company prepares tax documents, a balance sheet and a profit and loss statement at the same time.

Items 2430 and 2450 reflect deferred tax liabilities. If a firm records revenues or costs in one period but taxes are due in another, the corresponding figures create a temporary difference. Income tax acquires the status of a deferred liability. Information for the marked items can be taken either from account 77 or, for example, from account 09.

Item 2460 includes other information. Information may be recorded here regarding other amounts that affect the firm’s profit margin. These can be various penalties, fines, overpayments.

Item 2400 reflects the net profit of the organization. The corresponding figures can also record a loss. In order to get them, you need to subtract from line 2300 the sum of the indicators in points 2410, 2430, and 2450. After that, subtract the values ​​in line 2460 from the resulting sum.

Paragraph 2510 records the result of the revaluation. This reflects the results associated with the revaluation of various non-current assets. Item 2520 records the result of other operations. The corresponding line reflects information that was not taken into account by the report compiler in the previous paragraphs. Paragraph 2500 determines the financial result for tax period. It is determined by adding the indicators in lines 2400, 2510, and 2520. If the company operates as a joint stock company, then lines 2900 and 2910 must also be filled in, reflecting profit or loss per share.

Features of working with a document

The finished profit and loss statement (a form with all the figures entered, as well as signed by the head of the company) is submitted to the territorial division of the Federal Tax Service at the place where the enterprise operates.

In some cases, it is possible to draw up a simplified document. Its structure involves indicating a smaller number of figures - for groups of individual articles, but without much detail of certain indicators. This opportunity is open to small businesses. Analysis of the profit and loss statement of large businesses, in turn, involves the study of a large volume of various indicators. This is necessary to carry out an objective assessment of the effectiveness of the organization’s development model - by managers, investors or creditors.

All organizations must submit their financial statements by April 1 inclusive. In 2018, there were changes in reporting forms and accounting rules. Below, the review provides recommendations. What new things to consider when you prepare reports.

1. Submit reports using new forms

Submit your reports for 2018 using the forms from the Order of the Ministry of Finance dated July 2, 2010 No. 66n. In 2018, the Ministry of Finance made changes to the forms (Order of the Ministry of Finance dated March 6, 2018 No. 41n). The amendments were minor. But check that the reporting form is in the current edition.

There are also new forms with a line about mandatory audit and indicators. Which take into account amendments to PBU 18/02. But they cannot be used when submitting reports for 2018. The Ministry of Finance has not yet approved the forms. It will be necessary to report on them for 2019.

• Balance sheet for 2018
  Download... example (.xls 75Kb) + blank form (.xls 54Kb)
• Financial results report for 2018
  Download... example (.xls 60Kb) + blank form (.doc 70Kb)
• 
  
• Report on the intended use of funds
  Download... example + blank form

2. Submit reports in the same format

The composition of the financial statements for 2018 has not changed. It depends on how and with whom you keep records. IN general procedure, in a simplified form or in a non-profit organization.

Type of organization	Composition of accounting reports
Organizations that conduct accounting in a general manner	Balance Sheet Financial results report Cash flow statement Statement of changes in equity Explanations
Organizations that have the right to conduct accounting in a simplified form	Balance sheet in a simplified form(.doc 60Kb) Statement of financial results in a simplified form(.doc 47Kb) An organization that maintains accounting in a simplified form has the right to choose which forms to submit accounting reports in: general or simplified
Non-profit organizations	Balance Sheet Report on the intended use of funds Financial results report. If the NPO received profit from commercial activities. And the income from this activity is significant Explanations Non-profit organizations can submit a Balance Sheet. And a report on the intended use of funds using simplified forms. And do not provide an explanation. If accounting is carried out in a simplified manner

3. Submit reports to statistics

Submit your financial statements for 2018 to both the Federal Tax Service and Rosstat. If the organization is required to pass. You still need to submit an audit report to the statistics department. When an organization is not subject to mandatory audit. But in statistics they require an audit report, please send an explanation. That you don't have to represent him. There is no need to send the audit report for 2018 to the Federal Tax Service.

The rules for submitting financial statements will change when you submit them for 2019. Reporting along with auditor's report You will only need to submit it to the Federal Tax Service. Only some organizations will be required to submit reports to Rosstat.

4. Reporting can be submitted on paper

For 2018, you can submit your financial statements on paper. Same in electronic form. The size of the organization does not matter: Even large enterprises have the right to prepare balance sheets and other forms on paper. If the organization reports in electronic form. Use the format recommended by the Federal Tax Service (letter of the Federal Tax Service dated July 16, 2018 No. PA-4-6/13687).

But starting with reporting for 2019, the requirement for mandatory electronic form will become mandatory. An exception was made only for small businesses. They will be able to submit accounting reports for 2019 both on paper and according to the TKS. From 2020, small businesses will report in a general manner, electronically.

5. Explanations for reporting are required

Explanations to financial statements are required. If you are doing accounting general rules. It is not necessary to provide explanations. Only when you keep records according to simplified rules.

The explanations reflect additional information to other reporting forms. Most often this is a decoding of individual balance sheet indicators. And the financial results report.

Ready-made examples of explanations that will help decipher accounts receivable and payable data

• Explanations on accounts receivable
  Will be needed: if the organization has accounts receivable in its accounting, including those covered by the reserve for doubtful debts. Download... (.doc 65Kb)
• Explanations on accounts payable
  Will be needed: if the organization has accounts payable in its accounting, including overdue ones. Download... (.doc 66Kb)

How to draw up a balance sheet for small businesses

Balance Sheet Forms and the Report on the financial results of small businesses were put into effect by order of the Ministry of Finance of Russia No. 113n dated August 17, 2012. Based on the order of the Ministry of Finance of Russia dated July 2, 2010 No. 66n "On the forms of financial statements of organizations".

According to order No. 66n. Small business organizations prepare financial statements according to the following simplified system:

a) in the Balance Sheet and the Income Statement. Indicators only for groups of articles are included (without detailed indicators for articles);

b) in the Appendices to the balance sheet and the Statement of Financial Results of a small enterprise, only the most important information is provided. Without knowledge of which it is impossible to assess the financial position of an organization or the financial results of its activities.

You also need to be guided in your work. Provisions of the Tax Code of the Russian Federation and data from tax registers of the organization.

Before you make a balance sheet, check:

• whether all business transactions for the reporting period are reflected in accounting. To do this, first prepare an income statement and then a balance sheet.
• whether the turnover on synthetic and analytical accounts is formed correctly.

  Note:
  Before drawing up financial statements for the year, the accountant needs to summarize the organization’s activities and close the accounting accounts, according to which the financial results of the organization’s activities are determined.

Below is a detailed example of filling out the balance sheet and financial performance statement of a small enterprise. Balances and turnovers, which accounts are used to make up the Balance Sheet. And a report on financial results for small businesses (Form KND 0710098).

The company is located on the simplified taxation system (USN-D) 6% and is engaged in appraisal services. Intangible, financial and other non-current assets. There are also no financial or other current assets in the organization. The accounting policy stipulates that revenue is determined as money is received from customers. Expenses are recognized as they are paid and reduce the financial result of the current period. (clause 7 PBU 1/2008, clause 12 PBU 9/99, clauses 18 and 19 PBU 10/99).

Information disclosure service: financial statements, balance sheets. And all other forms are free.

Example REPORT on FINANCIAL RESULTS of a small enterprise

According to the accounting law included in the financial statements It is the financial results report that is included (clause 1).

Line 2110 "Revenue, minus VAT, excise taxes." It is calculated as the difference between the turnover on the Credit account 90.1 and the sum of the turnover on the Debit account 90.3,90.4,90.5.

Line 2120 "Expenses for ordinary activities." Amount of turnover on Account Debit 90.2.

Line 2330 "Interest payable." Turnover on Debit account 91 in terms of interest expenses.

Line 2340 "Other income". Calculated based on the Turnover on Account Credit 91.

Line 2350 "Other expenses". Calculated based on the Turnover in the Debit of account 91, all other expenses are indicated except for Interest payable (they are reflected on line 2330)

Line 2460 "Profit tax (income)". The amount of income tax indicated in account 68 is indicated. For organizations using the simplified tax system, you need to indicate the simplified tax here. Because this line reflects not only income taxes, but also taxes on income. And the simplified single tax is just that.

Line 2400 Net profit = Revenue – Expenses for ordinary activities + Interest payable + Other income – Other expenses + (-) Income tax.

EXAMPLE OF BALANCE SHEET of a company using the simplified tax system, How to draw up a balance sheet for a small enterprise

Balance sheet asset

Line 1150 "Tangible non-current assets". The line is calculated as the difference between the Balance at the end of the period for the Debit of account 01 and the Balance at the end of the period for the Credit of account 02.

Line 1170 "Intangible, financial and other non-current assets." The line is calculated as the difference between the Amount of balances at the end of the period for Debit accounts 03,04,09,58. And the amount of balances at the end of the period for the Credit of accounts is 05.59.

Line 1210 "Inventories". The line is calculated as the difference between the Amount of balances at the end of the period for Debit accounts 10,11,15,16.1,20,21,23,25,26,29,41,43,44,45,46,97. And Amounts of balances at the end of the period for Credit accounts 14, 16.1,16.2,42.

Line 1250 "Cash and cash equivalents." The line is calculated as the sum of the Balances at the end of the period for the Debit accounts 50,51,52,55,57.

Line 1260 "Financial and other current assets."

Line 1260 is calculated as the Sum of balances at the end of the period for Debit accounts 19,60,62,66,67,68,69,70,71,73,75,76,79,86,94 minus Balance for Credit account 63.

LIABILITY balance

Line 1310 "Capital and reserves". The line is calculated as the Sum of balances at the end of the period for Account Credit 80,82,83,84 minus Account Credit Balance 81.

Line 1410 "Long-term borrowed funds." The line is calculated as the Balance at the end of the period for Account Credit 67.

Line 1450 "Other long-term liabilities." The line is calculated as the sum of the balances at the end of the period for the Credit of accounts 75.77.

Line 1510 "Short-term borrowed funds." The line is equal to the Balance at the end of the period for the Credit of account 66.

Line 1520" Accounts payable". The line is calculated as the sum of the balances at the end of the period for Credit accounts 60,62,68,69,70,71,73,75,76.

Line 1550 "Other short-term liabilities." The line is calculated as the sum of the balances at the end of the period for the Credit of accounts 96.98.

Table: Procedure for filling out the Balance Sheet for a small enterprise

Table: Procedure for filling out the Balance Sheet in full

Download TAXPAYER LEFT version 4.60

The kit includes a program for filling out and printing the BALANCE. And the Financial Results Report. Important! You need to download all program files. Including additional changes! See an example of a small business balance sheet prepared in the program.

ROSSTAT: balance sheet, financial performance report
New order submission of a mandatory copy of the accounting (financial) statements to the statistical authorities. The order was developed in connection with amendments to Federal law dated December 6, 2011 No. 402-FZ “On Accounting”.

The issue of drawing up zero reporting in the absence of entrepreneurial activity. When it would seem there is nothing to report for. It is not as simple as it might seem to a non-professional.

Information is provided on the deadlines for submitting financial statements for 2019. As well as the form and place of their presentation.

Accountant calendar 2019. Deadlines for filing taxes, declarations, balance sheets, financial statements. For the year, 1st quarter, half year, 9 months download

General characteristics of the financial results statement

Financial results report(income statement) reports the amount of a company's income during a certain period of time, as well as the amount of expenses that were incurred to generate that amount of income. Net profit is formed as the difference between the amount of income and expenses. The basic equation underlying the income statement is:

Income - Expenses = Net profit

Investment analysts intensively study financial performance reports of companies. Stock analysts interested in them because stock markets often react positively or negatively to high or low earnings growth of a company with above-average or below-average earnings, respectively. Analysts who focus on fixed income instruments, should examine components of historical and forward-looking financial statements to obtain information about companies' capabilities. Steady profit generation will allow them to expect promised payments on their debts throughout the business cycle. Corporations often pay more attention to the income statement than to other financial statements.

Components and Format of the Income Statement

An example of an income statement is shown in Table 1. Note that years can be listed in ascending order from left to right with the most recent year in the last column, or in descending order with last year in the first column. These are alternative data display formats. There are also differences in the provision of information about various elements. Companies can detail sources of income, expenses, etc. The analyst should always check the order of years and the manner in which negative elements are presented before beginning the analysis.

The income statement is also called the statement of operations, earnings statement, or profit and loss statement. The following elements exist in this document:

• income– this is a positive cash flow from earned intermediary operations, sales of goods and services, provision of own funds on credit, etc.
• expenses represent a negative cash flow that is formed in order to generate income. This includes money that was spent during the accounting period, as well as expenses for which the future value cannot be measured.

The top line of the income statement typically contains revenue information. Revenue is the amount charged for the supply of goods or services in the ordinary course of business. Revenue is often used synonymously with sales income, sales, and turnover.

Table 1. Example of an income statement

Explanations	Indicator name		For January - December 2015	For January - December "2014
	Cost of sales
	Gross profit (loss)
	Business expenses
	Administrative expenses
	Profit (loss) from sales
	Income from participation in other organizations
	Interest receivable
	Interest payable
	Other income
	Other expenses
	Profit (loss) before tax
	Current income tax
	incl. permanent tax liabilities (assets)
	Change in deferred tax liabilities
	Change in deferred tax assets
	Net profit (loss)

Explanations	Indicator name		For January - December 2015	For January - December 2014
	Result from the revaluation of non-current assets, not included in the net profit (loss) of the period
	Result from other operations not included in the net profit (loss) of the period
	Total financial result of the period
	FOR REFERENCE Basic earnings (loss) per share
	Diluted earnings (loss) per share

Profit represents the excess of income over expenses, and also includes sales of a long-term asset at a cost that is higher than its book value; In addition, this includes the repayment of liabilities in an amount that is less than their carrying amount.

Lesion- this is the excess of expenses over the company’s income, as well as the sale of a long-term asset at a cost less than its book value; In addition, it is the repayment of a liability in an amount greater than its carrying amount.

Cost price goods and services sold includes the costs of directly producing those goods and services.

Gross profit is the difference between revenue and cost of goods and services sold. When the income statement shows gross profit, the company uses a multi-stage format; otherwise, a single-stage format is used. For industrial and retail companies, for which gross profit is most relevant, gross profit is calculated as revenue minus the cost of goods that were sold. For service companies, gross profit is calculated as revenue minus the cost of services that were provided. Thus, gross profit is the amount of income after subtracting the costs of producing the goods or services. Other expenses associated with running a business, raising capital, etc. deducted from gross profit.

Sales and administrative expenses– these are operating expenses that are associated with managing the company and organizing the sales process.

Operating profit– this is profit from operating activities and represents the pre-tax result without taking into account non-operating income and expenses. Operating expenses are additionally deducted from operating profit, such as cost of sales, administrative, sales and R&D expenses and others. Operating income reflects a company's profit from its normal business activities before taxes. For financial companies, interest expense will be included as part of operating expenses and deducted when calculating operating profit. For non-financial companies, interest expense will not be included in operating expenses and will be deducted after operating income as it relates to non-operating activities for such companies. For some companies that consist of several distinct business segments, operating profit can be useful in assessing the performance of individual businesses. This reflects the fact that interest and tax expenses are more relevant at the overall company level rather than at the individual segment level. The specific calculations of gross profit and operating profit may vary from company to company, so the reader of the financial statements should consult the notes to the statements to identify significant differences.

Non-operating profit- profit from auxiliary activities.

Net profit often called the bottom line. The basis for this expression is that net income is the bottom line on the income statement. Because net income is often viewed as the most appropriate number to describe a company's performance over a period of time, the term bottom line is sometimes used in general business jargon to mean any final or most appropriate result.

Net profit also includes gains and losses, which are inflows and outflows of assets and are therefore not directly related to the ordinary activities of the business. For example, if a company sells its products, this amount is recorded as income and expenses, which are reported separately. However, if a company sells surplus land that is not needed, the cost of the land is deducted from the sale price and the net result is reported as profit or loss.

Total financial result of the period. The general equation for determining net profit is expenses income minus. There are, however, some items of income and expenses that, according to accounting rules, are excluded from the calculation of net profit. To understand the relationship between the fair value of equity in one period and the amount of equity in another period, it is necessary to consider the essence of these elements and their impact on the overall financial result.

In addition to presenting net income, income statements also present certain other financial results that are significant to users of financial statements. Some of the financial results are determined by International Financial Reporting Standards (IFRS), in particular, income from non-core operations. International Accounting Standard (IAS) No. 1, Presentation of Financial Statements, requires that certain items, such as revenue, interest payments and income taxes, be presented separately in the income statement. IFRS No. 1 also requires that financial results be also " presented in the income statement when such presentation is relevant to understanding the financial performance of the entity." IFRS No. 1 says that expenses can be grouped either by nature or by function. For example, by grouping expenses such as depreciation of equipment or depreciation of administrative facilities into one element called depreciation, grouping by nature of expense occurs. Example of grouping by functions will occur, for example, if all costs associated with sales are summed up into a separate cost line, which will include some salaries (for example, production personnel), material costs, depreciation of fixed assets and other costs associated with production.

Thus, some aspects of reporting are industry specific, while others reflect differences in company accounting policies and practices. In the process of analyzing the financial results statement, it is worth paying attention to such differences, which will allow you to formulate more correct conclusions about the company's ability to generate profit.

Determination of a company's revenue in the statement of financial results

Revenue is the top line on the income statement. In a simple hypothetical scenario, revenue recognition is not an issue. For example, a company sells goods to a customer for cash with no option to return the product: When should a company recognize revenue? In this case, it is clear that income should be recognized when goods are exchanged for cash. In practice, however, the definition of income may be somewhat more challenging task for a number of reasons.

An important aspect regarding revenue recognition is that it can occur regardless of cash flow. For example, suppose a company sells goods to a customer on credit and therefore does not actually receive cash when the goods are delivered. The basic principle of accrual accounting is that revenue is recognized when it is earned, so that a company's financial statements reflect a sale when the related transaction is completed and the associated receivables are generated.

Later, when the cash is in the hands of the company, the company's financial accounts simply reflect that the cash has been received and the portion of the accounts receivable (the portion that relates to a particular transaction) has been settled. Additionally, there are situations where a company receives cash upfront and actually provides the product or service later, perhaps over a period of time. In this case, the company will record deferred income, which is then recognized as earned after a certain period of time. (One example might be an upfront subscription to a magazine that must be delivered periodically over time.)

Basic revenue recognition principles promulgated by relevant regulatory authorities.

The International Accounting Standards Board (IASB) stipulates that revenue from the sale of goods should be recognized (in the income statement) when the following conditions are met:

The enterprise transferred to the buyer significant risks and benefits related to the ownership of goods.

The company does not retain no management functions to the extent usually associated with property rights, no effective control over the goods sold.

The amount of revenue can be accurately assessed.

It is likely that the economic benefits associated with the operation will arrive at the enterprise.

Expenses incurred or to be incurred in connection with the transaction may be reliably priced.

The International Accounting Standards Board notes that a transfer of the risks and rewards of ownership generally occurs when the goods are delivered to the buyer or when legal title to the goods is transferred. However, as noted above in the remaining conditions, the transfer of goods does not always lead to the recognition of revenue. For example, if goods are delivered to a retail store to be sold, but with a provision for return if demand for the product is low, and title to the goods is not transferred, then no revenue will be recognized at the time of transfer.

The Accounting Standards Board (FASB) states that revenue should be recognized when it is "realized, or realizable and earned." The U.S. Securities and Exchange Commission (SEC), which has been motivated to clarify the definition of revenue due to the frequency of overstatement of revenue due to fraud and/or misstatement, provides guidance on how to apply accounting principles. These guidelines name four criteria for determining whether income is realized, realizable, and earned:

1. There is evidence of an agreement between the buyer and seller. This approach allows us to eliminate the practice when the seller delivers goods to the client before the end of the reporting year, and returns the goods after the end of the reporting year and the preparation of a report on the company’s financial results.

2. The product has been delivered or the service has been provided. This approach eliminates the practice where the goods have already been delivered, but the main risks and rewards of the goods still belong to the company.

3. The price is determined or can be determined.

4. The seller is confident that the funds under the transaction will be returned. This principle allows us to eliminate the situation when most likely the seller will not receive funds for the services provided.

Council Standards IFRS separately consider recognition of revenue for services:

1. If the outcome of a transaction involving the provision of services can be measured reliably, revenue associated with the transaction is recognized at the completion of the transaction at the reporting date.

2. The result of a transaction can be reliably assessed if the following conditions are met:

The amount of revenue can be estimated.

It is probable that the economic benefits (eg cash) associated with the transaction will flow to the entity.

The stage of completion of a transaction at the reporting date can be accurately determined.

The costs incurred in the transaction and the costs required to complete the transaction can be accurately estimated.

Companies may disclose their revenue recognition policies in notes to their financial statements. Analysts should carefully review this policy to understand how and when the company recognizes revenue, which may differ depending on the types of products sold and services rendered.

Determination of company expenses in the income statement

Expenses are subtracted from income to arrive at a company's net profit or loss. According to the IFRS Framework, expenses are "a decrease in economic benefits during an accounting period in the form of an outflow of cash, a decrease in assets or the creation of liabilities that reduce equity, other than those relating to distributions to shareholders."

The definition of expenses includes various types of losses, as well as expenses that arise in the normal course of business of the organization. Expenses that are incurred in the ordinary course of an organization's activities include, for example, cost of sales, wages and depreciation. They usually represent the disposal or "depletion" of assets such as cash and cash equivalents, inventories, property, plant and equipment.

Losses represent other items that meet the definition of expenses and may arise either in the ordinary course of the organization's activities or not. Losses represent a reduction in economic benefits and are therefore no different in nature from other expenses. Consequently, they are not considered a separate element of this Conceptual Framework.

Similar to the revenue recognition issue, in a simple hypothetical scenario, expense recognition is not an issue. For example, suppose a company purchased goods with cash and sold all the goods in the same period. When a company has paid for goods, it is clear that the amount of the outflow is equal to the cost of those goods, and it should be recognized as an expense (cost of goods sold) in the financial statements. Let's also assume that the company paid all operating and administrative expenses in cash during each reporting period. In this simple hypothetical scenario, there would be no expense recognition issues. In practice, however, both revenue recognition and expense determination can be somewhat more complex.

General principles

Generally, an entity recognizes expenses in the period in which the economic benefits associated with the expense are consumed (ie used) or some previously recognized economic benefit is lost.

A general principle for recognizing expenses is the matching principle, also known as " correspondence of expenses to income". Under the matching principle, a company directly matches certain expenses (such as cost of goods sold) with their associated revenues. Unlike a simple scenario in which a company buys goods and sells them all during one accounting period, in practice, it is more likely that some of the current period's sales will be made from inventory purchased in the previous period. In addition, it is likely that some of the inventory purchased in the current period will remain unsold at the end of the current period and will therefore be sold in the current period. next period. The matching principle requires that the cost of goods sold by a company correspond to certain period revenues.

Non-productive expenses of the reporting period, that is, expenses that correspond less directly to certain income, are reflected in the period in which the company makes the expenses or in the period in which the payment is due. Administrative expenses are an example of non-production expenses of the reporting period. Other expenses, which also correspond less directly to the income of the reporting period, are more related to future expected benefits; in this case, the costs are distributed systematically over time. An example is depreciation expense.

The chosen method for valuing inventory is important in the process of determining costs. According to PBU 5/01 Accounting for inventories, the following methods for estimating the value of inventories are used in domestic practice.

Table 2. - Summary table of inventory valuation methods

Problems in the cost estimation process

The following questions may arise during the cost estimation process.

Doubtful accounts receivable

When a company sells its goods or services on credit, it is likely that some customers will not be able to meet their obligations(i.e. unable to pay). At the time of sale, it is not known what the solvency of a particular client will be. (If it were known that a particular customer would eventually be insolvent, then presumably the company would not sell the goods on credit to that customer.) One possible approach to recognizing credit losses on customer receivables would be for the company to simply wait until until the client is declared bankrupt and only then the losses will be recognized. This approach is generally inconsistent with generally accepted accounting principles.

Under the matching principle, at the time revenue is recognized, a company must make an estimate of how much of the revenue will ultimately be lost. Companies make these estimates based on past experience in managing uncollectible accounts. Such estimates may be expressed as a percentage of total sales, total accounts receivable, or the amount of accounts receivable overdue for a specified amount of time. The company records its estimate of the value of accounts receivable as an expense on the income statement rather than as a direct reduction in revenue.

Guarantee

Sometimes companies offer guarantees for the products they sell. If the product is defective in any respect that is covered by the warranty, the company will bear the cost of repairing or replacing the product. At the time of sale, the company does not know the amount of future expenses it will incur in connection with the exercise of the right to guarantee. One possible approach is for a company to simply wait until the actual costs that will be incurred under the customer guarantee program are incurred. In this case, the expenses will be displayed at the time they are made. However, this leads to some discrepancy in the timing of expenses and income.

Under the matching principle, a company must estimate the amount of future warranty expense to recognize the estimated warranty expense during the sales period and update the expense amount based on its own experience over the life of the warranty program.

Depreciation and amortization

Companies often bear expenses for the acquisition of long-term assets. Long-term assets are assets that may provide economic benefits over a future period of time greater than one year. Examples are land (property), plant, equipment and intangible assets (assets that have no physical substance), such as trademarks. The value of most long-lived assets is spread over the period of time during which they provide economic benefits. The two main types of non-current assets, the costs of which are not allocated over time of use, are land and those intangible assets that have an indefinite useful life.

Depreciation is the process of systematically allocating the costs of non-current assets over the period over which the assets will produce economic benefits. Depreciation is the term that is usually applied to this process for physical, long-lived assets such as fixed assets (land is not subject to depreciation). Depreciation is also applied to intangible non-current assets with a limited useful life. Examples of intangible non-current assets with a finite useful life include a purchased mailing list, a patent with an expiration date, or a copyright with a specified expiration date. The term amortization is also widely used to systematically subtract the premium or discount from the face value of a fixed income security over its outstanding life.

To calculate depreciation and amortization, a company must select a depreciation method, estimate the useful life of the asset, and estimate the residual value. It's obvious that various options will be different and have a different impact on depreciation and therefore on net income.

Implications for financial analysis

A company's assessment of doubtful debts and/or warranty expenses may impact its net income. In addition, a company's choices regarding depreciation fundamentals, depreciation method, estimates of asset useful lives, and asset estimates of expected salvage value may have an adverse effect on net income. These are just a few of the opportunities and estimates that affect a company's bottom line.

As with revenue recognition policies, a company's choice of cost measurement method can be classified by level of conservatism. A policy that results in expenses being recognized later rather than earlier is considered less conservative. In addition, many expense items require the company to forecast future expenses, which can have a significant impact on net income. Analyzing financial statements and, in particular, comparing one company's financial statements with a competitor's financial statements requires an understanding of the differences in these estimates and their potential impact.

If, for example, a company demonstrates significant year-on-year changes in its approaches to the assessment of bad receivables, warranty costs or the expected useful life of assets, the analyst should strive to understand the underlying reasons for this phenomenon. Are the changes related to changes in business operations (for example, lower estimated warranty costs reflect a recent experience of fewer warranty claims due to improved product quality)? Or are the changes seemingly unrelated to changes in business operations and thus perhaps a signal that the company is manipulating estimates to achieve a particular effect relative to the net income amount?

As another example, if two companies in the same industry are vastly different when it comes to estimating bad accounts as a percentage of sales, warranty expenses as a percentage of sales, or expected useful life as a percentage of assets, it is important to understand the underlying reasons such a phenomenon. These differences arose due to differences in the business activities of the two companies(for example, a lower share of accounts receivable at one company would reflect a higher creditworthiness of the customer base or perhaps stricter credit policies)? Another difference will be the difference in expected useful lives of assets if one of the companies operates using more modern equipment. Or, conversely, the identified differences in the conditions of the same business activities of two companies, perhaps, signal that one of the companies is manipulating estimates?

The company's accounting policies and significant estimates may be described in the notes to the financial statements.

Whenever possible, the monetary impact of different policy and valuation approaches should be taken into account by the analyst when making comparisons between different companies. The analyst can use the monetary effect to adjust reporting data, including the formation of expenses, in order to ensure compliance with the principle of comparability in the process of financial analysis.

Even when the monetary consequences of differences in policies and estimates cannot be accurately calculated, it is usually possible to characterize the relative conservatism of the policies and estimates and therefore qualitatively assess potential differences that could affect the amount of expenditure reported and thus financial indicators.

Analysis of the income statement

In the process of analyzing the financial results statement, it is worth using two main analytical tools: horizontal-vertical analysis And coefficient analysis. When analyzing an income statement, the goal of the process is to evaluate a company's performance over a period of time—compared to its own historical performance or in comparison to another company.

Horizontal-vertical analysis of the income statement

A vertical income statement analysis involves showing each item on the income statement as a percentage of revenue. This analysis allows for comparisons of data across time periods (time series analysis) and between individual companies of different sizes.

An example of the analysis is presented in the following table:

Table 3 – Example of a vertical analysis of an income statement

Financial results report, thousand rubles.
Indicator	Company A	Company B	Company B
Cost price
Gross profit
Administrative expenses
Sales expenses
Other operating expenses
Operating profit
Vertical analysis of the income statement, %
Indicator	Company A	Company B	Company B
Cost price
Gross profit
Administrative expenses
Sales expenses
Other operating expenses
Operating profit

Thus, the analyst can compare the financial statements of different companies of unequal size. When preparing a vertical analysis of the income statement, as shown in Table 3, the analyst can easily see that the percentage of Company B's expenses and profits relative to the amount of revenue are exactly the same as for Company A. Additionally, although the company's operating income B is lower than Company B in absolute terms, but higher in percentage terms (20 percent for Company B compared to 15 percent for Company B). This means that for every 100 rubles of sales, company B generates 5 rubles more operating profit than company B. In other words, company B is more efficient and is able to generate more profit from the available volume of limited resources compared to company B.

A vertical analysis of the income statement also highlights differences in company strategies. When comparing two large companies It can be seen that Company A reports a higher share of gross profit in total sales compared to Company B (70 percent versus 25 percent). Given that both companies are in the same industry, the question arises, why is Company A able to generate so much more gross profit?

One possible explanation can be found by comparing the operating costs of the two companies. Company A spends significantly more on other operating expenses and on advertising (distribution expenses), while Company B has no such expenses. Spending on advertising is likely to lead to greater brand awareness. Thus, based on these differences, it can be assumed that Company A sells more recognizable products, which over time will become even more competitive in the market by improving A's brand image.

Company B can sell its products cheaper (with a lower share of gross profit in total sales), but rather than save money, invest it in research and development or advertising. In practice, the differences between companies are more subtle than in this hypothetical example, but this example helped to demonstrate the essence of vertical analysis of the financial results statement. The analyst, having noted significant differences, will seek to understand the underlying reasons for the differences and their implications for the companies' future performance.

For most costs, comparison with revenue is an acceptable technique. However, in determining the effectiveness of corporate income tax management, it is necessary to compare the tax expense with the amount of profit before tax. When current income taxes contribute to different proportions of total pre-tax earnings, the analyst can use the notes to the financial statements to explore the reasons for the differences in effective tax rates. To project a company's net income into the future, the analyst will project pre-tax earnings and then apply an estimated effective tax rate based in part on historical tax rates.

A vertical analysis of an income statement is especially useful when comparing companies to each other over a period of time or when comparing companies to industry data. The analyst may select individual competitor companies for comparison, use industry data from published sources, or collect data from databases based on a selection of peer companies or broader industry data. The performance of an individual company can be compared with industry data to assess relative performance.

As for horizontal analysis, this method involves comparing company data for several periods and calculating growth or gain indicators. An example is shown in Table 4.

Table 4 – Example of a vertical analysis of an income statement

Horizontal analysis of the income statement, %
Indicator				Absolute deviation, +, -			Vertical deviation, %
Cost price
Gross profit
Administrative expenses
Sales expenses
Other operating expenses
Operating profit

Horizontal analysis allows you to understand whether the company is developing, whether it is increasing its sales volume, or increasing the size of the financial result from its activities. All this allows us to understand the direction of the company’s development, which provides the analyst with information about business prospects. A higher rate of growth in income compared to expenses will indicate an increase in the company's operating efficiency.

Net Profit Margin = Net Profit / Revenue (1)

Net profit margin measures the amount of net profit that a company generated for each ruble of revenue. A higher net profit level indicates a higher profitability of the company and thus is a more desirable situation. Net profit margin can also be found directly by using the vertical method of income statement analysis.

A positive value of the indicator will indicate that every ruble of sales allows the company to make a profit. However, it is not always possible to accurately determine whether a positive value is high enough to support conclusions about effective performance or whether the current indicator is too low. Therefore, to determine the exact position of the company and the quality of management, it is worth comparing the net profit margin of the enterprise with other companies in the industry. Profitability can also be compared with its own indicator in previous periods of work. An increase in the indicator during the study period will indicate a constant improvement in the production, sales, and financial performance of the company. A decrease will indicate a reduction in the efficiency of the company’s core and non-core activities.

Another measure of profitability is the gross profit margin. Gross profit is calculated as revenue minus cost of goods sold, while gross profit margin is calculated as the ratio of gross profit to the company's revenue for the same period.

Gross profit margin= Gross Profit / Revenue (2)

The gross profit margin (also known as the gross profit margin) measures the amount of gross profit that is generated for each dollar of sales. In this case, higher gross profit margins also indicate higher profitability and are generally more desirable, although differences in gross profit margins reflect company strategies. For example, consider a situation where a company is pursuing a strategy to sell a differentiated product (e.g., the product is differentiated based on brand name, quality, advanced technology, or patent protection). A company will likely be able to sell a differentiated product at a higher price than similar but undifferentiated products and, therefore, will likely show a higher gross profit level than a company that sells an undifferentiated product. Although a company selling a differentiated product is likely to demonstrate higher gross profit margins, achieving such a market position may take some time. During the initial phase of a strategy, a company will likely incur additional costs to create a differentiated product, such as advertising or research and development, that will not be reflected in the gross profit calculation.

Thomas R. Robinson, International financial statement analysis / Wiley, 2008, 188 pp.

Kogdenko V.G., Economic analysis / Tutorial. - 2nd ed., revised. and additional - M.: Unity-Dana, 2011. - 399 p.

Buzyrev V.V., Nuzhina I.P. Analysis and diagnostics of financial and economic activities of a construction enterprise / Textbook. - M.: KnoRus, 2016. - 332 p.

Every enterprise or organization sets itself the task of making a profit, increasing sales, etc. The essence of any activity should be reduced to

a certain result. This is exactly the result of activity that is the financial results report. This will be discussed in this article.

Report about - what is it?

This report represents not only the performance indicators of the enterprise for the tax authorities, but also the results of this activity for the organization itself. After all, thanks to it, we can understand how much we earned, what losses we suffered, and so on.

Contents of the income statement

When and how is this report submitted?

The company submits a financial performance report every quarter (depending on the taxation system). Together with the balance sheet of the enterprise (Form 1), the document described above (Form 2) is submitted to the statistics and tax authorities. Failure to submit such documents entails significant