Explanations to the balance sheet - a mandatory form of financial statements. It reveals some of the indicators from the balance sheet and income statement. In the article, we gave an example of an explanatory note, recommended by the Ministry of Finance of Russia.
Who must submit an explanatory note to the balance sheet
Accounting reports are filled in by all organizations (IPs are not handed over). But an explanatory note to the balance sheet should be submitted only by those organizations that are prohibited from using the simplified method of accounting. That is, companies that are not small businesses. An explanatory note is needed for the audit of financial statements, so if an audit is mandatory for your company, you need to submit a note.
We cited the criteria for small business in the article “ Small business criteria in 2017". In general, these are companies with an average number of employees of no more than 250 people and income from declarations for the past year of no more than 2 billion rubles per year.
But even if the company belongs to a small business, it must still submit reports in a general form and submit a note to the balance sheet if:
- exists in the form of a joint stock company
- housing or housing-construction cooperative
How to write an explanatory note to the balance sheet
An example of an explanatory note given in the order of the Ministry of Finance of Russia dated July 2, 2010 No. 66n. In the example of the Ministry of Finance, explanations are shown by blocks: intangible assets, R&D, fixed assets, capital investments in progress, etc. The company can choose those tables that are suitable for the company's activities.
To do this, download an example of explanations in Excel format, and select the necessary blocks for yourself.
How to fill in notes to the balance sheet
Information contained in the "R&D" section, allows you to determine the ratio of the value of intangible assets to the volume of sales of finished products, as well as to find out the degree of risk of investing in this type of asset.
A large number of intangible assets for the reporting period or their high growth in comparison with the previous reporting period indicates the high competitiveness of the organization.
Reflection of information on depreciation of fixed assets allows you to assess the technical condition of the organization's fixed assets.
The financial investments of the organization are analyzed based on their composition, movement and profitability assessment. These indicators allow you to determine the degree of liquidity and profitability of investments.
High rates of receipt and disposal of financial investments indicate a high degree of their liquidity. And the high profitability of the organization - about their profitability.
The analysis of the section "availability and movement of stocks" allows you to obtain information about the use of each type of asset available in the organization.
The section "accounts receivable and accounts payable" allows you to obtain objective information about the state of the organization's current settlements.
The most favorable situation is when the growth rates of receivables and payables balance each other. If there are high amounts of arrears, this indicates the difficult financial condition of the organization.
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