The annual inventory of assets and liabilities is an annual mandatory event in every company. During the inventory, the accountant of the company, including the one that applies the simplified taxation system (USN), compares the amounts of accounts receivable and accounts payable before preparing annual reports. Also, during the inventory, it is possible to identify a shortage of property, debts to owners, etc. Let’s talk about the features of the annual inventory.
What are assets and liabilities?
Assets include in particular:
- The property and investments that the company made in the calendar year.
- Accounts receivable.
- Settlements with the owners.
- The company’s finances.
The company’s obligations include in particular:
- Loans and borrowings.
- Accounts payable.
- Debt owed to the owners of the company.
When it is necessary to take inventory
An inventory of assets and liabilities is carried out before the preparation of annual financial statements.
No earlier than November 1, an inventory of property, intangible assets, goods, including those transferred for sale, and work in progress is carried out.
No earlier than December 1, an inventory of cash, liabilities and other assets is carried out.
When else it is necessary to take inventory
There are cases in which an inventory is carried out regardless of the approach of the deadline for the preparation of annual financial statements. Such cases include:
- Purchase or sale of property complexes.
- Transfer of the company’s property for leasing, lease, and gratuitous use.
- Transfer of property by the company by decision of the management body.
In these cases, the date on which the inventory is carried out is determined in the contract for the transaction or in the decision of the company’s management body.
Change of the head of the company, financially responsible persons. In this case, the inventory is also carried out on the day of acceptance and transfer of cases.
During the reorganization or liquidation of the company. In such cases, an inventory is carried out before drawing up a separation or liquidation balance sheet.
How to make out the beginning of the annual inventory
The head of the company issues an appropriate order or instruction. This document defines:
- The composition of the inventory commission. In a large company, several inventory commissions are usually created: the central inventory commission and the working inventory commissions.
- A list of assets and liabilities that need to be inventoried. Accounts receivable and accounts payable are indicated during the annual inventory.
- The start date and the end date of the inventory. The start date is not earlier than December 1.
- The reason for the inventory.
- The date of submission of inventory materials to the accounting department.
Who is included in the inventory commission
Each commission must have a chairman. This is the head of the company or his deputy or the head of the structural division of the company.
In large companies, members of the permanent central inventory commission:
- The chief accountant or his deputy. When accounting is outsourced, the head of the accounting company is included in the commission.
- Heads of the company’s structural divisions.
- Employees of the company.
- The members of the working inventory commission include employees who have knowledge of the company’s assets and liabilities.
- We recommend that the members of the annual inventory commission include employees who have knowledge of accounting and reconciliation of debts, filing claims, and calculating the limitation period. This can be an accountant, a legal adviser, a specialist in working with business partners.
What does the inventory commission do?
The Inventory Commission verifies accounting documents on the availability, condition and valuation of assets and liabilities and documents the amounts of accounts receivable and payable. Accounts receivable are the company’s debts to third parties, accounts payable are the amounts that third parties owe to the company.
In particular, they check:
- The correctness of calculations and the grounds for accrual and write-off of amounts that appear according to accounting data.
- The validity and verification of the amounts of accounts receivable and payable.
What are debt reconciliation reports?
To reconcile settlements with debtors, debt reconciliation acts are drawn up. It is necessary to do this. It is possible to draw up reconciliation reports with creditors, this is not prohibited. Such an act is signed by representatives of both parties: the debtor and the creditor.
Reconciliation reports are usually not drawn up with the company’s employees, the budget and extra-budgetary funds.
The reconciliation act allows you to reconcile the debt that is listed in the accounting of the company with the amount that is listed in the accounting of the business partner. The outstanding debt is verified on November 1.
What can be revealed during the annual inventory
When conducting an annual inventory, you can set in particular:
- Arrears in settlements with various debtors and creditors, including employees of a company for which the statute of limitations has expired. Such debt is described in a separate line in the accounting documents, since it will have to be written off the account.
- The discrepancy in the amounts of accounts receivable and accounts payable, which were confirmed by reconciliation acts, with the amounts that were reflected in the company’s accounting as of November 1. In this case, accounting is brought into line with the acts of reconciliation of calculations: additional charges are added or the debt is reduced.
- Accounts receivable for which the deadline for submission of enforcement documents for execution has expired.
- Accounts payable to liquidated companies and deceased individuals.
What documents are issued based on the results of the inventory
After the inventory of accounts receivable and accounts payable, they are issued:
- The act of inventory of settlements with suppliers and contractors, buyers and customers, debtors and creditors.
- A certificate for this act.
- The results of the annual inventory are reflected in the annual accounting statements.
Features of tax accounting of debts after inventory
When debts with expired statute of limitations are found during the annual inventory, they are included, respectively, in non-operating income and non-operating expenses on the date following the expiration date of the statute of limitations. Non-operating expenses reduce taxable profit.
Losses from receivables that cannot be recovered (unrealistic to recover) are included in non-operating expenses on the date of the debtor’s exclusion from the Unified State Register of Legal Entities or the commercial register of another state.
Losses from the write-off of receivables for which the statute of limitations has expired for the presentation of enforcement documents for execution include non-operating expenses when the enforcement document was returned to the recoverer without recovery or with partial recovery.
Accounts payable to liquidated companies and deceased individuals are included in non-operating income as of the date of exclusion from the Unified State Register of Legal Entities, the trade register of another state.
There are exceptions to all these rules, which will be dealt with by our experienced specialists.
How we can be useful in conducting an annual inventory
Our lawyers are experienced specialists in the field of limitation periods, assets and liabilities, and tax accounting. We can:
- Advise you on the issues of registration of the inventory and draw up a package of documents for the inventory.
- Sort out your documents, reconciliation reports and arrange the results of the inventory.
- Advise you on the issues of accounting and tax accounting of inventory results.
- Sort out the controversial issues of the statute of limitations during the inventory.
Contact us
If you have any questions about the annual inventory, we will be happy to help you! Our long-term experience in the field of management accounting will help you in resolving any situations and disputes.
Phone and e-mail communication options are available for your convenience:
- +375293664477 (WhatsApp/Telegram/Viber);
- info@ambylegal.by.
