Annual accounts

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The annual financial statements are the arithmetical closing of a commercial business year . It determines the financial situation and the success of a company and includes the closing of the bookkeeping , the compilation of accounting documents as well as their examination, confirmation and publication. According to § 242 HGB, an annual financial statement consists of a balance sheet , profit and loss account , in the case of corporations an appendix is added according to § 264 HGB . If necessary, the annual financial statements are supplemented by a management report . Small traders and freelancers are not obliged to draw up annual financial statements; they usually create an income statement .

In addition to the annual financial statements, there can also be interim reports.


The annual financial statements have two basic functions: they provide information on the company's economic situation and provide the assessment basis for the distribution of the result.

  • Information function: The documentation of the asset, financial and earnings situation as of the balance sheet date is the basis for planning and future decisions by the company, shareholders and external groups. The result of the annual financial statements is used by banks and other creditors as a criterion for lending and can be used as evidence in a legal dispute according to Section 258 HGB .
  • Payment measurement function: The annual financial statements are the basis for the taxation of the company and for the determination of performance-related payments such as dividends and profit-sharing schemes ( distribution measurement function ).
  • Documentation function : Evidence of the business transactions shown in the bookkeeping and recording of financial and performance-related issues.

Legal basis


German commercial and tax law basically requires every commercial company to keep books and prepare annual financial statements.

Commercial law

In commercial law, the basic accounting obligation is regulated in § 238 HGB and the obligation to prepare annual financial statements in § 242 HGB. An exception to the accounting obligation under commercial law can be found for sole traders below certain thresholds in Section 241 a of the German Commercial Code. General commercial law is supplemented by ancillary commercial law, in particular Sections 150 ff. AktG, Sections 41 ff. GmbHG, Section 33 GenG. The legal definition of the annual financial statements can be found in Section 242 (3) HGB: The balance sheet and the income statement form the annual financial statements.

Tax law

The accounting obligation under tax law is regulated in §§ 140, 141 AO. The accounting obligation according to AO arises on the one hand derivative (§ 140 AO) and on the other hand original (§ 141 AO) for commercial entrepreneurs as well as for farmers and foresters when certain thresholds of turnover, business assets or profit are exceeded.


The commercial law bases for the preparation of the annual financial statements are essentially contained in the Austrian company code.

Switzerland and Liechtenstein

In Switzerland and Liechtenstein, the Code of Obligations has formed the legal basis since 1883 .


Capital market-oriented companies must also observe international accounting standards. The two most important sets of rules are the International Financial Reporting Standards (IFRS), mandatory for group companies , and the United States Generally Accepted Accounting Principles (US-GAAP) for companies operating in the US market. The application of US GAAP may be a prerequisite for listing on the US stock exchange . The regulations of the individual standards, which in some cases differ significantly from one another, can result in the need for parallel bookkeeping and several parallel financial statements. The German Accounting Standards Committee develops recommendations for the standardization of national and international principles in Germany. However, as a result of the advance of IFRS, it has lost its importance.

Legal form dependent supplements

These framework regulations are supplemented by other laws and ordinances depending on the legal form and sector: The Publicity Act regulates the publication of the financial statements of certain companies, tax provisions are contained in the Income Tax Act . In addition, there are special features depending on the legal form (e.g. §§ 150 ff Stock Corporation Act or § 42 GmbHG ). The financial institution accounting regulation (RechKredV) applies to the annual financial statements for banks , the insurance company accounting regulation (RechVersV) for insurance companies and the pension fund accounting regulation (RechPensV) for pension funds .

Companies obliged to list

In principle, all businesspeople must prepare annual financial statements ( Section 242 HGB). This does not apply to sole proprietorships who do not exceed € 600,000 in sales and € 60,000 in net income on the first or the last two consecutive closing dates ( Section 241a HGB).

Time of installation

Large and medium-sized corporations must prepare the annual financial statements in the first three months, small corporations in the first six months of the new year ( Section 264 of the German Commercial Code). Non-corporations are obliged to adhere to a “time corresponding to a normal course of business ” ( Section 243 HGB), which corresponds to a period of up to nine months in the normal course of business and up to twelve months in the case of unforeseen events.


The preparatory work in the annual financial statements review and correct the result that has arisen from ongoing bookkeeping and prepare it in accordance with internal and legal requirements. The most important preparatory work is listed below.

  • The inventory determines the actual inventory of assets and debts. The stocks included in the inventory are valued according to the principles of proper bookkeeping and differences between the target and actual stock are booked out with an effect on income.
  • By determining and posting depreciation , impairments in the value of fixed assets are included in the annual financial statements in accordance with the useful life of the individual assets. If necessary, depreciation is also required on the current assets .
  • Receivables must be checked and evaluated for their creditworthiness . Recognizable risks of bad debts are taken into account by posting individual and general bad debt allowances .
  • The accrual success determination is the time Prepaid and formation of provisions guaranteed.
  • The preparation of legally required or voluntary reserves is also one of the preparatory closing entries .
  • In addition to these steps, numerous other corrections may be necessary. This includes, for example, the delimitation of the private from the business area or the factual delimitation of non-operational expenses and income (e.g. donations).


The annual financial statements are prepared in several successive steps:

Closing of accounts

  • Closing the sub- accounts: For the sake of clarity , important accounts are often split into sub-accounts, the balances of which must be merged in the associated main accounts in the annual financial statements ( e.g. discounts ).
  • Closing the main accounts: The main accounts are also closed by taking their balances and transferring them to the balance sheet via the closing balance account or to the profit and loss account via the profit and loss account. Here it is often necessary to split the result into an operating result, which has arisen from the operational provision of services, and further result levels, which show external or extraordinary income and expenses .

Final overview

The "final overview", also known as the "main financial statements" or "operational overview" table, is used to check the figures. It shows the opening balances , the sums of all debit and credit postings , the balances of all accounts, the preparatory corrections explained above and their results in a compressed form and finally breaks down the figures according to the stock and profit accounts .

The company overview must be submitted to the tax office on request in addition to the balance sheet and profit and loss account. In the case of small companies, it can replace the annual financial statements if the formal requirements and statutory retention requirements are met.


The merchant is responsible for the list . In the case of corporations, the financial statements are prepared by the legal representatives and then forwarded for review and assessment. The determination, i.e. the approval of the annual financial statements, is the responsibility of the shareholders in the GmbH ( § 42a GmbHG), in the case of the AG the supervisory board or the general meeting ( § 172 AktG). In the case of cooperatives, pursuant to Section 38 (1) sentence 5 GenG, the supervisory board must examine the annual financial statements and report on the results of the examination to the general assembly before the annual financial statements are adopted. According to Section 48 (1) GenG, the General Assembly is responsible for approving the annual financial statements . In the case of partnerships, the annual financial statements are determined by the shareholders' meeting (so-called basic business).

Accounting documents

According to German and Austrian commercial law , the annual financial statements are the compilation of the balance sheet and profit and loss account ( Section 242 of the German Commercial Code), which in the case of corporations and partnerships without a natural person as the personally liable partner are supplemented by an explanatory appendix . Furthermore, medium-sized and large corporations are obliged to attach a management report . In addition, capital market-oriented corporations that are not obliged to prepare consolidated financial statements must add a cash flow statement and a statement of equity to the annual financial statements ( Section 264 (1) HGB)

Accounting according to IFRS and US GAAP requires the submission of further documents. These include the statement of cash flows (cash flow statement), the statement of comprehensive income (statement of comprehensive income), the changes in equity (statement of changes in stockholders's equity), the segment reporting and information concerning selected financial data from the past or to the courses of issued securities.

The balance sheet must be submitted to the tax office to determine income-related taxes . Because of the differences in commercial and tax law provisions for accounting and valuation, most companies need to prepare both commercial and tax balance sheets.

Disclosure and audit obligations

The annual financial statements of certain companies, in particular of larger corporations, cooperatives , companies in certain branches of the economy ( insurance companies , credit institutions ) or public-sector companies , must be checked by auditors and then published in the commercial register and in the Federal Gazette ( disclosure ). In the case of corporations, the type and scope of the audit and disclosure requirements depends on the size. Stock corporations usually publish the official components together with additional information for the shareholders in an annual report .

The obligated companies have to submit their annual financial statements electronically to the Bundesanzeiger Verlagsgesellschaft mbH . In Section 325 (1), 1a of the German Commercial Code (HGB), the legislature obliges the legal representatives of corporations to submit the accounting documents no later than one year after the closing date of the financial year. The Federal Office of Justice is ex officio obliged to initiate proceedings against all companies objected to by the Federal Gazette for failing to comply with the reporting obligation. Submission in paper form was permitted until the end of 2009. Since January 1, 2007, the annual financial statements can be submitted electronically. Previously, the annual financial statements had to be submitted to the local courts; most recently, 1.1 million companies were required to do so. In 2008, around 460,000 fine proceedings were opened due to non-filing; in 2009 about 200,000.

Distribution of profits and losses

The income statement (called income statement in the German-speaking part of Switzerland and Liechtenstein) shows the individual levels of the result including the effects of taxation. How the remaining profit or loss is ultimately distributed among the company owners depends on the legal form of the company . If a company has to report a loss in its annual financial statements, it is in the red . In addition to contractual regulations, legal provisions, for example on the liability of individual shareholders in the OHG and the KG , on the setting up of reserves and the need to form profit and loss carryforwards must be observed. Resolutions on the appropriation of profits are part of the disclosure requirements.


The analysis of the annual accounts deals with the evaluation of annual accounts . It prepares the balance sheet and profit and loss account and determines and assesses key figures such as capitalization, asset accumulation, profitability , liquidity or quotients for financing and investment . In addition to the official components of the financial statements, internal data such as due dates , orders or results of the planning calculation can be used for the evaluation for internal company purposes .

Individual and consolidated financial statements

If several legally independent companies are incorporated into a group , their individual financial statements are usually merged into one consolidated financial statement in order to provide the addressees of the financial statements with an unadulterated picture of the situation of the entire group. Under certain conditions, the consolidation of individual financial statements is required by law. So are publicly traded consolidated parent company based in the European Union committed to fiscal years beginning after December 31, 2004, consolidated financial statements according to the rules of IFRS create ( § 315e HGB). Since an IFRS financial statement must contain the previous year's data, the affected groups were forced to prepare parallel accounts according to IFRS a year earlier.

Further development

The requirements for annual financial statements are constantly being expanded in the face of international competition. In 2013, components of Corporate Social Responsibility (CSR) were made mandatory for around 6,000 companies in the European Union . More recent developments, such as integrated reporting , have been required for 470 companies in South Africa since 2010 .


Web links

Wiktionary: Annual accounts  - explanations of meanings, word origins, synonyms, translations

Individual evidence

  1. Düsseldorf Chamber of Crafts: Obligation to publish the GmbH balance sheet has been tightened since January 1, 2007 - fines of up to 25,000 euros are threatened - sanctions have to be expected across the board since January 2008 ( Memento from September 14, 2010 in the Internet Archive )
  2. 200,000 annual financial statements are still missing . Frankfurter Allgemeine Zeitung of March 6, 2009, Economy p. 13.
  3. ^ Federal Agency for Civic Education: 30 Years since the Fall of the Wall - Annual Accounts
  4. a b Integrated reporting. IHK Nuremberg for Middle Franconia, August 11, 2015, accessed on October 11, 2018 .