eBook - ePub
An Introduction to the German Accountancy System
All you need - and not too much
Wolf-Dieter Schellin
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- English
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eBook - ePub
An Introduction to the German Accountancy System
All you need - and not too much
Wolf-Dieter Schellin
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About This Book
For many professionals who learn about the German accounting system, it can seem daunting and confusing. This book will help you to understand the accounting records of German companies and be able to evaluate the information that you are presented. The author also gives insight into German tax laws, as well as provide explanations for the most forms of enterprise. You will also be given access to the main tax forms used as well as instructions for completing them.All current legislative changes (including those of 2020) have been taken into account in this second edition.
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The Balance Sheet
The balance sheet is a comparison between the value of the assets and liabilities in so-called âKontenformâ.
The property is shown on the left-hand side of the balance sheet, subdivided by fixed assets and current assets. It represents the assets in the workflow.
The capital is shown on the right-hand side of the balance sheet, subdivided by shareholders' equity and liabilities. It represents the liabilities in the workflow.
Always apply the equations
Assets = Capital
and
Equity = assets â liabilities
Balance Sheet to
31.12.20..
| Assets | Liabilities |
| Fixed assets | Shareholders' Equity |
| Current Assets | Liabilities |
| Assets | Capital |
The design - the layout of the balance sheet
The structure, or the layout of the balance sheet is not at the discretion of the company. Since the legislator rules, that a "qualified third person" has to be able to get an overview of the situation of the respective company within a reasonable time (â Proper accounting principles; Page â).
In other words, in the case of a tax audit of your business by the surely competent tax authority, the examiner must be able to get an overview of the figures quickly.
Also if you apply for a loan from your bank, it must be possible for the bank, to get an overview over your creditworthiness with the help of the balance sheet figures.
Changes in the values of the balance sheet
Each business transaction has an impact on the items in the balance sheet and in a double way. Even though not every business transaction is shown in the balance sheet, we can expect four possible changes of values:
- Change in assets = Replacement on assets
- Change in liabilities = Replacement on liabilities
- Increase in ass. + liab.= Both sides increase
- Reduction in ass. + liab. = Reduce both sides
A more secure way to identify the respective change of values, is a step-by-step approach to answer the following questions:
- Which positions are affected?
- On which side of the balance sheet do you find the account?
- How does the value of the balance sheet change?
- What is the change called?
| Business Operation | Which position will be affected? | On which side of the balance sheet is the account? | How the value does of the balance sheet change? | What do you call this balance sheet change? |
| Cash payments made to the bank account | Bank cash | assets assets | increase reduction | asset swap |
| Conversion of a supplier- debt into a loan-debt | authentic- a... |