Figure 3-3. The general scheme of interrelation of the Chart of Accounts and basic forms of financial reporting

The first six classes provide information necessary for preparing a balance sheet. Their purpose is to represent availability, state and changes in assets, owner’s equity and liabilities. Classes of accounts 7, 8, 9 are transit and intended for accounting income, expenses and activity results of an enterprise, and for preparing an income statement.

The financial report is to be authentic. Therefore, before preparing the financial report it is mandatory to make an inventory of an enterprise’s assets and liabilities and to document their availability, state and assessment.

The annual financial statements of enterprises (except for budgetary institutions, small business entities and representative offices of non-residents) comprise the following:

· Balance sheet;

· Income statement;

· Cash flow statement;

· Owner’s equity statement;

· Notes to the annual financial statements.

A calendar year is the reporting period for preparing financial reports. The interim financial reports are to be prepared quarterly as a part of the balance sheet and income statement with the running total beginning in the reporting year. Enterprises, which have subsidiaries, in addition to financial reports on their own economic operations, are to prepare and present the consolidated financial statement to owners (founders).