Requirements for balance setting-up and report improvement possibilities
Object of the article research is balance report. A theoretical research is done in the article where requirements of international and Lithuanian acts for balance content and form making are compared and differences between them are presented. Because it is assessed that balance is not informative...
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| Цитувати: | Requirements for balance setting-up and report improvement possibilities / G. Gipiene , L. Matuseviciene // Економічний вісник Донбасу. — 2010. — № 4(22). — С. 149-156. — Бібліогр.: 28 назв. — англ. |
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irk-123456789-240152022-09-29T21:32:17Z Requirements for balance setting-up and report improvement possibilities Gipiene, G. Matuseviciene, L. Finance Object of the article research is balance report. A theoretical research is done in the article where requirements of international and Lithuanian acts for balance content and form making are compared and differences between them are presented. Because it is assessed that balance is not informative enough balance improvement possibilities are introduced in the article by the authors. The article consists of introduction, two chapters, conclusion, and references. Key words: balance, IAS 1, Fourth Council Directive, BAS 2, improvement of balance sheet. Предметом статті є балансовий звіт. Авторами зроблено теоретичне дослідження, де порівняні міжнародні і литовські правові вимоги до змісту балансу та його форм, представлені їх відмінності. Оскільки баланс не є достатньо інформативним, автори статті представляють можливості поліпшення балансу. Ключові слова: баланс, 1-й МСФО, 4-а Директива Ради, 2-й БСБУ, поліпшення балансу. Предмет статьи — балансовый отчет. Авторами сделано теоретическое исследование, где сравнены международные и литовские правовые требования к содержанию баланса и его формам, представлены их различия. Поскольку баланс не является достаточно информативным, авторы в статьи представляют возможности улучшения баланса. Ключевые слова: баланс, 1-й МСФО, 4-я Директива Совета, 2-й БСБУ, улучшение баланса. 2010 Article Requirements for balance setting-up and report improvement possibilities / G. Gipiene , L. Matuseviciene // Економічний вісник Донбасу. — 2010. — № 4(22). — С. 149-156. — Бібліогр.: 28 назв. — англ. 1817-3772 http://dspace.nbuv.gov.ua/handle/123456789/24015 336.722.37(474.5) en Економічний вісник Донбасу Інститут економіки промисловості НАН України |
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Finance Finance Gipiene, G. Matuseviciene, L. Requirements for balance setting-up and report improvement possibilities Економічний вісник Донбасу |
| description |
Object of the article research is balance report. A theoretical research is done in the article where requirements of international and Lithuanian acts for balance content and form making are compared and differences between them are presented. Because it is assessed that balance is not informative enough balance improvement possibilities are introduced in the article by the authors. The article consists of introduction, two chapters, conclusion, and references. Key words: balance, IAS 1, Fourth Council Directive, BAS 2, improvement of balance sheet. |
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Article |
| author |
Gipiene, G. Matuseviciene, L. |
| author_facet |
Gipiene, G. Matuseviciene, L. |
| author_sort |
Gipiene, G. |
| title |
Requirements for balance setting-up and report improvement possibilities |
| title_short |
Requirements for balance setting-up and report improvement possibilities |
| title_full |
Requirements for balance setting-up and report improvement possibilities |
| title_fullStr |
Requirements for balance setting-up and report improvement possibilities |
| title_full_unstemmed |
Requirements for balance setting-up and report improvement possibilities |
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requirements for balance setting-up and report improvement possibilities |
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Інститут економіки промисловості НАН України |
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2010 |
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Finance |
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http://dspace.nbuv.gov.ua/handle/123456789/24015 |
| citation_txt |
Requirements for balance setting-up and report improvement possibilities / G. Gipiene , L. Matuseviciene // Економічний вісник Донбасу. — 2010. — № 4(22). — С. 149-156. — Бібліогр.: 28 назв. — англ. |
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Економічний вісник Донбасу |
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| fulltext |
149
Економічний вісник Донбасу № 4 (22), 2010
Gailute Gipiene, Lina Matuseviciene
Introduction
The key source of information regarding the
financial state of an enterprise is the volume of financial
accounting while the key account to achieve the above
set objective is the one concerning the balance. It is as if
a cornerstone aimed at attracting new investors, partners
and clients to the enterprise. Since the balance sheet is
one of the key elements of the system of accounting, it
has been paid major attention in all countries and anytime
in the recent history.
As a result, in order to assess the financial state of
an enterprise on the grounds of the balance data, standards
have been developed both at national and international
levels, various methodologies and criteria of assessment
have been designed.
However, neither the entire set of financial
accounting nor one of its constituting elements, namely,
the balance sheet are sufficiently informative at the
moment. As market economy efficiently functions only
when extensive information is available, accounting is to
be improved.
The object of the research is balance accounting.
The goal of the research is to compare the
requirements of key international and national law acts
on drawing the balance and to present some possibilities
for improving the balance.
In order to achieve the goal, the following objectives
are dealt with:
1. To compare Accounting Standard 1 “Disclosure
of Accounting Policies”, Fourth Council Directive and
Requirements of the 2nd business accounting standard
“Interim Financial Reporting” for drawing the balance sheet;
2. To present possibilities suggested by authors for
balance sheet presentation improvement.
The methods used in the research: logical analysis
and synthesis, comparison.
1. Requirements for drawing the balance sheet
In Lithuania as well as in the entire European Union
(further referred as EU), the set of financial accounting
is regulated both at international and national levels. The
usage of specific accounting standards in the business
area in the EU countries is presented in Table 1.
As seen from the data of Table 1, EU countries are
using international accounting standards (further referred
to as IAS) while each country possesses its own
accounting standards; however, many countries also
single out standards for small businesses.
Lithuania applies both international and national
standards for the requirements of drawing the entire set
of financial accounts as well as for one of its constituting
elements, namely, the balance sheet. P. Walton and W.
Aerts [2, p. 225] indicate that in EU countries, IAS has
been compulsory for listed constituting a consolidated
set of financial accounts. Lithuania does not make
exclusion here.
Other entities of limited civil responsibility seeking
profit by their activity are to follow Article 3, Part 4 of
the Law of the Republic of Lithuania [3] on bookkeeping
which states that “in the process of bookkeeping, follow
business accounting standards or international accounting
standards”. However, this law also contains a restriction
that “this choice cannot be altered earlier than after 5
years (except for cases when a juridical personality of
limited civil responsibility seeking profit by its activity
becomes an enterprise of an enterprise group)”.
1st Business Accounting Standard (further referred
to as BAS) “Financial Accounting” [4, p. 6] states that
“non-adhering to Business accounting standards is
allowed only if it is necessary for the rightful presentation
of the financial state of an enterprise and the results of
its activity”. However, if the annual set of financial
accounts is drawn by an enterprise not adhering to BAS,
reasons must be presented in an explanatory document.
Unfortunately, even though most enterprises in
Lithuania are of small and medium size, no specific
accounting standards have been created for small businesses.
The currently valid national standards, i.e. BAS, are not fully
adapted to small businesses. That is why currently
discussions have been more and more frequent that lower
requirements should be established for the set of financial
accounting of smaller businesses in Lithuania [5, p. 3].
Key international regulations of financial accounting
which are the most topical for the bookkeeping balance
are the IAS 1 “Presentation of Financial Statements” and
the Fourth Council Directive concerning the accountability
УДК 336.722.37(474.5)
Gailute Gipiene,
Vilnius University, Kaunas Faculty of Humanities, ass. prof., PhD (Economics),
Lina Matuseviciene,
Vilnius University, Kaunas Faculty of Humanities, master of finance,
Lithuania
REQUIREMENTS FOR BALANCE SETTING-UP AND REPORT IMPROVEMENT
POSSIBILITIES
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Економічний вісник Донбасу № 4 (22), 2010
Gailute Gipiene, Lina Matuseviciene
of certain types of companies (78/660/EEC). Actually, in
the IAS 1, the balance sheet is referred to as the account
of the financial state of the end of the period.
Consequently, most probably, it is not accidental that
Lithuanian authors occasionally formally refer to the
balance sheet by applying this term [6, p. 124]. It is also
to be mentioned that in the public sector, the account
which is adequate to the balance sheet is also called the
account of the financial state [7].
On the other hand, the IAS 1 permits an economy
subject to use other titles of accounting than the one
established in the Standard.
Financial accounting in every country is regulated
by law acts passed by the government or the parliament
which are in agreement with IAS, directives of the
European Council and normative documents established
by other international organizations. Even though BAS
valid in Lithuania have been developed after considering
IAS and the Right of the EU, however, having compared
these regulations, one may observe not only similarities,
but also differences. The key differences concerning the
balance sheet form and content between the international
law acts and the most important national law acts relevant
to this piece of accounting are laid out in Table 2.
IAS 1 “Presentation of Financial Statements” does
not identify the format of the sequence of article
presentation in the balance sheet; however, according to
this standard, the balance sheet is to contain at least the
following articles:
(a) property, plant and equipment;
(b) investment property;
(c) intangible assets;
(d) financial assets (excluding amounts shown under
(e), (h) and (i));
(e) investments accounted for using the equity
method;
(f) biological assets;
(g) inventories;
(h) trade and other receivables;
(i) cash and cash equivalents;
(j) the total of assets classified as held for sale and
assets included in disposal groups classified as held for
sale in accordance with IFRS 5 Non-current Assets Held
for Sale and Discontinued Operations;
(k) trade and other payables;
(l) provisions;
(m) financial liabilities (excluding amounts shown
under (k) and (l));
(n) liabilities and assets for current tax, as defined
in IAS 12 Income Taxes;
(o) deferred tax liabilities and deferred tax assets,
as defined in IAS 12;
(p) liabilities included in disposal groups classified
as held for sale in accordance with IFRS 5;
(q) minority interest, presented within equity; and
(r) issued capital and reserves attributable to owners
of the parent [8, p. 12-13].
Contrary to the IAS 1, Fourth Council Directive
and the BAS 2 indicate forms of balance sheets. Fourth
Council Directive presents an alternative for member
states to choose either of the two or both schemes of
balance sheets presented in Articles 9 and 10 of this
Directive. In case a country selects both schemes, the
right to choose one of the two schemes may be
transferred to enterprises [9, p.23].
The key difference between the presented balance
sheet schemes is that the layout of articles differs. In the
first balance sheet scheme, articles are joined into assets
and liabilities chapters which is absent from the second
scheme. The second scheme of the directive initially
presents information on all the assets further withdrawing
all short-term obligations.
Table 1
Accounting standards used in the business sector of the EU countries
Title of standards Comment
International accounting standards Following a decision of the EU, from 2005 onwards, these standards have been
mandatory to enterprises maintaining consolidated financial accounting that are
publicly traded. Other enterprises are allowed to use these standards
independently.
National accounting standards Accounting rules and methods which were gradually established in various
countries. In Lithuania these were business accounting standards. As a rule,
national standards are either a simplified copy of international standards (e.g. in
Lithuania) or present significant differences from international standards (e.g. in
France).
Accounting standards for small business
enterprises
These standards are specifically modified for family-run and other small
businesses. Most countries develop independent rules and methods for small
business accounting; however, EU institutions foresee unification of small
business standards throughout all the member countries.
Source: [1, p. 85].
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Економічний вісник Донбасу № 4 (22), 2010
Gailute Gipiene, Lina Matuseviciene
Table 2
Comparison of international and national law acts regarding the drawing of the balance sheet
Criteria IAS 1 "Presentation of
Financial Statements" Fourth Council Directive BAS 2 "Balance Sheet"
Forms of balance sheet Not indicated Full and brief Full and brief
Pasirašytas neapmokėtas
kapitalas
Not presented among the
mandatory items
May be shown either in assets
or liabilities part
Presented in the owned
capital and liabilities part
Formation costs Not presented among the
mandatory items
Presented if national law acts
allow showing it as property Not recognized as assets
Costs of research work Not presented among the
mandatory items
May be presented in the part
on intangible assets provided
it is allowed to be used as
property by national law acts
Not presented in the balance
sheet
Investment property Required to present Not required to present Required to present
Amounts of assets to be
received within a year
Required to present the
amounts of assets to be
received
Presented below short-term
assets
Presented within the
structure of long-term
financial assets
Prepayments and
accumulated income
Not presented among the
mandatory items
The amount is presented in
the property part
Accumulated income is
shown in the receivables
part; expenses of the
forthcoming period are
shown in received
prepayments part
Owned shares Not presented among the
mandatory items
Presented in the financial
assets part if allowed to be
shown on the balance sheet by
national law acts
Presented in the owned
capital part
Non-distributed profit
(losses)
Not presented among the
mandatory items
Presented for the year of
accounting and for previous
years
Presented for the year of
accounting and for previous
years
Article on dotations and
subsidies
Not presented among the
mandatory items Not singled out Singled out
Accumulated expenses and
forthcoming income
Not presented among the
mandatory items Presented in the liabilities part
Accumulated income is
shown in the receivables
part; expenses of the
forthcoming period are
shown in received
prepayments part
Liabilities to subsidiary
entities
Not singled out Singled out Not singled out
Conditions are previewed under which enterprises
are allowed to draw shortened balance sheets. At the level
of the EU, this is regulated by the Fourth Council Directive
while in Lithuania it is regulated by the Law of the alteration
of the law of financial accountability of enterprises of the
Republic of Lithuania (2008, No. X-1633). These
conditions are presented in Picture 1 (sums presented in
European units of accounting may be increased no more
than 10 per cent when converting to the national currency).
Forms of shortened balance as presented by Lithuanian
enterprises are contained in BAS 2 “Balance sheet”.
As it is seen in Picture 1, the two initial conditions
for drawing the shortened balance are far stricter in the
Fourth council directive are far stricter than the
requirements Law of the alteration of the law of financial
accountability of enterprises of the Republic of Lithuania
(2008, No. X-1633) while the third condition, to the
contrary, is stricter in Lithuania.
As seen above, requirements for drawing the brief
balance sheet are more flexible in Lithuania. Since IAS 1
contains no requirements upon the brief balance sheet,
BAS 2 takes an intermediary position if the above
mentioned regulations are compared as the major part of
EU requirements is stricter.
Source:[8, p. 12-13; 9, p. 23-28; 10, p. 9-11].
152
Економічний вісник Донбасу № 4 (22), 2010
Gailute Gipiene, Lina Matuseviciene
If requirements set not only upon the balance sheet
form but also on the content by IAS 1, Fourth Council
Directive and BAS 2, several differences may be found.
As seen from the data of Table 2, most articles as required
by TAS 1 are not stated as mandatory by Fourth Council
Directive and BAS 2; however, as well as all the referred
accounting standards dealing with the drawing of the
balance sheet, it allows including additional articles if their
content is not included into the content of the mandatory
articles “whenever this presentation is mandatory for the
understanding of the financial state of a market entity”
[8, p. 13].
Fourth Council Directive presents alternatives for
some articles of the balance sheet; i.e. these are allowed
to be shown in various parts of the balance sheet or not
to be shown at all, e.g. … according to Fourth Council
Directive may be shown either in the assets or the
liabilities part. Thus selectively it may be presented in
the parts of owned capital or liabilities. As in this part it is
posted with the minus mark and as according to E.
Bertasiute and K. Valuzis [12] this position means a debit
debt, it should be presented in the subpart on debits.
Owned shares in the Lithuanian version of balance
sheet are also posted with the minus mark. As this
represent a part of financial property, in the framework
of Fourth Council Directive their presentation in the part
on financial property is completely motivated.
Formation costs and research work cost in the
framework of Fourth Council Directive may be presented
in the balance sheet if national law acts allow to show
them as property; however, BAS 2 does not present these
articles in the balance sheet; these are posted in the parts
on profits or losses of the accounting document.
Fourth Council Directive singles out prepayments
and accumulated income as a separate article in the
property part. BAS 2 shows accumulated income in the
article on receivables while the costs of the forthcoming
period are posted in articles on prepayments. Besides,
Fourth Council Directive in its part on liabilities delivers
an article on accumulated costs and forthcoming income
while the Lithuanian version of the balance sheet shows
accumulated costs among other liabilities, and the income
of the forthcoming period is posted in the articles on the
received prepayments.
Fig. 1. Comparison of requirements imposed on the brief balance sheet
Source: [9, p. 28; 11].
153
Економічний вісник Донбасу № 4 (22), 2010
Gailute Gipiene, Lina Matuseviciene
Besides, a comparison of the above mentioned
regulations for drawing a balance sheet leads to an insight
into the difference that in Fourth Council Directive all the
receivables including the receivables within a year and the
receivables in the further future are to be presented below
short-term assets while in the Lithuanian form the receivables
of the forthcoming year are shown as a constituent part of
the long-term financial property. According to N. Stonciuviene
[13, p. 257], as a result of this, there is no logical sequence
in Fourth Council Directive in terms of property presentation
as both tangible assets and debit debts are to be presented in
terms of the increase of market liquidity. It is sensible to
agree with the author’s statement that the Lithuanian balance
form is more consistent.
Some aspects of information are more detailed and
elaborate in the Lithuanian balance sheet form than it is
required by Fourth Council Directive, for example, the
Lithuanian balance sheet form singles out investment
property and includes articles on external material assistance
and subsidies which are not present in Fourth Council
Directive. On the other hand, investment property is required
to be posted by IAS 1 while the article(s) on external material
assistance and subsidies is not singled out, either.
Fourth Council Directive in its part on liabilities
additionally singles out liabilities to subsidiary entities while
this is not included into the Lithuanian balance sheet form.
Thus a comparison of IAS 1, Fourth Council
Directive and BAS 2 demonstrates that Fourth Council
Directive and BAS 2 pose stricter requirements of drawing
a balance sheet than IAS 1 which is relatively flexible.
However, B. Basoglu and A. Goma [14] as well as
V. Klanaite [15, p. 2] consider the flexibility of
international standards to be a drawback rather than an
advantage. The authors claim that the feature of allowing
the choice of alternatives for enterprises may lead to
ambiguities. It is worth agreeing with this attitude since
different interpretations may lead to disagreements and
incompatibilities between enterprises.
V. Klanaite [15, p. 2] also observes that IAS is not
sufficiently extensive as methodological
recommendations are missing. V. Bruzauskas [15, p. 2]
also observes lack of methodological recommendations.
He remarks that according to this set of standards, small
businesses are facing relatively complicated requirements.
On the other hand, in spite of all the drawbacks of
IAS, H. Chen, Q. Tang, Y. Jiang et al. [16, p. 4] discovered
in a research that the quality of accounting after the
beginning of application of IAS increased in EU
enterprises; thus the standards demonstrated positive
impact on the quality of accounting.
It is sensible to single out the advantages of the above
mentioned standards. Among the advantages of IAS, M.
Pamazanova and E. Salnikova [17] mention hard economy-
based logic, possibilities of application of the practice of
highly advanced countries in the field of accounting and
the opportunity for users to conceive the information of
the set of financial accounting anywhere in the world.
As a consequence, the comparison of fundamental
law acts setting requirements upon drawing the balance
sheet permits to conclude that BAS 2 “Balance” essentially
corresponds to the requirements of IAS 1 “Presentation
of Financial Statements” and those of Fourth Council
Directive upon drawing a balance sheet. The presented
information in BAS 2 is more detailed than that in IAS 1
which allows more freedom of choice for enterprises.
2. Possibilities for balance sheet improvements
Even though the balance sheet the way it is used in
Lithuania essentially corresponds to the attitudes of
international regulations concerning the drawing of balance
sheets, it is still insufficiently informative. Consequently,
some Lithuanian authors when dealing with the form of
the Lithuanian balance sheet deliver suggestions
concerning improvements of this constituent part of the
set of financial accounting.
2.1. Possibilities for improving the assets part
of the balance sheet
Assets may be defined as likely benefits in the future,
obtained or controlled by an entity as a result of former
deals or events [18, p. 93].
When dealing with the assets part of the balance
sheet, K. Valuzis [19, p. 7] finds a drawback of the balance
sheet in terms of the absence of information concerning
the amount of assets as a downpayment when getting a
loan and the balance value of these assets. The author
also indicates that this information is not required in the
letter of explanation, either.
K. Valuzis [20, p. 5] observes that the real value of
the assets of an enterprise which is actually under the
control of the enterprise would be best reflected if the
letter of explanation not only singles out the balance value
of downpayments but also the value of the insurance of
the property on loan as well as the total value of the part
of the balance without the value of assets functioning as
downpayments in addition to the total value of the owned
capital and liabilities in the balance sheet not including
the loans which were received for assets functioning as
downpayments. Only the possession of this data allows
the calculation of the financial capabilities of an enterprise.
C. H. Gibson [18, p. 123] finds a major issue in the
fact that some enterprises do not recognize some of their
elements as assets, e.g. qualities of excellent employees,
unpaid management activities and the properly selected
location are not mentioned in the balance.
Information for Better Markets [21, p. 3] also claims
that the balance sheet does not consider the newly created
154
Економічний вісник Донбасу № 4 (22), 2010
Gailute Gipiene, Lina Matuseviciene
value, such as relationships, reputation and knowledge.
As the accumulated property is not shown while expenses
on this property are included into the balance, asymmetry
of information develops.
One of the articles on short-term property in the
balance sheet is the indebtedness of purchasers. In case
of delayed payments, not only the regular activity of an
enterprise may suffer but also major losses may be incurred
by an enterprise, consequently, E. Suliauskaite and
K. Valuzis [22] suggest that the part on the debts of
purchasers in the balance sheet should contain a more
detailed article on doubtful debts, “specifically singling out
debts delayed under three months and more than three
months”. The authors base their opinion on the fact that
BAS 1 “Financial Accountability” indicates that enterprises
when publishing the annual set of financial accounts may
omit non-mandatory articles and that additional articles may
be supplied in order to correctly reveal the financial state
of the enterprise; thus additional lines may be inserted.
Besides, K. Valuzis [19 p. 7] treats the absence of
information of the amount of non-recovered doubtful
debts and defaulted loans is one of the major drawbacks
of the balance sheet.
The article on doubtful debtors is suggested to be
included by V. Bruzauskas and A. Navickaite [23, p. 18]
as well. Besides, N. Stonciuviene [13, p. 261] suggests
presenting more detailed data on debit debts. She also
suggests [13, p. 260] that the balance sheet should show
the completed production, articles for sale, incomplete
production and their alteration during the relevant year in
more detail as, according to the author, this would better
reveal the activity of the enterprise during the year for
which the account is written.
As a result, when dealing with the part of balance
property, authors find the absence on doubtful debts in
the article on the indebtedness of purchasers as the main
drawback of the balance sheet. This article would be
useful first of all because it would provide information
on the part of debts of purchasers on the day of account
presentation that constitutes doubtful debts while the
additional details in the article would reveal information
concerning the part of debts that are delayed most of all
and possess the highest likelihood that these debts will
not be recovered.
Besides, in the part on property balance, the authors
suggest showing the balance value of the
downpayment(s) and to present more detailed information
on the reserves of the enterprise.
2.2. Possibilities for improving the part on owned
capital and liabilities of the balance sheet
The part of balance where the structure of property
and debts is presented is called the part on owned capital
and liabilities.
The owned capital is defined as the remaining
interests of the owners to the property after all liabilities
have been met [18, p. 114].
G. Kalcinskas [24, p. 633] claims that the liabilities
of an enterprise may be not uniform, i.e. both positive and
negative ones. On one hand, if the debts of an enterprise
are large, it may find it more difficult to get credits and is
not attractive to investors, it is less likely to be relied upon
by business partners as well. On the other hand, having
trade debts for which the interest is usually not paid,
enterprises frequently benefit since they thus get an interest-
free loan, i.e. in order to earn its own income, the enterprise
is able to attract property belonging to a third party.
When the financial state of an enterprise is assessed,
its inability to pay may be revealed by defaulted credit
debts. Thus in order to properly show the financial state
of an enterprise, the balance part on the debts to suppliers
should be supplied with an article on delayed debts by
singling out “debts delayed by fewer or more than three
months” [22].
Even though it is claimed that in case of revealing
such enterprise data as debts to other entities in terms of
payment dates as included into the deals, the prestige of
the enterprise may suffer and commercial secrets may be
revealed, this may still be contradicted. K. Valuzis [20,
p. 5] claims that commercial secrets would not be revealed
as neither specific suppliers nor the specific assets nor the
type of production or its cost, etc. would be revealed.
K. Valuzis also suggests [25, p. 15] that the balance
sheet or at least the letter of explanation should specify such
additional data as delayed remuneration and related taxes.
G. Kalcinskas [24, p. 633] remarks that debts have
to be observed due to two reasons. First of all, they must
be noted as in case of payment delay, the enterprise will
have to pay fines or penalties; besides, these debts may
unexpectedly turn into income. The author notes that
this may happen in case of the bankruptcy of the creditor
when its accounts are closed in banks or when the creditor
alters its bank and location address and forgets to refer
this information to its debtors. The debtors being sure
that their liabilities will not have to be covered may get to
treat them as income from other activities.
K. Valuzis [26, p. 175] observes that one of the
characteristics of dealing with suppliers and purchasers
is that the bills are in this type of accounting are singled
out into active and passive ones.
Bills featuring payments by purchasers are strictly
active while bills dealing with providers are strictly passive.
As most entities with whom transactions are made may
be both debtors and creditors, R. Patasiene [27, p. 267]
remarks that in case of such strict distribution of bills into
active and passive ones, enterprises are obliged to use twice
as many bills. D. Zinkeviciene [28, p. 126] when dealing
with this issue also remarks that the same entity may be
both a debtor and a creditor as this may happen due to
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Економічний вісник Донбасу № 4 (22), 2010
Gailute Gipiene, Lina Matuseviciene
prepayments. Consequently, in order to establish the sum
of debt of an enterprise to another one or vice versa on a
selected date, data of at least two bills is to be compared.
As a result, even though the principle of active versus
passive bills is criticized by the partisans of the “modern
accounting”, according to the above mentioned author, it
is still quite convenient for the practice of accounting.
R. Patasiene [27, p. 267] agrees with the opinion that
the principle of usage of active versus passive bills in payment
accounting provides opportunities to make fewer inscriptions
in registers while the data of accounting with purchasers
and providers are presented more vividly. She also claims
(ibid.) that the absence of this principle, i.e. the use of
separate accounts for debtors and creditors is unacceptable
in terms of technology. In this case, labour costs increase,
and the use of data gets more complicated. K. Valuzis even
notes that the usage of accounting bills “with such narrow
application or non-usage of them has no impact on the
financial results or on the amount of taxes paid to the state.”
He also observes [26, p. 175] that the derivative accounting
balance in the active account and the debit balance in the
passive account is just a methodological violation. As this is
not related with tax calculation, the enterprise cannot be
punished for that in any scenario.
R. Patasiene [27, p. 267] generalizes that the
distribution of accounting bills into active and passive
ones is artificial, and its rejection would lower labour
costs of the accounting staff, and the user would be
provided with the information sooner; it would be
presented in a clearer way. D. Zinkeviciene [28, p. 126]
agrees with this opinion.
Consequently, when dealing with the part of owned
capital and obligations, in order to show the financial state
of an enterprise correctly, various authors suggest the part
of debts to suppliers to be supplied with an article on delayed
debts to clarify what debts under and over three months the
enterprise is facing on the balance drawing day.
Besides, a few authors suggest not to involve such
strict division of accounting with purchasers and suppliers
into active and passive ones as this requires the usage of
almost twice as many bills.
Conclusions
1. The comparison of international and national
requirements for the establishment of brief balance, it has
been discovered that these regulations in Lithuania are at
the intermediate level between IAS 1 and Fourth Council
Directive as IAS 1 does not regulate it at all while the
major part of the requirements of Fourth Council Directive
for drawing the brief accounting sheet is stricter than the
requirements set by the normative documents in Lithuania.
2. The comparison of IAS 1, Fourth Council
Directive and BAS 2 shows that stricter requirements
for drawing a balance sheet are outlined by Fourth Council
Directive and BAS 2 while IAS 1 is more flexible.
3. Even though a comparative theoretical research
demonstrates a number of differences between
international and national law acts in terms of requirements
set upon the form and content of a balance sheet, these
differences are not essential; it may thus be concluded
that BAS 2 part “Balance sheet” essentially corresponds
to IAS 1 “Presentation of Financial Statements” and
requirements of Fourth Council Directive set upon
drawing a balance sheet.
4. The absence of information of delayed doubtful
debts to an enterprise and its own debts with delayed
terms is mentioned as one of the essential drawbacks of
a balance sheet.
5. According to numerous authors, significant
additional information which should also be included into
the balance is the data on the value on downpayment and
more detailed information on the reserves of an enterprise.
Strict division of accounting with purchasers and suppliers
into active and passive bills is not suggested, either.
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Gipiene G., Matuseviciene L. Requirements for
balance setting-up and report improvement
possibilities
Object of the article research is balance report. A
theoretical research is done in the article where requirements
of international and Lithuanian acts for balance content
and form making are compared and differences between
them are presented. Because it is assessed that balance is
not informative enough balance improvement possibilities
are introduced in the article by the authors.
The article consists of introduction, two chapters,
conclusion, and references.
Key words: balance, IAS 1, Fourth Council Directive,
BAS 2, improvement of balance sheet.
Гипене Г., Матусявичене Л. Требования к ус-
тановлению баланса и потенциал развития
Предметом статті є балансовий звіт. Авторами
зроблено теоретичне дослідження, де порівняні міжна-
родні і литовські правові вимоги до змісту балансу та
його форм, представлені їх відмінності. Оскільки ба-
ланс не є достатньо інформативним, автори статті пред-
ставляють можливості поліпшення балансу.
Ключові слова: баланс, 1-й МСФО, 4-а Дирек-
тива Ради, 2-й БСБУ, поліпшення балансу.
Гипене Г., Матусявичене Л. Требования к ус-
тановлению баланса и потенциал развития
Предмет статьи — балансовый отчет. Авторами
сделано теоретическое исследование, где сравнены
международные и литовские правовые требования к
содержанию баланса и его формам, представлены их
различия. Поскольку баланс не является достаточно
информативным, авторы в статьи представляют воз-
можности улучшения баланса.
Ключевые слова: баланс, 1-й МСФО, 4-я Дирек-
тива Совета, 2-й БСБУ, улучшение баланса.
Received by the editors: 22.10.2010
and final form in 01.12.2010
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