a form of accounting report (known in the USSR as Form No. 1), characterizing in generalized monetary indexes the status of economic assets and the sources of their formation on the reporting date. An accounting balance is one of the indexes of the economic autonomy of an enterprise. In structure an accounting balance is a two-sided table. The left side of the table, the asset side, shows the composition and distribution of the economic assets of the enterprise; the right side, the liability side, reflects their sources. Total assets and liabilities are equal. Information on assets and the sources of their formation are cited for two dates—the beginning of the year and the date the balance is drawn up.
In the USSR the accounting balance is one of the principal sources of analysis of the financial situation of an enterprise or organization. The data of an accounting balance make possible the determination of the supply of an enterprise’s own circulating capital and the assets equivalent to it and the degree of their sufficiency; the calculation of an enterprise’s total working assets in economic circulation; the establishment of compliance with norms on circulating capital where such norms exist; and the determination of the supply of Gosbank (State Bank) loans, the condition of payment discipline, the solvency of an enterprise, the correctness of the use of assets allocated to an enterprise, and so forth.
The form of the accounting balance and the content and procedure for evaluating balance items are strictly regulated by the state. A single form of accounting balance, approved by the Ministry of Finance of the USSR and the Central Statistical Administration of the USSR, has been established for all enterprises of the national economy. The Statute on Accounting Reports and Balances of State, Cooperative (Except Kolkhoz), and Public Enterprises and Organizations (1967) establishes a standard procedure for submitting and approving accounting balances; it also standardizes rules for drawing up accounting balances and establishes procedures for evaluating their items, for taking inventory, and for writing off losses. Under this statute, fixed assets are shown on the asset side of the accounting balance at their original cost (fixed assets put into operation before Jan. 1, 1960, are reflected in the accounting balance at their replacement cost). The depreciation of fixed assets is reflected on the liability side of the accounting balance under a separate heading. Circulating capital assets are evaluated at their actual production cost, including all expenditures for procuring them and delivering them to the warehouse, regardless of the method of evaluating them in current accounting. An exception are industries with large-series and mass production, where evaluation of parts and semifinished products at their existing normative production cost is allowed. All the indexes of accounting balances are compiled on the basis of documented accounting data. Before drawing up accounting balances, it is essential that remainders and turnover be verified by balancing according to analytic and synthetic accounts.
The accounting balance of the basic activity of an industrial enterprise consists of five sections. Each section is given a letter symbol (see Table 1).
|Table 1. The accounting balance|
|(A) Fixed capital stock and nonworking assets||(A) Sources of an enterprise’s own assets and equivalent assets|
|(B) Circulating capital for which norms are which norms are set||(B) Bank credits for circulating capital for set|
|(C) Cash, settlements, and other assets||(C) Various bank credits, payments, and other liabilities|
|(D) Assets and outlays for capital construction||(D) Sources of assets for capital construction|
|(E) Outlays for the formation of the basic livestock herd||(E) Financing of outlays for formation of the basic live stock herd|
The first three sections of the accounting balance characterize the basic activity of the enterprise; the fourth and fifth, outlays on capital investments. This kind of grouping of the assets and the sources for their defrayal facilitates an analysis of the financial situation of the enterprise and makes it possible to determine how correctly the assets allocated to the enterprise are being used.
Each section of the accounting balance is broken into groups of homogeneous items. A separate line, with its own sequential number, is allotted to each item. Alongside the name of the item is a symbol for the bookkeeping account; the balance sum of the account is transferred to the accounting balance. Beyond the totals of the accounting balance, there are references to notes with additional information necessary for an analysis of the financial situation of an industrial enterprise. The asset side of section A reflects fixed capital stock, diverted assets, payments within the system in the redistribution of circulating capital and profits, and the settling of accounts with enterprises for allocated assets and losses. The liabilities side shows the sources of the enterprise’s own assets and equivalent assets: the statutory fund, budget financing for an increase in the norm for the enterprise’s own circulating capital, profits, assets removed in connection with turnover credit, debts on wages and deductions for social insurance, and so forth. Such a grouping of assets and sources in section A makes it possible to determine the supply of an enterprise’s own working assets and equivalent assets and to calculate the influence of various factors on changes in their quantity. On the asset side section B reflects circulating capital for which norms are set (production reserves, uncompleted production, outlays for future periods, remainders of finished output at warehouses, and so on); on the liability side it reflects short-term Gosbank credits for above-norm reserves of circulating capital for which norms are set. On the asset side of the section, in addition to factual data, the established norms of reserves are cited for all items. From the data of section B one can determine the stock of above-norm remainders of valuable commodities and materials and establish, with the use of references in the balance, the quantity of above-norm reserves for which credit has not been provided by the Gosbank and whose formation was the result of shortcomings in the work of the industrial enterprise. Section C is heterogeneous in economic content. Its asset side reflects, for the most part, cash, goods sent out, accounts receivable, payments of various kinds, assets and outlays for unfinished capital repairs, and so forth. On the liability side are various Gosbank credits, accounts payable, special funds, and sources of the means for capital repairs. From the data of section C can be established the flow of debtors’ and creditors’ liabilities, the supply of credits for payment documents in transit, the correctness of the use of assets allocated for capital repairs, and so forth. Section D is filled in by enterprises that do not have a separate accounting balance of capital investments; it is intended to control the use of assets appropriated for capital construction. Section E reflects outlays for the formation of the basic livestock herd and the sources of their defrayal, since these outlays are planned and financed separately from other capital investments.
REFERENCESMakarov, Z. G. Teoriia bukhgalterskogo ucheta. Moscow, 1966.
Margulis, A. Sh. Bukhgalterskii balans v otrasliakh narodnogo khoziaistva. Moscow, 1966.
Shchenkov, S. A. Bukhgalterskii balans promyshlennogo predpriiatiia. Moscow, 1963.
Savichev, P., and N. Ivanov. Balans promyshlennogo predpriiatiia i ego analiz. Moscow, 1953.
A. D. KARBYSHEV