translation sponsored by · financial market technology, the council of ministers, using the...

Translation sponsored by:

PAL Office Solutions

Riversdale Moçambique

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While all care has been taken in the preparation of this translation, this document is not a sworn translation and bears no legal weight. In case of queries please consult the Portuguese original. ACIS and the translation sponsors can not be held responsible for any loss or omission resulting from use

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Translation sponsored by: CCFB, Companhia de Sena, Crown Agents, Ferreira Rocha e Associados, Hotel Cardoso, Impetro, Kangela, KPMG, MCB, Mocambique Companhia de Seguros, Nova Vida, PAL Office Solutions, PG Consult, PriceWaterhouse Coopers, RES, Riversdale, SAL & Caldeira, and SDV-AMI

DECREE 36/2006

Of 21 September It being necessary to approve the General Accounting Framework, with a view to accommodating the various economic transformations and reforms which have occurred in Mozambique in the last few years, arising out of the internationalization of economic activities and the impact of rapid innovations in information, communication and financial market technology, the Council of Ministers, using the competencies attributed to it by line f) of no. 1 of article 204 of the Constitution of the Republic, hereby decrees: Article 1. The General Accounting Framework (“GAF”), annexed to this decree, and forming an integral part of it, is hereby approved. Article 2. The General Accounting Framework shall be applicable to all commercial businesses, with the exception of those with principal trading activities being within the banking or insurance sectors. Entities of small economic size shall also be exempt from the mandatory application of the GAF, and these entities shall be deemed to be those with an annual turnover not exceeding that stipulated in no. 2 of article 108 of the Collective Persons Income Tax Code, approved by Decree 21/2002, of 30 July. Article 3. The Minister of Finance shall be responsible for the approval of complementary rules necessary for the application of this Decree. Article 4. The General Accounting Framework enters into force on 1 January 2007. Article 5. Resolution 13/84, of 14 December, is revoked. Approved by the Council of Ministers, on 25 July 2006. Let it be published. The Prime Minister, Luísa Dias Diogo.

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CHAPTER 1

General and technical provisions

General accounting General accounting may be defined as a mandatory reporting system in which all facts relating to the financial information of a business is recorded, and which has, as its essential function, the determination of the financial position of a business at a particular moment, by way of the balance sheet and the income statement of each financial year.


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Entry method General accounting shall make use of the double entry system.

Documentary support

1. Each accounting entry shall be substantiated by way of supporting documentation which is compliant, in terms of commercial and fiscal legislation, and which may be produced whenever requested.

2. A commercial business shall keep accounting records and other supporting documents corresponding to its business activities in its care and responsibility, and in an orderly manner, for a period of ten years from the last entry recorded in the books, except if otherwise provided in special provisions of law.

Inventory

At least once in each financial year, at year-end, a physical inventory count of all business assets shall be taken.

Financial year for accounting purposes 1. The financial year of companies shall be annual, commencing on 1 January and terminating on 31 December. 2. A different accounting period than that set out in the paragraph above may be adopted, if the conditions set out in

numbers 2 and 3 of article 7 of the Collective Persons Income Tax Code, approved by Decree 21/2002 of 30 July, have been met.

Currency and language of accounting records

Mercantile bookkeeping, in general accounting, and in analytical accounting, when used, shall be done in the official language and currency, in an appropriate manner, with individual and clear entries, in chronological order, without blank spaces, blank lines, deletions, corrections or marginal notes.

General accounting books

1. A commercial business shall be obliged to keep daybooks, inventory books, and balance sheets, as well as other books required by law.

2. Commercial businesses shall maintain the following books, in addition to those indicated in the previous paragraph, in accordance with the type of business concerned:

a. Book of minutes of general meetings; b. Book of minutes of directors board meetings; c. Book of minutes of audit committee meetings, if applicable; d. Register of encumbrances, charges and guarantees.

3. The mandatory books may be replaced with sheets, or with accounting or other procedures which allow for the use of new accounting techniques, on legally prescribed terms.

4. In order to further facilitate the recording of its transactions, a commercial business may make use of books, sheets and other optional accounting procedures.

5. Mandatory books, sheets and accounting instruments which are used shall be submitted to the commercial registration authority for legalization.


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6. Legalization shall consist of the signature of the terms of opening and closure, as well as the noting the number of pages in the book on the first page of each book, and the respective page number and heading on each page of each book. Page headings may be inserted using a stamp.

7. Accounting books may be kept in any appropriate form, using any appropriate method, provided that the procedures used give sufficient authenticity to accounting entries, and that accounting control measures are adopted.

8. If an error should occur in an accounting entry, the respective correction shall be made by way of an accounting reversal entry.

Components of financial statements

Financial statements consist of the following mandatory accounting statements: — The balance sheet; — The income statement; — The notes to the balance sheet and income statement; — The technical report.

Chart and Code of Accounts

1. General accounting shall comply with the code assignment, terminology and functioning of the accounts contained in Classes 1 to 8 of the General Accounting Framework. Classes 0 and 9 shall be reserved for suspense accounts and for analytical operating accounting, respectively.

2. General accounting shall record all transactions, assets and funds of a commercial business in a sufficiently detailed manner, and may for this purpose, and when it is justified, create more detailed subaccounts, which shall respect the content of the principal account.

3. The Chart of Accounts consists of 8 classes, namely: — Classes 1 to 4 - asset and liability accounts; — Class 5 - capital and owners equity accounts; — Classes 6 and 7 - expense and loss accounts, and income and profit accounts, respectively; — Class 8 - profit and loss accounts.

Analytical accounting

1. Analytical accounting is not mandatory, and has the following functions: — Identifying cost elements which form the basis for pricing, and which allow for the control of the profitability of

the business; — Allowing for an analysis of the internal operating conditions of the business; — Providing the bases for the valuation of certain parts of the asset base.

2. Analytical accounting is independent of general accounting, but its data must concur with general accounting entries.

3. Analytical accounting shall make use of the accounts listed in class 9. 4. Analytical accounting may make use of either the double or single entry method.


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5. Analytical accounting shall, within class 9, make use of a first group of “reflected accounts” which shall ensure the autonomy of analytical accounting, and shall confirm the concurrence of analytical accounting with general accounting.

6. Class 9-account accounting shall not be regulated, and businesses shall determine how this is done individually, based on the nature of their trading activities, organization and management objectives.

7. Analytical accounting presupposes the use of a perpetual inventory method. 8. Even if accounting records for analytical accounting are not defined, the accounting method adopted must allow for

comparative cross-referencing with general accounting entries.

CHAPTER II

Financial information

Objective The objective of financial statements is to provide credible financial information regarding the financial position, performance and changes in financial position of a business, and information that is useful to investors, creditors, the State and other users, so that investments, the granting of credit and the making of economic decisions may be effected in a rational manner. Users The users of financial information are investors, lenders, employees, suppliers of goods and services, customers, the State and the general public. Preparation of financial statements The responsibility for the preparation and presentation of financial information shall fall upon the management body of the business. Management shall implement administrative and internal control procedures in such a manner as to guarantee that the information provided is credible. Qualitative characteristics In order for published financial information to be useful, it must be understood by its users. Qualitative characteristics are the attributes that make the financial information provided useful to users. The basic qualitative characteristics are as follows: — Understandability

Information provided in the financial statements should be readily understandable by users. These users are assumed to have a reasonable knowledge of business and economic activities and accounting, as well as a


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willingness to study the information with reasonable diligence. However, information relating to complex matters that is included in the financial statements, due to its relevance to user decision-making, should not be excluded simply on the basis that certain users may find it more difficult to understand.

— Relevance Information should be relevant to the needs of users, as regards decision-making. Information is relevant when it influences the economic decisions of the users by assisting them to evaluate the past, present and future events or confirming, or correcting their past evaluations.

— Reliability Information should be reliable, and is reliable when it is free from material errors, and when users may have confidence that the information faithfully represents that which it purports to represent, or could reasonably be expected to represent.

— Comparability Users of financial information should be able to compare the financial statements of the business over a period of time, so as to identify trends in its financial position, and in its performance. Users should also be able to compare the financial statements of different businesses, so as to evaluate their relative financial position, performance, and changes in its financial position. Consequently, the evaluation and presentation of the financial results and other similar events should be done in a regulated manner that is consistent between various businesses and financial periods.

— Trustworthy representation The financial information should represent the transactions and other occurrences which it intends to reflect in a trustworthy manner, or, that could reasonably be expected to represent. Thus, the balance sheet and the income statement should represent the transactions and other occurrences, from which assets, liabilities, capital and owner’s equity are derived, as well as the expenses and income of the business, on the date of the report, in a trustworthy manner, so as to satisfy the recognition criteria.

— Neutrality Information flowing from the financial statements should be free from bias, i.e., should not be selective or presented in such as a way as to influence the taking of a position or decision, or so as to achieve a predetermined goal.

— Completeness Information in financial statements should be complete, within the limits of materiality and cost. An omission may result in the information being false or erroneous, and, in consequence, not trustworthy and deficient in terms of its relevance.


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CHAPTER III Fundamental accounting principles

In order for a business to present the correct economic and financial situation the following fundamental principles should be adopted: 1. Going concern

A business is an entity which will continue to operate for the foreseeable future, and in consequence, it is understood that it is not intended, nor necessary, for it to enter into liquidation, or for it to significantly reduce the volume of its operations.

2. Consistency The business shall maintain the accounting policies from year to year, and shall disclose, as a note to the financial statements, any alterations which are considered to be material.

3. Prudence The business shall, in its accounting for estimates, take the necessary precautions needed, without giving rise to hidden reserves or excessive provisions which may cause a deficit in the calculation of assets and income, or an excess in the calculation of liabilities and expenses.

4. Accrual basis The business shall recognize income and expenses at the time at which these occur, whether or not monies were received or paid, and shall include these in the statements of the financial year to which they relate.

5. Historical cost The business shall record accounting entries on the basis of the original costs of acquisition or production.

6. Substance before form A business shall account for its operations on the basis of their substance and economic reality, and not only to comply with the legally required form.

7. Materiality Financial statements shall include all elements which are relevant and conducive to a correct assessment by users.


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CHAPTER IV Valuation criteria

1. Current Assets

Current assets denominated in foreign currency, in cash or banks, shall be disclosed on the final balance sheet at the year-end rate obtained from any exchange authority. The foreign exchange gains and losses shall be accounted for in accounts 6.8.4 – Exchange losses – or 7 – Exchange gains.

2. Negotiable securities Each of the specific elements of negotiable securities and other financial investments shall be valued in terms of the criteria defined for stock items, to the extent to which these are applicable to them.

3. Debits and credits 3.1. Transactions denominated in foreign currency shall be recorded, for accounting purposes, at the spot rate on

transaction date, except if the exchange rate is fixed by the parties, or guaranteed by a third party. On balance sheet date, the credits and debits shall be translated, at the spot rate on Balance sheet date, unless the exchange rate has been fixed or guaranteed.

3.2. In the case of medium and long-term credits and debits, exchange rate gains or losses shall be recorded in account 4.9.2.3 – Exchange gains – and in account 1.9.2.3 – Exchange losses – when there are reasonable expectations that the gain or loss will be reversible. Thereafter, and as payments are made or received, a transfer must be made to account 7.8.4 – Exchange gains – or to account 6.8.4 – Exchange losses, depending on whether there is an net gain or loss.

3.3. Exchange rate gains or losses relating to fixed assets shall only be capitalized to fixed assets while the asset is still under construction.

3.4. When the value of debits to be paid is higher than the corresponding collected amounts, the difference may be posted to a specific subaccount of account 1.9.2 – Deferred costs.

3.5. When there is an expectation that third party credits will not be received, allowance shall be made to an extent which corresponds to the respective risk of non-recovery.

4. Inventory 4.1. In valuing purchases – the cost of acquisition must be recorded, taking into account, all direct or indirect

expenses incurred in bringing the inventory item to its place of storage. 4.2. In valuing manufactured products – the cost of production must be recorded, which shall be deemed to include

the costs of inventory, direct labor, variable overhead expenses and fixed overhead expenses, which are necessary for bringing the inventory item, in the state in which they are encountered, to its places of storage. Fixed overhead expenses may be allocated to costs of production at normal capacity. Administrative, financial and distribution costs shall not be included in costs of production.

4.3. Stock costing – permissible costing methods: the weighted average cost method, the standard cost method, FIFO method, LIFO method, and the specific identification method.

4.4. On the balance sheet – the cost of acquisition or of production, except in the following situations:


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a) In agricultural, forestry and cattle-farming operations, as well as in the fishing industry and in the extracting industry, in which inventory may be valued by their net realizable value, less the normal profit margin;

b) In project based activities, namely, the construction of buildings, roads, bridges and dams, and ship-building, in which the products or services in construction may be valued in terms of the percentage completed, or, alternatively, by the maintenance of their respective costs, until completion;

c) By-products, waste, residues and scrap shall be valued, in the absence of a more adequate criterion, by the net realizable value;

d) In the activities of retail sale, in which many varieties of articles are sold, goods may be valued by the sale price in force year-end, less the profit margin;

e) In the situations in which the valuation has, as its base, the net realizable value, this shall be understood to be the result of the difference between the sale price of the item, and the necessary and foreseeable costs of finishing and sale.

4.5. When it appears that the inventory valuation is in excess, of the historical cost, or if the inventory items are considered as obsolete, having suffered a physical deterioration, price reduction or other similar event, the difference between the sale price and the valuation shall be recognized in the appropriate provision accounts, which shall be reduced or reversed when the originating cause ceases to exist.

5. Fixed assets 5.1. Fixed assets shall be valued at the cost of acquisition or production, as defined in 4.1 and 4.2 above. 5.2. If, at year-end, any of the specific elements of financial assets have a carrying value which is lower than their

respective market value, the difference may be compensated for by way of the constitution of an adequate provision, which shall be reduced or reversed when the when the originating cause ceases to exist.

5.3. If the elements of tangible or intangible assets have, at year-end, a market value which is lower than that accounted for, then the difference shall recognized as an extraordinary amortization, if it is deemed that the reduction in value is permanent, and this shall not be maintained if the reasons which gave rise thereto, cease to exist.

5.4. Intangible assets shall be amortized within a maximum period of five years, unless the use of a longer period is justifiable.

5.5. Financing costs on acquisition of fixed assets shall be capitalized to the cost of acquisition or production while these assets are still under construction, and if it is judged that this procedure is the most adequate and consistent.


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CHAPTER V Financial Statements

1. Balance sheet, Income Statement and Notes to Financial Statements

1.1. Balance sheet The structure of the balance sheet reflects current trends in the accounts, which are arranged in ascending order of asset performance and debt collectability, and so as to allow for a comparison with figures recorded for the previous financial year.

1.2. Income Statement The structure of the income statement envisages the fulfillment of two objectives - firstly, the presentation of income and expense accounts, according to their nature, and, secondly enabling, in a easy and expeditious manner, to distinguish between current and extraordinary profits and losses, as well as the recognition, inter alia, of those profits and losses which flow from operating activities, and those which are derived from financial activities.

1.3. Notes to Financial Statements The following should be included as notes to the balance sheet and the income statement: 1.3.1. General ledger trial balances, before and after rectification or adjustment entries, and the approval of

financial results; 1.3.2. A copy of the minutes of meeting where the financial statements were approved; 1.3.3. Register of board of directors, managers and members of the audit committee; 1.3.4. A Technical report, with necessary comments in order to ensure the correct understanding and

interpretation of the accounts disclosed on the balance sheet and income statement, as well as providing comprehensive and relevant information to interested parties, relating to the economic and financial position of the business.

Despite the fact that the notes making up the Technical report, and which are detailed below, are extensive, the total number of mandatory explanatory notes will be reduced for the vast majority of businesses, due to the fact that the majority of information set out in the notes will not be applicable to the business. However, for the purpose of consistency, businesses shall, always indicate the respective number attributed below: 1. Disclosure and justification for any exemptions from the application of the provisions of the General

Accounting Framework, and the respective effects thereof on the financial statements; 2. Disclosure and commentary on balance sheet accounts and income statement accounts that are not

comparable with previous financial years; 3. Valuation criteria used in the main headings of the balance sheet and the income statement; 4. Disclosure of the foreign exchange rates used for the conversion of balances denominated in foreign

currency; 5. Disclosure of methods utilized which may alter the financial results, and which may influence the value of

income tax, namely: — Valuation criteria which are different from those defined in Chapter IV; — Amortizations, higher than those which are permissible;


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— Provisions, higher than those which are permissible. 6. Average number of staff employed by the business during the year, divided into full time and part time

employees. 7. Under the heading of fixed assets, monetary transactions which took place during the year, including

movements in amortizations and allowances. Carrying value of fixed assets

Headings Opening balance

Revaluation Acquisitions Disposals Transfers / scrapping

Closing balance

Fixed assets: Financial Tangible

Intangible Amortizations and provisions relating to fixed assets

Headings Opening balance Reinforcements Adjustments Closing balance Fixed assets:

Financial Tangible

Intangible

8. As regards tangible fixed assets, and fixed assets under construction, separate disclosure is required in the following situations: — Fixed assets controlled by third parties; — Fixed assets located abroad; — Reversible fixed assets (concessions).

9. Goods acquired under a financial leasing regime, and their respective accounting value. 10. Disclosure of the legal terms which provided the basis for the revaluation of tangible fixed assets and of financial

assets. If the revaluation was not effected on the basis of legal terms, the criteria used should be disclosed. 11. Revaluations should be disclosed in the following format:

Headings Carrying accounting value Revaluations Revaluation value Tangible fixed assets

Financial assets

12. Accumulated and current financial costs capitalized to fixed assets; 13. Shares and quotas included in account 1.7 – Negotiable securities – in which the accounting value is equal to or

higher than 5% of the total value posted to that account, disclosure of subsidiaries , quantities, nominal values and balance sheet values;


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14. Inventories located outside the premises of the business, namely on consignment, in transit or controlled by third parties;

15. Disclosure of the value of debts receivable that are considered to be doubtful; 16. Disclosure of aggregate advances or loans granted to the directors or supervisory bodies of the business, with

disclosure of their established terms and conditions; 17. Aggregated value of active and passive debts, relating to staff employed by the business; 18. Breakdown of amounts receivable contained in account 4.4 – Creditor – the State – which have not been paid within

the legally prescribed time limit; 19. Disclosure of receivable items that are to be settled within a period of five years or more, broken down under the

various balance sheet headings; 20. Disclosure of the liability of the business for guarantees given, in accordance with their nature, relating these to the

headings of the balance sheet under which they fall; 21. Movements in provisions during the financial year:

Accounts Opening balance Increase in provision Decrease in provision Closing balance

1.8.1 – Provision for doubtful receivables

1.8.2 – Provision for negotiable securities

2.9 – Provision for inventory

3.9 – Provision for financial assets

4.8 – Provision for risks and costs

22. Changes in equity that has arisen during the current financial year. If these relate to a change in capital, the value

subscribed, but not yet paid up, should be disclosed. 23. Number of shares in each category making up share capital of the business, and the respective nominal value. 24. Inventory cost of sales statement should be disclosed as follows:

Transactions Merchandise Raw materials, auxiliaries and other materials

Opening trading stock X X Purchases X X Adjustment of trading stock ±X ±X Closing trading stock -X -X Costs of sales for the financial year X X

25. Production variations should be disclosed as follows:


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Transactions Finished and unfinished products

By-products, waste, residues and scrap

Products and services in progress

Closing trading stock X X X Adjustment of trading stock ±X ±X ±X Opening trading stock -X -X -X Increase / reduction during financial year

±X ±X ±X

26. Income statement should be disclosed as follows:

Financial years

Financial years Expenses and losses

N N-1

Income and profits

N N-1 6.8.1 – Interest paid X X 7.8.1 – Interest received X X 6.8.2 – Amortizations of financial assets X X 7.8.2 – Income from immovable property X X 6.8.3 – Provision for financial investments

X X 7.8.3 – Dividends X X

6.8.4 – Exchange losses X X 7.8.4 – Exchange gains X X 6.8.5 – Discounts granted for prompt payment

X X 7.8.5 – Discounts received for prompt payment

X X

6.8.6 – Losses incurred on the sale of negotiable securities

X X 7.8.6 – Profits obtained on the sale of negotiable securities

X X

6.8.9 – Other expenses and financial losses

X X 7.8.9 – Other income and financial profit X X

Financial profits and losses ±X ±X X X x X 27. Statement of extraordinary profits and losses, should be disclosed as follows:

Financial years

Financial years Expenses and losses

N N-1

Income and profits

N N-1 6.9.1 – Losses in fixed assets X X 7.9.1 – Profits from fixed assets X X 6.9.2 – Losses in inventory X X 7.9.2 – Profits from inventory X X 6.9.3 – Non-recoverable credits X X 7.9.3 – Recovery of credits X X 6.9.4 – Donations X X 7.9.4 – Refunded taxes X X 6.9.5 – Fines and penalties X X 7.9.5 – Contractual penalty benefits X X 6.9.6 – Increases in amortizations and provisions

X X 7.9.6 – Reductions in amortizations and provisions

X X

6.9.7 – VAT adjustments, in favor of the State, based on final pro rata calculation

X X 7.9.7 – VAT adjustments, in favor of the taxpayer, based on final pro rata calculation

X X

6.9.8 – Corrections allocated to prior financial years

X X 7.9.8 – Corrections allocated to prior financial years

X X

6.9.9 – Other extraordinary expenses X X 7.9.9 – Other extraordinary income and X X


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and losses profits Extraordinary profits and losses ±X ±X X X X X 28. Information required in terms of legal terms and conditions. 29. Other relevant information.


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CHAPTER VI

Chart and Code of Accounts The accounts system has been established based on assessments of fundamental economic facts and criteria. The accounts are divided into ten classes, being:

Class 0 Suspense accounts

…………………………………………………… Class 1 Financial current asset accounts

1.1 Cash 1.2 Banks

1.2.1 Call deposits 1.2.2 Notice deposits 1.2.3 Fixed term deposits

1.3 Customers 1.3.1 Customers - current account 1.3.2 Customers – receivables

…………………………………………………… 1.3.8 Doubtful receivables 1.3.9 Customer advances

1.4 Debtor – the State 1.4.1 Income tax

1.4.1.1 Withholding tax 1.4.1.1.1 2nd category 1.4.1.1.2 3rd category 1.4.1.1.3 4th category 1.4.1.1.4 5th category

1.4.1.2 Provisional tax and special provisional tax 1.4.1.2.1 Provisional tax 1.4.1.2.2 Special provisional tax

1.4.1.3 Recoverable 1.4.1.4 Reimbursements requested

1.4.3 VAT, paid 1.4.3.1 Inventory 1.4.3.2 Fixed assets 1.4.3.3 Other goods and services

1.4.4 Deductible VAT 1.4.4.1 Inventory 1.4.4.2 Fixed assets 1.4.4.3 Other goods and services


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1.4.5 VAT corrections 1.4.5.1 Monthly, in favor of taxpayer 1.4.5.2 Annual, by final pro rata calculation

1.4.6 VAT recoverable 1.4.7 VAT reimbursements requested 1.4.9 Tax, contribution and other taxation adjustments

1.5 Members, shareholders or owners 1.5.1 Loans granted 1.5.2 Advances against profits 1.5.3 Attributed profits and losses 1.5.4 Available profits

…………………………………………………… 1.5.9 Other transactions

1.6 Other debtors 1.6.1 Staff

1.6.1.1 Advances to directors 1.6.1.2 Advances to employees

…………………………………………………… 1.6.1.8 Other transactions involving directors 1.6.1.9 Other transactions involving employees

1.6.2 Subsidiaries 1.6.2.1 Public entities 1.6.2.2 Private entities

…………………………………………………… 1.6.2.9 Other entities

1.6.3 Bond holders 1.6.9 Sundry debtors

1.7 Negotiable securities 1.7.1 Shares 1.7.2 Bonds and participation bonds 1.7.3 Government bonds

…………………………………………………… 1.7.8 Other securities 1.7.9 Other financial investments

1.8 Provisions 1.8 Provision for doubtful receivables

1.8.1.1 Customer credits 1.8.1.2 Debtor credits

1.8.2 Provision for negotiable securities 1.8.2.1 Shares 1.8.2.2 Bonds and participation bonds 1.8.2.3 Government bonds

…………………………………………………… 1.8.2.8 Other securities 1.8.2.9 Other financial investments

1.9. Increase in income and deferred costs 1.9.1. Increase in income


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1.9.1.1 Interest to be received ……………………………………………………

1.9.1.9 Other increases in income 1.9.2 Deferred costs

1.9.2.1 Discount in the issuing of bonds 1.9.2.2 Discount in the issuing of participation bonds 1.9.2.3 Exchange losses

1.9.2.3.1 Fixed assets under construction 1.9.2.3.2 Other

…………………………………………………… 1.9.2.9 Other deferred costs

Class 2 Inventory accounts

2.1 Purchases

2.1.2 Merchandise ……………………………………………………

2.1.6 Raw materials, auxiliaries and other materials 2.1.6.1 Raw materials 2.1.6.2 Auxiliaries 2.1.6.3 Other materials

2.1.6.3.1 Fuel and lubricants 2.1.6.3.2 Commercial packaging 2.1.6.3.3 Parts and spares

…………………………………………………… 2.1.6.3.9 Sundry materials

2.1.7 Returns of purchases 2.1.8 Purchase discounts and abatements

…………………………………………………… 2.2 Merchandise

…………………………………………………… 2.2.5 Merchandise in transit 2.2.6 Merchandise under the control of third parties

…………………………………………………… 2.3 Finished and unfinished products

…………………………………………………… 2.3.6 Finished products under the control of third parties

…………………………………………………… 2.4 By-products, waste, residues and scrap

2.4.1 By-products 2.4.6 Waste, residues and scrap

2.5 Products or services in progress 2.6 Raw materials, auxiliaries and other materials

2.6.1 Raw materials 2.6.2 Auxiliaries 2.6.3 Other materials


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2.6.3.1 Fuel and lubricants 2.6.3.2 Commercial packaging 2.6.3.3 Parts and spares

…………………………………………………… 2.6.3.9 Sundry materials

2.6.5 Raw materials, auxiliaries and other materials in transit 2.8 Adjustment of inventory

2.8.2 Merchandise 2.8.3 Finished and unfinished products 2.8.4 By-products, waste, residues and scrap 2.8.5 Products or services in progress 2.8.6 Raw materials, auxiliaries and other materials

2.9 Provision for depreciation of inventory 2.9.2 Merchandise 2.9.3 Finished and unfinished products 2.9.4 By-products, waste, residues and scrap 2.9.5 Products or services in progress 2.9.6 Raw materials, auxiliaries and other materials

Class 3 Fixed asset accounts

3.1 Financial assets

3.1.1 Subsidiaries 3.1.2 Bonds and participation bonds 3.1.3 Investments in immovable property 3.1.4 Other financial assets

3.1.4.1 Government bonds 3.1.4.2 Other securities

…………………………………………………… 3.2 Tangible fixed assets

3.2.1 Constructions 3.2.1.1 Industrial buildings 3.2.1.2 Administrative and commercial buildings 3.2.1.3 Buildings for residential and other business purposes

…………………………………………………… 3.2.1.6 Communication routes and related construction

…………………………………………………… 3.2.2 Basic equipment 3.2.3 Furniture and office equipment 3.2.4 Transport equipment 3.2.5 Containers 3.2.6 Tools and utensils

…………………………………………………… 3.2.9 Other tangible fixed assets

3.3 Intangible fixed assets 3.3.1 Costs of acquisition or expansion


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3.3.1.1 Business establishment costs 3.3.1.2 Increase of capital 3.3.1.3 Industrial studies and projects 3.3.1.4 Commercial studies and projects

…………………………………………………… 3.3.2 Costs of research and development 3.3.3 Industrial property and other rights 3.3.4 Goodwill

…………………………………………………… 3.4 Fixed assets under construction

3.4.1 Financial assets 3.4.2 Tangible fixed assets 3.4.3 Intangible fixed assets

3.8 Amortizations 3.8.1 Of financial assets

3.8.1.3 Investments in immovable property 3.8.2 Of tangible fixed assets

3.8.2.1 Constructions 3.8.2.2 Basic equipment 3.8.2.3 Furniture and office equipment 3.8.2.4 Transport equipment 3.8.2.5 Containers 3.8.2.6 Tools and utensils

…………………………………………………… 3.8.2.9 Other tangible fixed assets

3.8.3 Intangible fixed assets 3.8.3.1 Costs of constitution or expansion 3.8.3.2 Costs of research and development 3.8.3.3 Industrial property and other rights 3.8.3.4 Goodwill

…………………………………………………… 3.9 Provision for financial assets

3.9.1 Subsidiaries 3.9.2 Bonds and participation bonds 3.9.4 Other financial assets

Class 4 Creditor accounts

4.1 Suppliers

4.1.1 Suppliers - current account 4.1.2 Suppliers – bills payable

…………………………………………………… 4.1.9 Advances to suppliers

4.2 Loans received 4.2.1 Bank loans

4.2.1.1 Short term


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4.2.1.2 Medium and long term 4.2.3 Debentures

4.2.3.1 Convertible 4.2.3.2 Non-convertible

4.2.4 Participation bond loans ……………………………………………………

4.2.9 Other loans received 4.4 Creditor – the State

4.4.1 Income tax 4.4.2 Income tax – withholding tax

4.4.2.1 First category income 4.4.2.2 Second category income 4.4.2.3 Third category income 4.4.2.4 Fourth category income 4.4.2.5 Fifth category income

4.4.3 VAT assessed 4.4.3.1 General transactions 4.4.3.2 Own consumption and gratuitous transactions 4.4.3.3 Special transactions

4.4.4 VAT adjustments 4.4.4.1 Monthly, in favor of the State 4.4.4.2 Annual, based on final pro rata calculation

4.4.5 VAT computation 4.4.6 VAT - tax office assessments 4.4.7 VAT payable 4.4.8 Other taxes

4.4.8.1 Stamp duty 4.4.8.2 Municipal taxes

…………………………………………………… 4.4.9 INSS contributions

4.5 Creditors – members, shareholders or owners 4.5.1 Loans received 4.5.2 Advances against profits 4.5.3 Attributed profits and losses 4.5.4 Available profits

4.6 Other Creditors 4.6.1 Fixed asset suppliers

4.6.1.1 Fixed asset suppliers – current account 4.6.1.2 Fixed asset suppliers – bills to be paid 4.6.1.3 Fixed asset suppliers – advances

…………………………………………………… 4.6.1.9 Other transactions

4.6.2 Staff 4.6.2.1 Remuneration to be paid to directors 4.6.2.2 Remuneration to be paid to employees

…………………………………………………… 4.6.2.8 Other transactions involving directors


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4.6.2.9 Other transactions involving employees 4.6.3 Trade unions 4.6.4 Creditors by way of unpaid subscriptions 4.6.5 Bond holders 4.6.6 Consultants, assessors and intermediaries

…………………………………………………… 4.6.9 Sundry creditors

4.8 Provision for risks and costs 4.8.1 Judicial proceedings in progress 4.8.2 Work accidents and professional diseases 4.8.3 Taxes

…………………………………………………… 4.8.9 Other risks and costs

4.9 Increase in costs and deferred income 4.9.1 Increase in costs

4.9.1.1 Interest payable 4.9.1.2 Remuneration payable

…………………………………………………… 4.9.1.9 Other increases in costs

4.9.2 Deferred income 4.9.2.1 Premiums for the issuing of bonds 4.9.2.2 Premiums for the issuing of participation bonds 4.9.2.3 Exchange gains

4.9.2.3.1 On fixed assets under construction 4.9.2.3.2 Others

4.9.2.4 Subsidies for investments ……………………………………………………

4.9.2.9 Other deferred income Class 5 Capital accounts and owners equity 5.1 Capital 5.2 Own shares or quotas

5.2.1 Nominal value 5.2.2 Discounts and premiums

5.3 Supplementary payments 5.4 Premiums for the issuing of shares or quotas 5.5 Reserves

5.5.1 Revaluation reserves 5.5.1.1 Decree 13/88, of 11 November 5.5.1.2 Decree 33/93, of 30 December

…………………………………………………… 5.5.2 Legal reserves 5.5.3 Statutory reserves 5.5.4 Free reserves 5.5.5 Donations

……………………………………………………


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5.9 Accumulated profits and losses Class 6 Expense and loss accounts

6.1 Inventory, cost of sales or consumed

6.1.2 Of merchandise 6.1.6 Of raw materials, auxiliaries and other materials

6.1.6.1 Raw materials 6.1.6.2 Auxiliaries 6.1.6.3 Other materials

…………………………………………………… 6.2 Staff costs

6.2.1 Remuneration of directors 6.2.2 Employees´ remuneration 6.2.3 Costs of remuneration 6.2.4 Pensions 6.2.5 Subsistence allowances 6.2.6 Compensation 6.2.7 Insurance for work accidents and professional diseases 6.2.8 Costs of social action

…………………………………………………… 6.2.9 Other staff costs

6.3 Third party supplies and services 6.3.1 Subcontracts 6.3.2 Supplies and services

6.3.2.1.1 Water 6.3.2.1.2 Electricity 6.3.2.1.3 Fuels

6.3.2.1.3.1 Gasoline 6.3.2.1.3.2 Other fuels 6.3.2.1.3.3 Lubricants

6.3.2.1.4 Rapidly deteriorating tools and utensils 6.3.2.1.5 Maintenance and repair materials 6.3.2.1.6 Office materials 6.3.2.1.7 Books and technical documentation 6.3.2.1.8 Giveaways 6.3.2.1.9 …………………………………………………… 6.3.2.2.0 …………………………………………………… 6.3.2.2.1 Maintenance and repair 6.3.2.2.2 Goods transport 6.3.2.2.3 Staff transport 6.3.2.2.4 Communications 6.3.2.2.5 Honorariums 6.3.2.2.6 Commissions paid to intermediaries 6.3.2.2.7 Advertising and propaganda 6.3.2.2.8 Trips and accommodation


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6.3.2.2.9 Costs of representation 6.3.2.3.0 …………………………………………………… 6.3.2.3.1 Court and notarial fees 6.3.2.3.2 Rental and hire 6.3.2.3.3 Insurances 6.3.2.3.4 Royalties 6.3.2.3.5 Cleaning, hygiene and comfort 6.3.2.3.6 Security 6.3.2.3.7 Specialized work

…………………………………………………… 6.3.2.9.0 ……………………………………………………

…………………………………………………… 6.3.2.9.9 Other supplies and services

6.4 Taxes and fees 6.4.1 Customs duties 6.4.2 Value Added Tax 6.4.3 Stamp duty 6.4.4 Vehicle taxes 6.4.5 Municipal taxes

…………………………………………………… 6.5 Financial year amortizations

6.5.2 Tangible fixed assets 6.5.2.1 Constructions 6.5.2.2 Basic equipment 6.5.2.3 Furniture and office equipment 6.5.2.4 Transport equipment 6.5.2.5 Containers 6.5.2.6 Tools and utensils

…………………………………………………… 6.5.2.9 Other tangible fixed assets

6.5.3 Intangible fixed assets 6.5.3.1 Costs of constitution or expansion 6.5.3.2 Costs of research and development 6.5.3.3 Industrial property and other rights 6.5.3.4 Goodwill

…………………………………………………… 6.6 Financial year provision

6.6.1 For doubtful receivables 6.6.1.1 Customer credits 6.6.1.2 Debtor credits

6.6.2 For risks and charges 6.6.2.1 Judicial proceedings in progress 6.6.2.2 Work accidents and professional diseases 6.6.2.3 Taxes 6.6.2.4 Pensions

…………………………………………………… 6.6.2.9 Other risks and charges


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6.6.3 For trading stock depreciation 6.6.3.2 Merchandise 6.6.3.3 Finished and unfinished products 6.6.3.4 By-products, waste, residues and scrap 6.6.3.5 Products or services in progress 6.6.3.6 Raw materials, auxiliaries and other materials

6.7 Other costs and operating losses 6.7.1 Costs related to industrial property and other rights 6.7.2 Contributions 6.7.3 Confidential costs 6.7.4 Trading stock offers and samples 6.7.5 Social responsibility programmes

…………………………………………………… 6.8 Financial expenses and losses

6.8.1 Interest paid 6.8.1.1 Bank loans 6.8.1.2 Debentures and participation bond loans 6.8.1.3 Member, shareholder and owner loans 6.8.1.4 Other loans 6.8.1.5 Discounted securities 6.8.1.6 Compensatory and mora interest

…………………………………………………… 6.8.1.9 Other interest

6.8.2 Amortizations of financial assets 6.8.2.3 Investments in immovable property

6.8.3 Provision for negotiable securities and financial assets 6.8.3.1 Negotiable securities

6.8.3.1.1 Shares ……………………………………………………

6.8.3.1.9 Other financial investments 6.8.3.2 Shareholdings 6.8.3.3 Bonds and participation bonds 6.8.3.4 Other financial assets

6.8.4 Exchange losses 6.8.5 Discounts for prompt payment granted 6.8.6 Losses in the sale of negotiable securities 6.8.8 Other costs and financial losses

6.8.8.1 Bank charges ……………………………………………………

6.8.8.9 Sundries, not specified 6.8.9 ……………………………………………………

6.9 Extraordinary expenses and losses 6.9.1 Losses in fixed assets

6.9.1.1 Sale of financial assets 6.9.1.2 Sale of tangible fixed assets 6.9.1.3 Sale of intangible fixed assets 6.9.1.4 Scrapping


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6.9.1.5 Damage-causing events ……………………………………………………

6.9.2 Losses in inventory 6.9.2.1 Damage-causing events 6.9.2.2 Shortfalls

…………………………………………………… 6.9.2.9 Others

6.9.3 Non-recoverable credits 6.9.4 Donations 6.9.5 Fines and penalties 6.9.6 Increases in amortizations and provisions

6.9.6.1 Amortizations 6.9.6.2 Provisions

6.9.7 VAT adjustments in favor of the State, based on final pro rata calculation

6.9.8 Corrections allocated to prior financial years 6.9.9 Other extraordinary expenses and losses

Class 7 Income and profit accounts

7.1 Sales of inventory 7.1.1 Merchandise 7.1.2 Finished and unfinished products 7.1.3 By-products, waste, residues and scrap 7.1.4 VAT on VAT-inclusive sales 7.1.5 Sales returns 7.1.6 Discounts and abatements

…………………………………………………… 7.2 Sales of services

…………………………………………………… 7.2.4 VAT on VAT-inclusive sales of services 7.2.6 Discounts and abatements

…………………………………………………… 7.3 Investments realized by the business itself

7.3.1 Financial assets 7.3.2 Tangible fixed assets 7.3.3 Intangible fixed assets 7.3.4 Fixed assets under construction

7.4 Subsidies 7.4.1 State, and other public entities

…………………………………………………… 7.4.9 Other entities

7.5 Supplementary income 7.5.1 Business services 7.5.2 Hire of equipment 7.5.3 Sale of electricity


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7.5.4 Studies, projects, research and investigation 7.5.5 Technical assistance 7.5.6 Royalties 7.5.7 Corporate functions exercised in other businesses 7.5.8 …………………………………………………… 7.5.9 Other supplementary income inherent to increased

value 7.6 Other income and operating profits

7.6.1 Industrial property rights ……………………………………………………

7.6.9 Other income, excluding added value 7.8 Financial income and profits

7.8.1 Interest received 7.8.1.1 Bank deposits 7.8.1.2 Loans 7.8.1.3 Bonds and participation bonds 7.8.1.4 Other financial investments

…………………………………………………… 7.8.1.9 Other interest

7.8.2 Immovable property income 7.8.3 Dividends 7.8.4 Exchange gains 7.8.5 Discounts for prompt payment obtained 7.8.6 Profits from the sale of negotiable securities

…………………………………………………… 7.8.9 Other financial income and profits

7.9 Extraordinary income and profits 7.9.1 Profits from fixed assets

7.9.1.1 Sale of financial assets 7.9.1.2 Sale of tangible fixed assets 7.9.1.3 Sale of intangible fixed assets 7.9.1.4 Insurance claims

…………………………………………………… 7.9.2 Profits from material current assets

7.9.2.1 Insurance claims 7.9.2.2 Surpluses

…………………………………………………… 7.9.2.9 Others

7.9.3 Recouped credits 7.9.4 Refunded taxes 7.9.5 Contractual penalty benefits 7.9.6 Reductions in amortizations and provisions

7.9.6.1 Amortizations 7.9.6.2 Provisions

7.9.7 VAT adjustments, in favor of the taxpayer, based on final pro rata calculation

7.9.8 Corrections imputable to prior financial years


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7.9.9 Other extraordinary income and profits 7.9.9.1 Overestimated tax allowance 7.9.9.2 Subsidies for investments

…………………………………………………… Class 8 Profit and loss accounts

8.1 Operating profits and losses 8.2 Financial profits and losses 8.3 Current profits and losses 8.4 Extraordinary profits and losses 8.5 Income tax 8.8 Net profits and losses for the financial year 8.9 Interim dividends

Class 9

Analytical Accounts ………………………………………………………………

CHAPTER VII Terminology and operation of accounts

Class 1

Financial current assets accounts

Financial current assets consist of the monetary assets of a business, third party receivables, and negotiable securities which may be cashed in, in the short term. 1.1 - Cash Amounts held in cash or in cheque should be recorded in this account. 1.2 - Banks Includes the means of payment available to a business, by way of the operation of bank accounts. 1.3 - Customers Includes credit sales that flow from the sales of goods or of services, which make up the ordinary business activity of the business. 1.3.2 - Customers – receivables Includes customer debts represented by unmatured bills of exchange. 1.3.9 - Customer advances Records payments made to the business, to be offset against future supplies. These amounts should be transferred to account 1.3.1 – Customers - current account - when an invoice is issued in respect of goods transferred or services rendered.


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1.4 Debtor – The State Records situations in which the State is indebted to the company, on account of taxes which the business is entitled to recoup or be refunded in the future. 1.4.1.1- Withholding tax Records, as a debit, the withholding tax paid on the different categories of income earned by the business during the year, in contra-entry to the accounts relating to the income from which these taxes originated. At year-end, this account should be cleared via a credit entry, and the contra-entry to account 4.4.1 – income tax. 1.4.1.2- Provisional tax and special provisional tax Records, as a debit, and in contra-entry to accounts 1.1 – Cash, or 1.2 - Banks, the value of provisional payments and special provisional payments which are made by the business during the year. At year-end, this account should be cleared via a credit entry, and the contra-entry to 4.4.1 – income tax. 1.4.1.3- To be recouped Records the amount of the income tax credit, as at year-end, which will be transferred to the following year. 1.4.1.4 - Reimbursements requested Records the amount of the income tax credit, calculated at year end, and which a request for reimbursement has been submitted. 1.4.3 - VAT paid Discloses VAT paid in respect of all acquisitions of inventory, fixed assets, and other goods and services. It is advisable, but not mandatory, that this account be utilized in cases where the taxpayer does not have an integral right to deduct the VAT input which has been invoiced, or, whenever he performs transactions which grant him the right to a deduction alongside other transactions which do not grant him this right (pro rata method). If the taxpayer claims the VAT input on invoices paid, the taxpayer may used this account less interest. It should be debited in respect of all acquisitions made, divided into different subaccounts, in accordance with their origins. It should be credited in contra-entry to the corresponding subaccounts of account 1.4.4 – Deductible VAT, and the balance, when it exists, should be credited in contra-entry to the accounts in which the respective acquisitions are recorded, or to account 6.4.2 – Value Added Tax, except for the purchases of fixed assets, in which case the tax paid, which cannot be deducted, should affect the value of acquisition of the goods to which it relates. 1.4.4 – Deductible VAT Records the amount of VAT which has been paid, which, given the nature of the transactions connected to the activities performed, may be deducted on the terms set out in articles 17 and 21 of the VAT Code. It should be debited with the amount of VAT relating to acquisitions, and also in contra-entry to account 1.4.3 – VAT paid, in the cases in which the taxpayer makes use of this account. It should be credited by the transfer of the balance relating to the tax period, against a debit in account 4.4.5 – VAT computation. 1.4.5 - VAT adjustments Records those tax corrections in favor of the taxpayer, listed in their respective subaccounts, and capable of being effected in the respective periodic declarations. The account 1.4.5.1 – Monthly, in favor of the taxpayer – should be debited, if the adjustments were motivated by an error in the computation of the tax, customer returns, reductions, contract rescissions and annulments on the part of customers, non-recoverable credits, etc., in contra-entry to the accounts which gave rise to the rectification. It should be credited in contra-entry to account 4.4.5 – VAT computation.


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1.4.6 – VAT recoverable Records the amount of the tax credit owed by the State, at the end of the taxation period. This situation always arises when the amount of the tax in favor if the taxpayer exceeds the amount of the tax in favor of the State. It should be debited in contra-entry to account 4.4.5 – VAT computation, so as to transfer the balance in favor of the taxpayer found in this account at the end of the taxation period. It should be credited in contra-entry to account 1.4.7 – VAT reimbursements requested, if a reimbursement has been requested from the State, or 4.4.5 – VAT computation, if a credit for the following tax period has been opted for. 1.4.7 – VAT reimbursements requested Records the amount of State credits for which a request for reimbursement has been submitted. It should be debited in contra-entry to account 1.4.6 – VAT recoverable, and credited in contra-entry to accounts 1.1 – Cash or 1.2 - Banks, whenever this is reimbursed from public coffers. 1.5 – Debtors – members, shareholders or owners Records those credits which the business holds in respect of these entities, which do not result from transactions effected in the scope of its normal activity or from transactions related to fixed assets. 1.5.3 – Allocated profits and losses Records the profits of subsidiaries which, although having been allocated, have not yet been made available, or the covering of losses by subsidiaries, as a result of resolutions passed at the general meeting. It should be debited in contra-entry to account 7.8.3 – Dividends, at the time of allocation of profits not yet distributed to the business, or to account 8.8 – Net profits and losses for the financial year, if the loss was covered by members. It should be credited in contra-entry to account 1.5.4 – Available profits, when these are received. 1.5.4 – Available profits When profits are made available by subsidiaries, directly, or by the transfer of allocated profits, and there is a time difference between the moment of allocation and their being made available, the profits receivable should be reflected in this account. This account should be debited, in the first instance, in contra-entry to account 7.8.3 – Dividends, and, in the second instance, in contra-entry to account 1.5.3 – allocated profits and losses. It should be credited in contra-entry to accounts 1.1 – Cash, or 1.2 – Banks, when these are received. 1.6.2 – Capital subscribers Records the capital subscription made by the respective holders of equity, the payment for which will be made at a later date. This account should be debited at the time of subscription, in contra-entry to account 5.1 – capital. Thereafter, at the time of payment of capital by the respective equity holders, it should be credited in contra-entry to the accounts in which this payment is recorded. 1.6.3 – Bond-holders Records, initially, the subscription to loans in contra-entry to account 4.2.3 – Debentures. Records, thereafter, the payments made by bond-holders, in contra-entry to accounts 1.1 – Cash, or 1.2 - Banks. 1.6.9 – Sundry debtors Records, by name, the transactions flowing from the sales of fixed assets, subsidies allocated to the business, current loans or other debts, which cannot be incorporated into accounts 1.5 – debtors – members, shareholders or owners – and 1.6.2 – staff.


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1.7 – Negotiable securities Includes short term financial transactions, that is, in which the foreseeable time period is less than one year. This account should be debited in contra-entry to accounts 4.6.4 – creditors by way of unpaid subscriptions, 1.1 – Cash, or 1.2 – call deposits. 1.8.1 – Provision for doubtful receivables This account is intended for recording the risks relating to the non recovery of third-party receivables. This account should be credited in contra-entry to account 6.6.1 – Provisions of the financial year: for doubtful receivables, if the expense is ordinary or current, or 6.9.6.2 – Increases in amortizations and provisions: provisions, if of an extraordinary nature. It should be debited in contra-entry to account 7.9.6.2 – Reduction in amortizations and provisions: provisions, if the reallocation or annulment took place in a financial year different from that in which it was constituted, or to those accounts in which these were listed as expenses, if the annulment or reallocation takes place in the same financial year. 1.8.2 – Provision for negotiable securities Records the provision for impairment in value of negotiable securities. The impairment is the difference between the value for which negotiable securities were acquired, and the respective market value, when the market price is lower of the two values. This account should be credited in contra-entry to account 6.8.3.1 – Provision for negotiable securities and financial assets: negotiable securities. It should be debited in contra-entry to account 7.9.6.2 – Reduction in amortizations and provision: provision, when a reduction or annulment occurs. 1.9 – Increases in income and deferred costs This account is intended for recording expenses and income in the financial years to which they pertain. Included in these increases of income, are those income transactions which are accounted for the current year, but which will only be received and recognized during subsequent years, and in deferred costs, those which have been received during the current year, but which relate to subsequent years.

Class 2

Inventory accounts Inventory includes all assets held for sale in ordinary course of business, and include, depending on the organization of the business, purchases, as well as opening and closing inventories. 2.1 – Purchases Records the cost of acquisitions of inventory, intended for consumption or sale, this includes additional charges incurred in bringing these purchases to their place of storage. This account should usually be debited in contra-entry to accounts 1.1 – Cash, or 1.2 - Banks, and account 4.1 – Suppliers, depending on whether the acquisitions are paid for in cash, or on credit. This account should always balance with accounts 2.2 – Merchandise or 2.6 – Raw materials, auxiliaries or other materials, depending on whether goods are acquired for sale or for manufacture. 2.2 – Merchandise Goods intended for sale, without prior industrially processed.


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If the periodic inventory method is used, this account should be debited, at the beginning of the financial year, by the value of opening trading stock, and at the end of the year, by the net value of purchases made during the year, and also in contra-entry to account 2.8.2 – Adjustment of inventory, if the balance of this account is in debit. It should be credited, at the end of the year, in contra-entry to account 6.1.2 – Cost of inventory sold or consumed: merchandise, and account 2.8.2 – Adjustment of inventory: goods, if the balance of this account is in credit. The balance reflects the closing trading stock value. If a perpetual inventory method is used, this account should be debited, during the year, in contra-entry to account 2.1.2 – Purchases: merchandise, and credited, also during the year, in accordance with the prescribed accounting principles, in contra-entry to account 6.1.2 – cost of inventory sold or consumed: merchandise. The balance reflects the closing trading stock value. 2.3 – Finished and unfinished products Includes the principal goods produced by the business which are normally tradable, and those which, being usually used in manufacturing, may be considered sale items. 2.4 – By-products, waste, residues and scrap 2.4.1 – By-products Secondary goods produced together with principal goods. 2.4.6 – Waste, residues and scrap Residual goods flowing from the production process, and which may not be regarded as by-products. 2.5 – Products or services in progress Includes goods whose phase of manufacture does not allow for their sale or warehousing, and services which have not yet been completed. If the periodic inventory method is used, accounts 2.3 to 2.5 should be credited, at the end of the year, by the value of opening trading stock, in contra-entry to account 8.1 – Operating profits and losses. It should be debited, also at the end of the year, in contra-entry to account 9.1 – Operating profits and losses, the closing of trading stock value in that financial year. If a perpetual inventory method is used, far be it, during the year, the relationship between accounts 2.3 to 2.5 and the analytical accounting adopted, and, in the same way, the relationship between stock counts and accounting entries made must be used to determine the cost of production. At year-end, entries must be made in a way analogous to that previously described. 2.6 – Raw materials, auxiliaries and other materials 2.6.1 – Raw materials Goods which are materially incorporated into final products. 2.6.2 – Auxiliaries Goods used in the manufacturing process but which are not materially incorporated into the final products. 2.6.3 – Other materials Goods acquired or produced by the business, which, by their consumption, contribute to the development of the respective business activity. 2.6.3.2 – Commercial packaging Goods which are indispensable for the containment and transaction of goods or transacted products, which, by their nature, are not intended for continuous use.


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If the periodic inventory method is used, this account should be debited, at the commencement of the financial year, by the amount of opening trading stock values, and at the end of the financial year, by the net value of purchases made during the year, and also in contra-entry to account 2.8.2 – Adjustment of inventory, if the balance of this account is in debit. It should be credited, at the end of the year, in contra-entry to account 6.1.6 – cost of inventory sold or consumed: raw materials, auxiliaries and other materials, and to account 2.8.6 – adjustment of inventory: raw materials, auxiliaries and other materials, if the balance of this account is in credit. The balance reflects the closing trading stock value. If the perpetual inventory method is used, this account should be debited, during the course of the year, in contra-entry to account 2.1.6 – purchases: raw materials, auxiliaries and other materials, and credited, also during the course of the year, in accordance with prescribed accounting principles, in contra-entry to account 6.1.6 – cost of inventory sold or consumed: raw materials, auxiliaries and other materials, in accordance with the valuation criterion employed. The balance reflects the closing trading stock value. 2.8 – Adjustment of inventory This account is for recording variations in trading stock which are not related to purchases, sales or consumptions, namely, abnormal shortfalls or surpluses, or the addition or reduction of stock samples or giveaways. In the case of own trading stock giveaways, this account should be credited in contra-entry to 6.7.4 – Other operating expenses and losses: giveaways and samples of own trading stock. It should also be credited in contra-entry to account 6.9.2.2 – Losses in inventory: shortfalls, in the case of abnormal shortfalls. It should be debited in contra-entry to account 7.9.2.2 – Profits from inventory: surpluses, in the case of abnormal surpluses, or 7.9.2.9 – Profits from inventory: other. At the end of the financial year, the balances should be transferred to accounts 2.2 – Merchandise, 2.6 – Raw materials, auxiliaries and other materials, or 8.4 – Extraordinary profits and losses, in the case of products flowing from the production process. 2.9 – Provision of inventory Intended for the recording variations in the cost of acquisition or production, flowing from the application of valuation criteria set down for trading stock. It should be credited, in contra-entry to account 6.6.3 – Provisions for the financial year: for depreciation of trading stock, or account 6.9.6.2 – Increases in amortizations and Provision: provision, depending on whether these are normal or extraordinary. It should be debited, by its annulment or repositioning, in contra-entry to account 7.9.6.2 – Reduction in amortizations and provision: provision, when more than one financial year has passed since the date of its constitution, or to cost accounts 6.6.3 and 6.9.6.2, previously referred to, if effected in the same financial year.

Class 3 Fixed asset accounts

This class comprises of those goods acquired by the business and which are to be permanently retained by it, whether these are owned, or under a financial leasing regime.


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3.1 – Financial assets Comprises financial investments of a permanent nature, and investments in urban or rural immovable properties, which are not related to the operating activities of the business. 3.2 – Tangible fixed assets Comprises tools of trade, intended for operating activities, which are not intended to be sold or processed, and which are held for a period of more than one year. Improvements and large scale repairs which increase the cost of these tools of trade are also included. 3.2.1 - Constructions Includes buildings, and fixed installations in these buildings (water, electricity, etc.). Also includes other constructions, namely, roads, bridges, dams, irrigation, runways, railways, tunnels, wells, walls, silos, parks, canals, piers and docks. Buildings and installations which are in the public domain, developed in terms of a concession, should be reflected in their own subaccount. 3.2.2 – Basic equipment Includes the total of instruments, machines, installations and other goods, which are not tools or utensils recorded in account 3.2.6 – Tools and utensils, with which, or by means of which, products are extracted, processed or developed, or services are rendered. Items of basic equipment used in terms of a concession or financial leasing regime, should be reflected in separate subaccounts. Also includes costs paid for its adaptation or installation. If the nature of business is that of transport or administrative services, equipment which by its nature is related to these activities should be included here. 3.2.5 - Containers Includes objects intended to hold, or internally contain, goods acquired or produced by the business, or for the containment of goods transactioned by it, in the case of returnable commercial packaging which may be reused. 3.2.6 – Tools and utensils Includes those instruments which do not deteriorate rapidly, meaning those which have a use life greater than one year, and the use of which is intended to complement installed equipment, or to support the various services of the business. Accounts 3.2.1 to 3.2.9 should be debited in contra-entry to accounts 1.1 – Cash, or 1.2 - Banks, if the acquisition was in cash, or 4.6.1 – Suppliers of fixed assets, if the acquisition was on credit. It should be debited by the transfer of account 3.4 – Fixed assets under construction, or in contra-entry to account 5.5.5 – Reserves: donations. It should also be credited by their sale, or by compensation received for damage-causing events, in accounts 7.9.1.2 – Profits from fixed assets: sale of tangible fixed assets, or 7.9.1.4 – Profits from fixed assets: insurance claims, if the result was positive, or in account 6.9.1.2 – Losses in fixed assets: sale of tangible fixed assets, or 6.9.1.5 – Losses in fixed assets: damage-causing events, if the result was negative. In the case of scrapping, it should be credited in contra-entry to account 3.8.2 – Amortizations: of tangible fixed assets, and, if the accounts do not balance, the same should be transferred to 6.9.1.4 – Losses in fixed assets: abatements. 3.3 - Intangible fixed assets Comprises the intangible fixed assets of a business. 3.3.1 – Costs of constitution or expansion


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Comprises the costs of constitution and organization of the business, as well as those related to its expansion, namely, capital increases, studies and projects. 3.3.2 – Costs of research and development Comprises the costs related to original and intended research, with the objective of obtaining new scientific or technical knowledge, as well as those which result from the technological application of discoveries, prior to the production phase. 3.3.3 – Industrial property and other rights Comprises patents, trademarks, trading authorisations, licenses, concessions and author´s rights, as well as other analogous rights and contracts. 3.3.4 – Goodwill Comprises the value of the acquisition of a right to occupy and run an establishment. 3.4 – Fixed assets under construction Includes additions or improvements to, or substitutions of, fixed assets while these have not yet been completed. It should be debited in contra-entry to accounts 1.1 – Cash, 1.2 - Banks, 4.6.1 – Fixed asset suppliers, or to account 7.3 – Investments effected by the business itself, if these were produced internally. It should be credited in contra-entry to its transfer to account 3.1 – Financial assets, 3.2 – Tangible fixed assets or 3.3 – Intangible fixed assets, in accordance with its nature. 3.8 – Amortizations This account represents the loss in value of fixed assets which was accumulated during the course of various financial years, as a result of their useful life or degree of use, or of their becoming technologically obsolete. It should be credited, in contra-entry to account 6.5 – Amortizations of the financial year. It should be debited by the sale amount, or amount of compensation received for damage-causing events, in contra-entry to account 6.9.1 – Losses in fixed assets – or 7.9.1 – Profits from fixed assets, depending on whether the result is negative or positive. In the case of scrapping, it should also be debited in contra-entry to its own fixed asset accounts. 3.9 – Provision for financial assets This account is intended for recording of impairment in value, where the impairment is the difference between the cost of financial assets, and the corresponding market value, when the market value is lower of the two. This account should be credited in contra-entry to account 6.8.3.2 – Allowances for negotiable securities and financial assets: financial assets. It should be debited in contra-entry to account 7.9.6.2 – Reduction in amortizations and provisions: provisions, when a reduction or annulment occurs.

Class 4 Creditor accounts

4.1 – Suppliers Records credit transactions with sellers of goods or services, intended for ordinary business activities. 4.1.2 – Suppliers – bills payable Comprises supplier credits which are represented by letters of credit, or other credit securities. 4.1.9 – Advances to suppliers Records payments made by the business for future supplies. On receipt of the provider´s invoice for goods delivered or services rendered, amounts should be transferred to account 4.1.1 – Suppliers - current account.


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4.2 – Loans received Comprises loans contracted, with the exception of those set out in account 4.5 – Creditors – members, shareholders or owners. 4.4 - Creditor – the State Comprises those credits in favor of the State, in the nature of taxes and obligatory contributions for State-guaranteed social security. 4.4.1 – Income tax This account should be credited at the end of the financial year, in contra-entry to the estimate of tax to be paid, reflected in account 8.5 – Income tax. It should be debited, in contra-entry to account 1.4.1.1 – Income tax: withholding tax, 1.4.1.2 – Income tax: provisional tax, and special provisional tax, and 1.4.1.3 – Income tax: recoverable. If the balance is in credit, it should be debited, in contra-entry to account 1.1 – Cash, or 1.2 - Banks, at the time of payment of the tax to the State. If the balance is in debit, it should be credit in contra-entry to 1.4.1.3 – income tax: recoverable, or 1.4.1.4 – Income tax: reimbursements requested, depending on the option chosen. In the case of sole traders, the value of the tax to be taken into account shall be only that relating to business activities. 4.4.2 – Income tax: withholding tax Records, as a credit, the value of withholding tax incurred at the time of payment to the respective beneficiaries. It should be debited in contra-entry to account 1.1 – Cash, or account 1.2 - Banks, at the time of payment of these amounts to the State. 4.4.3 – VAT assessed Records the debit in favor of the State flowing from sales of goods or the rendering of services effected by the taxpayer to its customers, or by its acquisitions, if this is the case, provided that such transactions are subject to effective taxation. This account should be credited with the tax payable in terms of invoices or equivalent documents issued by the taxpayer, generally in account 4.4.3.1 – VAT assessed: general transactions. The use of the account 4.4.3.2 – VAT assessed: own consumption and gratuitous transactions - is reserved for those situations provided for in no. 3 of article 32 of the VAT Code. The operation of account 4.4.3.3 – VAT assessed: special transactions, shall be reserved for those situations contained in no. 3 of article 25 of the said VAT Code. This account shall be debited, so as to transfer the balance, in contra-entry to account 4.4.5 – VAT computation. 4.4.4 – VAT adjustments Records those tax corrections in favor of the State, divided into their respective subaccounts, and capable of being made in the respective periodic declarations. 4.4.4.1 – Monthly, in favor of the State Credit this account in contra-entry to those accounts from which these payments originated, in situations contrary to those indicated in the notes to account 1.4.5.1. Debit this account by transferring the balance to account 4.4.5 – VAT computation. 4.4.4.2 – Annual, based on final pro rata calculation Records the corrections arising from a final pro rata determination which is lower than that which was provisionally utilized during the year. It should be credited in contra-entry to account 6.9.7 – VAT adjustments in favor of the State based on final pro rata calculation, and should be debited thereafter in contra-entry to account 4.4.5 – VAT computation.


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4.4.5 – VAT computation Reveals the debtor or creditor status of the taxpayer, in respect of the State. It should be debited in contra-entry to account 1.4.4 – Deductible VAT, 1.4.5 – VAT adjustments, 1.4. – VAT recoverable, if applicable. It should be credited, in contra-entry to accounts 4.4.3 – payable VAT, and 4.4.4 – VAT adjustments. If the balance flowing from the previous transactions is in credit, this account should be debited in contra-entry to account 4.4.7 – VAT payable, and, if otherwise, this account should be credited in contra-entry to account 1.4.6 – VAT recoverable. 4.4.6 – VAT - tax office assessments Reveals the amount of payable tax calculated by the Fiscal Administration, in terms of articles 68 and 69 of the VAT code. It should be debited in contra-entry to account 4.4.7 – VAT payable. If the calculation is ineffective, the previous entry should be annulled. If it has been paid, this account should be regularized in accordance with the notes relating to the purpose of account 4.4.7 – VAT payable. 4.4.7 – VAT payable Reveals the tax amount to be paid to the State by the taxpayer. It should be credited in contra-entry to accounts 4.4.5 – VAT computation, or 4.4.6 – VAT - Tax office assessments, by the unofficially calculated amounts. It should be debited, in contra-entry to accounts 1.1 – Cash, or 1.2 - Banks, as per the payment effected, and to account 4.4.6 – VAT - Tax office assessments. If the unofficially calculated amount has been paid, this account should be regularized, after an accounting verification of the tax to be paid during the respective tax period, by way of an annulment of the corresponding value recorded in account 4.4.6 – VAT - tax office assessments. 4.4.8.1 – Stamp duty Records, as a credit, and in contra-entry to account 6.4.3 – Taxes and fees: stamp duty, or to the entity liable to pay the tax, the value of the calculated stamp duty. It should be debited, in contra-entry to account 1.1 – Cash, or 1.2 - Banks, when this is paid to the State. 4.5 – Creditors – members, shareholders or owners Records the transactions concluded with equity holders, which do not result from transactions of inventory, or fixed assets. 4.6.1 – Fixed asset suppliers Records transactions concluded with sellers of goods or services intended for fixed assets. 4.6.2 – Staff 4.6.2.1 – Remuneration to be paid to directors 4.6.2.2 – Remuneration to be paid to employees For the processing of wages, salaries and other remuneration relating to the month in question: subaccounts 6.2 – Staff costs should be debited, in contra-entry to 4.6.2.1 or 4.6.2.2, by the net values to be paid, and also to accounts 4.4.2.1 – Income tax – withholding tax: first category income, 4.4.9 – INSS contributions, and 4.6.3 – Trade unions, as well as to the respective subaccounts of 1.6.1 – Staff, if applicable. For the processing of costs of remuneration payable by the employer: account 6.2.3 – Staff costs – costs of remuneration should be debited, in contra-entry to 4.4.9 – Creditor – the State and other public entities – INSS contributions.


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For payments to staff and other entities: the respective accounts previously referred to should be debited, as contra-entries to account 1.1 – Cash or 1.2 - Banks. 4.6.4 – Creditors by way of unpaid subscriptions This account should be credited by the value of subscriptions for quotas, shares, bonds and other securities, in contra-entry to the respective financial investment accounts. It should be debited in respect of payment, by crediting accounts 1.1 – Cash or 1.2 - Banks. 4.8 – Provision for risks and costs This account serves for the recording of liabilities flowing from risks in situations set out therein, when their occurrence is probable. 4.9 – Increase in costs and deferred income This account is intended for the recordal of costs and income in the financial years to which these relate. Cost increases should include costs relating to the financial year in progress, but which will only be paid and accounted for as such in subsequent years, and deferred payments should include income accounted for in the financial year in progress, but which relates to subsequent years.

Class 5 Capital accounts and owners equity

5.1 – Capital Intended for the recognition of the nominal capital value subscribed to by the businesses shareholders. In the case of sole traders, this account records the initial capital that is acquired, and also financial transactions with the owner. It also serves for the recordal of the capital of co-operatives. 5.2 – Own shares or quotas Account 5.2.1 – Nominal value should be debited with the nominal value of own shares or quotas acquired, and the difference between the cost of acquisition and the nominal value must be recorded in account 5.2.2 – Discounts and premiums. Thereafter, if own shares or quotas are sold, account 5.2.1 – Nominal value should be credited with the nominal value, and account 5.2.2 – Discounts and premiums, with the difference between the sale price and the nominal value. At the same time, the necessary adjustments should be made to account 5.2.2, in contra-entry to reserves, so that this comes to reflect the discounts and premiums relating to own shares or quotas which remain the property of the company. 5.3 – Supplementary payments Intended for recording of payments of this nature by quota-holders, in terms of the Commercial Code. 5.4 – Premiums for the issuing of shares or quotas Records the difference between the issue value of shares or quotas subscribed to, and their nominal values. Records as a credit, the difference between the value of the subscription and the nominal value, when the second is lower than the first, in contra-entry to account 1.6.2 – capital subscriptions. It should be debited in contra-entry to account 5.1 – capital, when its value is incorporated into the capital of the business. 5.5.1 – Revaluation reserves Intended for recording of contra-entries to monetary adjustments to tangible fixed assets.


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5.5.2 – Legal reserves Intended for recording of reserves required by law. 5.5.5 – Donations Intended for recording of donations made to the business. 5.9 – Accumulated profits and losses Serves as contra-entry to a resolution regarding the covering of losses, or the application of net profits from the previous year. It should be debited in contra-entry to account 8.8 - Net profits and losses for the financial year, if this was negative, by transfer of the balance of account 8.9 – Interim dividends, and by the application of positive earnings results, in accordance with the resolution taken. It should be credited in contra-entry to account 8.8 – Net profits and losses for the financial year, if these were positive, and by the resolutions which were taken regarding the covering of losses.

Class 6 Expense and loss accounts

6.1 Costs of inventory sold or consumed Serves as a contra-entry to the stock exits listed in it, which are sold or incorporated in the productive process. Entries should be made in respect of those stock exits which occurred during the year, if a perpetual inventory method was used, or only at the end of the year, if a periodic inventory method was used. 6.2.3 Costs of remuneration Costs incurred in respect of remuneration, which the employing entity was obliged to cover. 6.2.4 Pensions Includes those amounts regularly paid to employees who retain a relationship with the business, although they are not employed by it. 6.2.5 Subsistence allowances Comprises those pre-determined amounts paid to workers when travelling in the service of the business. 6.2.8 Cost of social action Socially useful payments, of an assisting nature, made to workers or their family members. 6.3.1 Subcontracts Work related to the productive process of the business, for which it subcontracts the services of other businesses, whether by formalized contractual arrangements, or otherwise, is included in the scope of this account. 6.3.2.1.3.1 - Petrol Records the value of petrol acquisitions, including the amount of tax paid and not deductible, in accordance with line b) of no. 1 of Article 19 of the VAT Code. 6.3.2.1.3.2 – Other fuels Records the value of fuel acquisitions, including taxes paid, in cases in which this is not deductible, in terms of line b) of no. 1 of Article 19 of the VAT Code. 6.3.2.1.3.3 - Lubricants Records the value of lubricant acquisitions, net of taxes paid. 6.3.2.1.3.4 – Rapidly deteriorating tools and utensils Records those acquisitions of tools and utensils with a use life, in normal conditions of use, of less than one year.


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6.3.2.2.1 – Maintenance and repair materials Incorporates those goods and services acquired and intended for the maintenance of various fixed assets which may not be considered to be “large repairs” because they do not increase the duration of value of those assets. 6.3.2.2.3 – Staff transport Records the cost of transport of the staff of the business to their workplace, when this is a permanent service, and is performed by third parties. 6.3.2.2.5 – Honorariums Records those funds paid to independent workers. 6.3.2.2.6 – Commissions paid to intermediaries Records those funds paid to entities which broker goods or services for their own account. 6.3.2.2.8 – Trips and accommodation Records costs for transport, food and accommodation away from the workplace, when not covered by subsistence allowances. 6.3.2.3.2 – Rental and hire Records amounts paid for the rental of immovable property, or for the hiring of equipment. It does not include rentals for goods used in terms of financial leases, but does include rentals paid for goods used in terms of operating leases. 6.3.2.3.3 – Insurances Records insurance premiums paid by the business, with the exception of those relating to staff, which must be included in account 6.2 – Staff Costs. 6.3.2.3.7 – Specialized work Records costs of the acquisition of technical services, namely, information technology services, laboratory analyses, printing, studies and reports. 6.4.2 – Value Added Tax Records taxes not arising from those situations recorded in no. 3 of Article 32 of the VAT Code, and the balance of account 1.4.3 – VAT paid, whenever the taxpayer opts to use it. 6.5 – Financial year amortizations Records depreciations in financial assets, except in those financial assets which are recorded in account 6.8.2 – Amortizations of financial assets. 6.6 – Financial year provisions Records, at the end of the financial year, the risk estimate in respect of the different types of operating cost provisions made. 6.7.4 – Stock offers and samples Records offers and samples of own stock, in contra-entry to account 2.8 – Adjustment of material current assets. 6.7.5 – Social responsibility programmes Socially useful payments flowing from contracts concluded with the State. 6.8.4 – Exchange Losses Records exchange losses related to the ordinary course of the business and to the financing of fixed assets, and must observe the rules set out in chapter IV – Valuation Criteria. 6.8.6 – Losses in the sale of negotiable securities Records losses incurred in the sale of short term negotiable securities.


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It should be debited in contra-entry to account 1.7 – Negotiable securities, and credited, by the product of the sale, in contra-entry to accounts 1.1 – Cash, and 1.2 - Banks, or 1.6.9 – Sundry Debtors. 6.9.1 – Losses in fixed assets Records those losses incurred in the sale, damage or scrapping of fixed assets. It should be debited in contra-entry to accounts 3.1 – Financial assets, 3.2 – Tangible fixed assets, or 3.3 – Intangible fixed assets, by the cost of the fixed assets sold or damaged. It should be credited by the value of the sale or the compensation received, in contra-entry to accounts 1.1 – Cash, 1.2 - Banks or 1.6.9 – Sundry debtors, and also to account 3.8 – Amortizations. Record, also as a debit, in contra-entry to account 3.2 – tangible fixed assets, the part of the value of the goods which is not the object of amortization, in the case of goods to be scrapped. 6.9.2 – Losses in inventory Record those losses incurred in inventory, flowing from damage, abnormal shortfalls, or analogous situations. It should be debited for the cost of the inventory, in contra-entry to account 2.8 – Adjustment in inventory. In the case of damage-causing events, from which a loss in inventory results, the value of compensation shall be credited in contra-entry to accounts 1.1 – Cash, 1.2 - Banks or 1.6.9 – Sundry debtors. 6.9.6 – Increases in amortizations and provisions “Increase in amortizations” records the extraordinary amortization of those fixed assets which, at the date of the balance sheet, have a value less than that recorded in the accounts, when it is foreseeable that the reduction in this value will be permanent. It should be debited in contra-entry to 3.8 – Amortizations. “Increase in provisions” records, in a global manner, at the end of the financial year, the positive variation in the risk estimate for the different types of provisions in two consecutive periods, in the cases in which the cost should be considered to be extraordinary. It should be debited, in contra-entry to accounts 1.8 – Provisions, 2.9 – Provisions for inventory, 3.9 – Provisions for financial assets, or 4.8 – Provision for risks and charges, depending on the nature of the provision. 6.9.7 – VAT adjustments in favor of the State, based on final pro rata calculation Records, at the end of the year, the value of corrections to be made because of a diminution of the final percentage of deduction, relative to that provisionally used. It should be debited in contra-entry to account 4.4.4.2 – VAT adjustments: annual, by final pro rata calculation. 6.9.8 – Corrections imputable to prior financial years Losses suffered during the financial year, but which originated in prior financial years.

Class 7 Income and profit accounts

7.1 – Sales of inventory Records the sale of goods included in the ordinary course of the business. 7.1.4 – VAT on VAT-inclusive sales Records the amount of VAT which should be deducted from the value of sales, which, during the relevant period, were recorded as VAT-inclusive. 7.2 – Sales of services


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Records that work done, and those services performed, connected to the goals or objectives of the business. 7.2.4 – VAT on vat-inclusive sales of services Records the amount of VAT which should be deducted from the value of services performed which, during the relevant period, were recorded as VAT-inclusive. 7.3 – Investments made by the business itself Investments made by the business, and directly administered by it, by investment of its own funds, or funds acquired for this purpose, and which comprise fixed assets of the business. 7.4 – Subsidies Amounts granted to the business, relating to the financial year in question, intended to offset costs or income. 7.5 – Supplementary income Records that income derived from added value, flowing from activities which are not themselves the main objects of the business. 7.6 – Other operating income and profits Records that income, not derived from added value, flowing from activities which are not themselves the main objects of the business. 7.8.4 – Exchange gains Records those exchange gains related to principal trading activities, and to the financing of fixed assets, and must observe the rules set out in IV – Valuation Criteria. 7.8.6 – Gains in the sale of negotiable securities Records those profits realized in the sale of short term negotiable securities. It should be debited, in contra-entry to account 1.7 – negotiable securities, and credited, by the sale product, in contra-entry to accounts 1.1 - Cash, 1.2 - Banks, or 1.6.8 – Sundry debtors. 7.9.1 – Profits from the sale of, and insurance claims in respect of, fixed assets Records the profit realized in the sale of, or insurance claims in respect of, fixed assets. It should be debited in contra-entry to accounts 3.1 – Financial assets, 3.2 – Tangible fixed assets, or 3.3 – Intangible fixed assets, by the cost of the fixed assets sold or damaged. It should be credited, by the value of the sale or compensation received, in contra-entry to accounts 1.1 – Cash, 1.2 - Banks or 1.6.9 – Sundry debtors, relating to the value of the compensation, and also to account 3.8 – Amortizations. 7.9.2 – Profits from inventory Records those profits from inventory arising from insurance claims, abnormal profits or analogous situations. It should be debited, in the case of insurance claims, by the cost of material current assets, when the insurance claims against inventory result in a profit, in contra-entry to account 2.8 – Adjustments of inventory – and credited in contra-entry to accounts 1.1 – Cash, 1.2 - Banks or 1.6.9 – Sundry debtors. When abnormal profits or other profits occur, it should be credited in contra-entry to account 2.8 – Adjustments in inventory. 7.9.6 – Reductions in amortizations and provisions “Reduction in amortizations” records the diminution or annulment or amortizations of fixed assets previously effected, which, at the date of the balance sheet, are considered to have been unnecessary. It should be credited in contra-entry to account 3.8 – Amortizations.


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“Reduction in provisions” records, in a global manner, at the end of the financial year, the negative variation in the risk estimates for different types of provisions in two consecutive periods, whether this is operating, financial or extraordinary. It should be credited in contra-entry to accounts 1.8 – Provisions, 2.9 – Provisions for stock depreciations, 3.9 – Provision for financial assets, or 4.8 – Provision for other risks and costs, depending on the nature of the provision. 7.9.7 – VAT adjustments in favor of the taxpayer, by final pro rata calculation Records, at the end of the year the value of corrections to be made because of an increase in the final percentage of deduction, relative to that provisionally used. It should be credited in contra-entry to account 1.4.5.2 – VAT adjustments: annual, by final pro rata calculation. 7.9.8 – Corrections imputable to prior financial years Profits acquired during the course of the financial year, but which originated in prior financial years.

Class 8

Profit and loss accounts

8.1 – Operating profits and losses

Intended to serve in contra-entry, at the end of the year, to the costs and expenses posted to accounts 6.1 to 6.7 and 7.1 to 7.6, as well to the variation in production.

8.2 - Financial profits and losses

To be used in contra-entry to the balances of accounts 6.8 and 7.8

8.3 - Current profits and losses

Combines the balances of accounts 8.1 and 8.2

8.4 - Extraordinary profits and losses

To be used in contra-entry to the balances of accounts 6.9 and 7.9.

8.5 - Income tax

Reflects the amount of tax which is expected to be levied on obtained profits, in contra-entry to account 4.4.1 – Creditor – the State: Income tax.

8.8 - Net profits and losses of the financial year

Combines, by transfer, the balance of the previous accounts.

8.9 - Interim dividends

Records the value of profits attributed during the year by companies, in accordance with legal and statutory terms, as an advance against the profits for that financial year in which they were attributed.


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It should be debited in contra-entry to account 1.5.2: Debtors: members, shareholders or owners: advances against profits, at the moment of allocation. At the beginning of the following year, It should be credited in contra-entry to account 5.9 – accumulated profits.


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BALANCE SHEET

FINANCIAL YEARS FINANCIAL YEARS N N-1 N N-1

ASSET

AB AP AL AL

CAPITAL, OWNERS EQUITY AND LIABILITIES

3 Fixed assets 5 Capital and Owners equity 3.3 Intangible fixed assets 5.1 Capital +X +X 3.3.1 – Costs of construction or of expansion X X X X 5.2 Own shares or quotas 3.3.2 – Costs of research and development X X X X 5.2.1 – Nominal value -X -X 3.3.3 – Industrial property and other rights X X X X 5.2.2 – Discounts and premiums ±X ±X 3.3.4 – Goodwill X X X X 5.3 Supplementary capital payments +X -X 3.4.3 Fixed assets under construction X X X X 5.4 Premiums for the issuing of shares or quotas +X +X

X X X X

3.2 Tangible fixed assets 5.5 Reserves 3.2.1 – Construction X X X X 5.5.1 – Revaluation reserves +X +X 3.2.2 – Basic equipment X X X X 5.5.2 – Legal reserves +X +X 3.2.3 – Furniture and office equipment X X X X 5.5.3 – Statutory reserves +X +X 3.2.4 –Transport equipment X X X X 5.5.4 – Free reserves +X +X 3.2.5 – Containers X X X X 5.5.5 – Donations +X +X 3.2.6 – Tools and utensils X X X X 5.9 Accumulated profits and losses ±X ±X 3.2.9 – Other tangible fixed assets X X X X Subtotal ±X ±X 3.4.2 Fixed assets under construction X X X X 8.8 Net profits and losses for the financial year ±X ±X

X X X X 8.9 Interim dividends -X -X

3.1 Financial assets Total of capital and owners equity ±X ±X 3.1.1 – Shareholdings X X X X 4 Liabilities: 3.1.2 – Bonds and participation bonds X X X X 4.8 Provisions for other risks and costs X X 3.1.3 – Investments in fixed assets X X X X 4.8.1 – Judicial proceedings underway X X 3.1.4 – Other financial assets X X X X 4.8.2 – Work accidents and professional diseases X X 3.1.5 – Fixed assets under construction X X X X 4.8.3 – Taxes X X

X X X X 4.8.9 – Other risks and costs X X

2 Inventory X X X X Medium and long term debts (a) X X 2.6 Raw materials, auxiliaries and other materials X X X X Short term debts: 2.5 Products or services in progress X X X X 4.2 Loans received X X 2.4 By-products, waste, residues and scrap X X X X 4.2.3 – Debentures X X 2.3 Finished and unfinished products X X X X 4.2.3.1 – Convertible X X 2.2 Merchandise X X X X 4.2.3.2 – Not convertible X X

X X X X 4.2.4 – Participation bond loans X X

1 Financial current assets 4.2.1 – Bank loans X X Medium and long term credits (a) 4.2.9 – Other loans obtained X X Short term credits 4.5 Creditors – members, shareholders or owners X X 1.3 Customers 4.1 Suppliers X X 1.3.1 – Customers – current account X X X X 4.1.1 – Suppliers – current account X X 1.3.2 – Customers – receivables X X X X 4.1.2 – Suppliers –bills payable X X 1.3.8 – Customers – doubtful receivables X X X X 4.6 Other creditors X X 4.1.9 Advances to suppliers X X X 4.6.1 – Fixed asset suppliers X X 4.6.1.3 Suppliers of fixed assets – advances 4.6.2 – Staff X X 1.4 Debtor – the State X X X X 4.6.3 – Trade unions X X 1.5 Debtors – Members, shareholders or owner X X X X 4.6.4 – Creditors by way of unpaid subscriptions X X 1.6 Other debtors 4.6.5 – Bondholders X X 1.6.1 – Staff X X X X 4.6.6 – Consultants, assessors and intermediaries X X 1.6.2 – Capital subscribers X X X X 4.6.8 – Sundry creditors X X 1.6.3 – Bondholders X X X X 1.3.9 Customer advances X X 1.6.9 – Sundry debtors X X X X 4.4 Creditor – the State X X 1.7 Negotiable securities 4.9 Increase in costs and deferred income X X 1.7.1 – Shares X X X X 4.9.1 – Increase in costs X X 1.7.2 – Bonds and participation bonds X X X X 4.9.2 – Deferred income X X 1.7.3 – Government bonds X X X X Total liabilities X X 1.7.8 – Other securities X X X X Total of capital, equity and

liabilities X X

1.7.9 – Other financial investments X X X X

X X X X

1.2 Banks X X X 1.1 Cash X X X

X X X X

1.9 Increase in income and deferred costs 1.9.1 – Increase in income X X X 1.9.2 – Deferred costs X X X

X X X

Total amortizations X Total provisions X

Total assets X X X X

Abbreviations:

AB – Gross Assets

AP – Amortizations and Provisions

AL – Net Assets


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(a) To be developed in accordance with accounts indicated as short term, considering predictions regarding the payment or enforcement of the debt, or part thereof, of a period of longer than one year.


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STATEMENT OF PROFITS AND LOSSES, BY THEIR NATURE

Financial Year Code of Accounts N N-1

6 Expense and loss accounts 6.1 Cost of inventory sold or consumed 6.1.2 – Merchandise X X 6.1.6 – Raw materials, auxiliaries and other materials X X Subtotal X X 6.2 Staff costs 6.2.1 – Remuneration paid to directors X X 6.2.2 – Remuneration paid to employees X X 6.2.3 – Costs of remuneration X X 6.2.4 – Pensions X X 6.2.5 – Subsistence allowances X X 6.2.6 – Compensation X X 6.2.7 – Work accident and professional disease insurance X X 6.2.8 – Costs of social action X X 6.2.9 – Other staff costs X X 6.3 Suppliers and third party services X X 6.3.1 – Subcontracts X X 6.3.2 – Supplies and services X X 6.4 Taxes and fees X X 6.5 Amortizations for the financial year of tangible and intangible fixed assets X X 6.6 Allowances for the financial year X X 6.7 Other operating expenses and losses X X Subtotal X X Total operating costs (A) X X 6.8 Financial expenses and losses (C) X X 6.9 Extraordinary expenses and losses (E) X X 8.5 Income tax X X Total costs (G) X X 8.8 Net profits and losses for the financial year ±X ±X

7 Income and Profits 7.1 Sales of inventory 7.1.1 – Merchandise X X 7.1.2 – Finished and unfinished products X X 7.2 Sales of services X X Variation in production ±X ±X 7.3 Investments made by the business itself X X 7.4 Subsidies X 7.5 Supplementary income X X 7.6 Other income and operating profits X X Total operating income (B) X X 7.8 Financial income and profits (D) X X 7.9 Extraordinary income or profits (F) X X Total income (H) X X

Synthesis: Operating profits and losses: (B-A) X X Financial profits and losses: (D-C) X X Extraordinary profits and losses: (F-E) X X Net profit / loss for the financial year: (H-G) X X

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