Ficha de revisão: Introduction to Accounting Standards and Norms

1. 📌 Essentials

• Normative evolution: mercantile → tax → EU adaptation → standards.
• Main norms: Ley 16/2007, Código de Comercio, RD 1514/2007, Ley 22/2015.
• Books of accounts: Diario + Inventories & Annual Accounts; legalize in Mercantile Registry.
• Formulation deadline: within 3 months after fiscal year-end.
• Financial statements: balance sheet, profit & loss, statement of changes in equity, cash flow, notes.
• Recognition criteria: probable future benefits and reliable measurement.
• Valuation methods: historical cost, fair value, net realizable value, present value.
• Core principles: accrual, consistency, prudence, materiality, no offsetting.
• Financial info must be prepared according to a codified chart of accounts.
• Financial statements are approved by the General Shareholders' Meeting and published in Mercantile Registry.
• Recognition of assets/liabilities occurs when benefits are probable and measurable.
• Income/expenses are recognized when realized or incurred.
• Inventory regularization at year-end ensures balance with physical stock.
• Inventory impairment must be recognized if net realizable value drops below cost.

2. 🧩 Key Structures & Components

• Normative Framework — sets legal and technical standards for accounting.
• Books of Accounts — Diario, Inventories, and Annual Accounts.
• Financial Statements — Balance Sheet, P&L, Statement of Changes, Cash Flow, Notes.
• Recognition Criteria — conditions for recording assets, liabilities, income, expenses.
• Valuation Methods — techniques for measuring asset/liability value.
• Principles — fundamental rules guiding accounting: accrual, prudence, materiality, consistency.
• Legal Bodies — Mercantile Registry, General Shareholders' Meeting, auditors.

3. 🔬 Functions, Mechanisms & Relationships

• Normative evolution guides the development of accounting standards over time.
• Books are the primary record-keeping tools, legalized in the Mercantile Registry.
• Financial statements are prepared based on recognized and measured items.
• Recognition depends on the probability of future benefits and measurement reliability.
• Valuation applies specific methods depending on asset/liability type.
• Principles ensure comparability, reliability, and prudence in financial reporting.
• Approval and publication ensure transparency and legal compliance.
• Recognition hierarchy: assets/liabilities → income/expenses, based on economic events.
• Inventory management involves regularization and impairment recognition.

4. 📊 Comparative Table

5. 🗂️ Hierarchical Diagram (ASCII)

Normative Framework
 ├─ Normative Evolution
 │    ├─ Mercantile Norms
 │    ├─ Tax Norms
 │    └─ EU & International Standards
 ├─ Norm Types
 │    ├─ Mercantile (General & Specific)
 │    ├─ Fiscal
 │    └─ Civil
 ├─ Current Norms
 │    ├─ Ley 16/2007
 │    ├─ Código de Comercio
 │    ├─ RD 1514/2007
 │    └─ Ley 22/2015
 ├─ Books & Formulation
 │    ├─ Diario + Inventories & Accounts
 │    ├─ 3 months to formulate
 │    ├─ 1 month to publish
 │    └─ Legalized in Mercantile Registry
 └─ Financial Statements
      ├─ Balance Sheet
      ├─ Profit & Loss
      ├─ Changes in Equity
      ├─ Cash Flow
      └─ Notes

6. ⚠️ High-Yield Pitfalls & Confusions

• Confusing recognition with measurement; recognition depends on probability and measurability.
• Mistaking valuation methods; e.g., using fair value when historical cost is required.
• Overlooking timing: assets/liabilities are recognized when benefits are probable and measurable, not necessarily cash flow.
• Ignoring inventory impairment rules; net realizable value must be checked at year-end.
• Misunderstanding principles: e.g., applying offsetting contrary to prudence or materiality.
• Assuming books are optional; they are legally mandatory and must be legalized.
• Confusing formulation deadline with publication deadline.
• Overlooking auditing and approval processes.
• Ignoring the importance of legalization in the Mercantile Registry.

7. ✅ Final Exam Checklist

• Understand the normative evolution of accounting standards.
• Identify main norms: Ley 16/2007, Código de Comercio, RD 1514/2007, Ley 22/2015.
• Know books of accounts: Diario + Inventories & Accounts, legalization process.
• Recall deadlines: 3 months for formulation, 1 month for publication.
• Be familiar with financial statements: balance sheet, P&L, cash flow, notes.
• Recognize recognition criteria: probable benefits, reliable measurement.
• Master valuation methods: historical cost, fair value, net realizable value, present value.
• Apply fundamental principles: accrual, prudence, materiality, consistency.
• Understand inventory management: regularization, impairment recognition.
• Know approval and publication procedures**.
• Comprehend hierarchical relationships between components.
• Be aware of common pitfalls: recognition timing, valuation errors, inventory issues.
• Ensure compliance with legal and normative requirements.

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