General Accounting Plan (Spain)
The General Accounting Plan, known colloquially as PGC, is a legal text that includes the set of regulatory standards for accounting in Spanish companies.
It is an essential reference manual for all accountants, since it contains all the procedures to correctly record the transactions of a company in its accounting, definitions of accounting concepts and guidelines for preparing financial statements.
The main objective is to achieve accounting harmonization and for all companies to follow a similar methodology when presenting the annual accounts. This will allow a third party to know how to interpret a balance sheet or income statement of two different companies (what criteria have been used, what principles have they applied, how they have valued their stocks, how they have recorded their income, etc.).
Who should apply this regulation?
The rules established in the PGC must apply all companies regardless of their legal form. However, SMEs may choose to apply the General Accounting Plan for Small and Medium Enterprises (PGC PYMES).
What General Accounting Plan is in force in Spain?
The PGC has been modified several times since its inception. The first official one was published in 1973 and companies could apply it voluntarily. In 1990 the first mandatory was published, which was modified in 2007 and is the one that is currently in force. The changes have been aimed at adapting the PGC to European accounting regulations.
Structure of the General Accounting Plan (PGC)
The General Accounting Plan is structured in 5 parts with the following order:
- Accounting Conceptual Framework: It includes basic concepts (true image, valuation criteria, etc.) and the fundamental principles that a company must follow to prepare its financial statements.
- Registration and valuation rules: Indicates how any component of a company's balance sheet should be valued (fixed assets, inventories, transactions in foreign currency, grants, loans, etc.). You can check when an event should be recognized in accounting, how this event will be valued or for what amount a change in value should be recognized.
- Annual accounts: In this part the reader will be able to know which are the documents that make up the annual accounts and what information should be included in the report.
- Chart of accounts: It is the list of all existing accounts. It is distributed by groups from 1 to 9, generally having the following distribution: from 1 to 5 are balance sheet accounts, group 6 and 7 belong to the income statement and group 8 and 9 belong to equity.
- Definitions and accounting relationships: Explanation of how to use the accounts in the previous section.
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