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What is an Inventory and Annual Accounts Book?

What is an Inventory and Annual Accounts Book?

By Clara Cera

Published: 13 May 2025

The Inventory and Annual Accounts Book is one of the compulsory accounting books that all commercial companies must keep.

Beyond its compulsory nature, this book is essential to know the financial situation of a company.

In this article, we take a look at everything you need to know: what it is, how many parts it consists of and the regulations it must comply with.

Shall we get started? 👇


What is an Inventory and Annual Accounts Book?

The Inventory and Annual Accounts Book is an accounting document that gathers financial information of a company during a specific financial year (usually annual) and in relation to its:

  • Assets,
  • rights,
  • and obligations.

How is an Inventory and Annual Accounts Book made?

The Inventory and Annual Accounts Book is made up of four documents that show the economic reality from different perspectives and at different times.

So, what is the content of the Inventory and Annual Accounts Book? This book is made up of the following reports:

  1. Opening balance sheet,
  2. Trial balance,
  3. Closing inventory for the financial year,
  4. Annual Accounts.

Let's take a look at them in more detail!

1. Opening balance sheet

The opening balance sheet shows the detailed situation of a company at the beginning of the accounting year.

For this purpose, it takes into account all the company's assets and liabilities , based on the closing inventory of the previous financial year.

🔵 Example of opening balance sheet:

2. Trial balance sheets

In plural because it must be carried out at least every quarter of the accounting year.

Also known as the trial balance, it is responsible for recording and analysing the company's evolution through its accounting accounts. It shows the profit and loss for a specific period.

☝ ️ The trial balance draws information from the general ledger accounts, which are prepared on the basis of the company's income and expenditure.

🔵 Example of Trial Balance:

3. Closing inventory

The year-end inventory lists all assets, rights and obligations of the company at the end of the financial year.

☝️ It defines the closing stocks (assets), according to their quantity and value, and the liabilities (liabilities).

🔵 Example of the year-end inventory:

4. Annual Accounts

Finally, the purpose of the annual accounts is to show the financial position at the end of the accounting period, as well as the result for the year.

The Commercial Code makes it compulsory to draw up five financial statements:

  1. The Balance Sheet;
  2. the Income Statement (or Profit and Loss Statement);
  3. the Statement of Changes in Equity for the year (ECPN);
  4. the Cash Flow Statement (CFS);
  5. the Notes to the Financial Statements.

☝️ The General Accounting Plan details the regulations that companies must follow in order to draw up these documents, as well as some exceptions depending on the characteristics of the companies.

What is the function of an Inventory Book?

The Inventory and Annual Accounts Ledger provides information on the financial situation of an entity throughout the accounting year:

  • At the beginning,
  • during the course of the year,
  • at the end.

It is therefore a book of great importance as it allows the assets and liabilities of the company to be controlled at any time.

☝️ With good control of finances, it is easier to comply with legislation.

Legal aspects: obligations and regulations

As we have already mentioned, the Annual Accounts and Inventory Book is compulsory.

But is it for all companies and self-employed persons? The answer is: no, only for commercial companies.

According to the General Accounting Plan, these companies, in addition to keeping accounts, are obliged to have their accounting books legalised.

This means that they must submit the books to the Mercantile Register within four months of the end of the accounting year, either electronically or through the Provincial Mercantile Register.

☝️ Watch out for manners! Failure to comply with the regulations may result in penalties. The Inventory and Annual Accounts Book must be:

  • Clear,
  • chronological,
  • without spaces or erasures,
  • without abbreviations or symbols of confusing interpretation.

If you walk with others, you'll go further

It is well known that bookkeeping can be a tedious task. However, when the law requires it, there are no excuses: it has to be done!

In that sense, there are tools or applications that can help you keep your accounts up to date without too much effort.

Having an accounting software is useful to automate multiple processes and create different reports that allow you to analyse the financial reality.

Would you like to check it out?

Article translated from Spanish