What is the General Accounting Plan or PGC?

The General Accounting Plan (PGC) is a text that includes the basic accounting rules applicable to all companies. This plan was born in 1973 as the first text of these characteristics. In 1990, the first reform of the General Accounting Plan took place when we entered the common European market. 

At that time, countries had to adapt their accounting standards established up to that time. The second and last reform was in 2008 when new regulations were incorporated that allowed more excellent adaptation and harmony with European restrictions. 

On November 16, 2007, Royal Decree 1514/2007 on accounting regulations for companies and Royal Decree 1515/2007 on the specific General Accounting Plan for SMEs were approved. With this reform, accounting is brought closer to the international one. The 2008 reform introduces changes at a terminological and conceptual level regarding valuation criteria, accounting principles and annual accounts.

Some of the criteria of this plan are the historical cost, the production cost, the price of the articles, the net value, the fair value or the current value. How does the 2018 general accounting plan work?

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In 2017, a reform of the General Accounting Plan was carried out that entailed a series of changes, highlighting some such as those companies that use the abbreviated model of the General Accounting Plan will be exempt from including the statement of changes in equity. 

The volume of data that must be presented in the abbreviated memory is reduced, and a ten-year amortization period is established for intangible assets; these are some of the changes contemplated within the reform of the General Accounting Plan of 2017. 

Parts that Make up the PGC of Accounts Tedesco

The General Accounting Plan comprises five parts, of which three are mandatory while the remaining two are voluntary. However, these last two are the most used by companies due to their two main advantages: ease of work and comparison of internal and market data. 

1. Conceptual Framework

It is the theoretical framework of accounting. It contains the bases and main concepts on which accounting is based. Some images are an economic reality, annual accounts, assets and liabilities or income. The definition of the terms helps to understand the rest of the General Chart of Accounts. 

2. Registration and Valuation Rules

This section contains 23 rules that explain the registration and assessment procedure. The first refers to the posting, and the second to the amount to make said record. 

3. Annual Accounts

This part explains how to present the Annual Accounts. That is the financial reports that collect the financial information of the company. It is compulsory to give the annual accounts once a year in the Mercantile Registry within a month from the time the General Meeting approves the company’s activity. 

For its part, the General Meeting will have six months to approve the annual accounts. The annual arrangements are made up of the following sections: Balance sheet Profit and loss account Statements of changes in equity Statement of cash flow Annual report. 

4. Table of Accounts Tedesco

This section emphasizes the list of ledger accounts. The PGC does not recommend using the Chart of Accounts about the company’s equity. This is one of the voluntary parts that companies can join, having the opportunity to create new accounts related to their needs. 

Some entities have an adapted chart of accounts, such as non-profit companies or cooperatives. Accounting Definitions and Relationships This part shows the use of the accounts registered in the chart of funds and the accounting operation of the graph. This last concept refers to when the accounts are charged and paid. 

This section is also voluntary. How does the General Plan affect SMEs? Specifically for SMEs, there is a simplified version called the General Accounting Plan for Small and Medium Enterprises or PGC for SMEs, which comprises five parts: -Conceptual framework of accounting. 

Standards of registration and valuation for Small and Medium Enterprises. Annual accounts. -Chart of accounts. -Definitions and accounting relationships.

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