The balance sheet is a fundamental document that reflects a company’s financial standing at a specific date. It shows what the company owns (assets) and how those assets are funded (equity and liabilities). A well-prepared balance sheet not only ensures transparency but also supports sound managerial decision-making.
In Moldova, where both National Accounting Standards (NAS) and International Financial Reporting Standards (IFRS) apply, accuracy in balance sheet preparation is crucial. Mistakes in this report can lead to fines, loss of investor trust, and even tax-related risks.
This article explains what you need to know when preparing a balance sheet — from basic structure to common mistakes to avoid. It’s valuable reading for entrepreneurs, accountants, and business leaders looking to ensure financial stability and compliance with Moldovan regulations.
«A balance sheet is a mirror of your company. If it’s distorted, business progress becomes difficult.»
— Intelcont Financial Expert
Basics of the Balance Sheet
The balance sheet is a financial reporting form that reflects the structure of a company’s assets and the sources of their financing, based on the principle of balance. It is divided into two parts: assets (what the company owns) and liabilities (where the resources come from).
The basic equation is: Assets = Equity + Liabilities
This means that every asset must be financed either with internal funds (share capital, retained earnings) or external sources (loans, payables).
Main types of balance sheets:
- Initial balance sheet – prepared upon company registration.
- Current (interim) balance sheet – prepared during operations, e.g. quarterly.
- Annual (final) balance sheet – mandatory for all businesses and submitted to the tax authorities.
- Closing balance sheet – prepared when the company is liquidated or reorganized.
The balance sheet plays a crucial role in financial analysis: it helps assess liquidity, solvency, and overall financial stability. That’s why preparing it requires accuracy, attention to detail, and compliance with applicable accounting standards.
What to Do Before Preparing the Balance Sheet
Before drafting a balance sheet, a number of preparatory steps must be taken. These ensure the accuracy and compliance of the data reflected in financial reporting.
Inventory Check
Prior to the annual balance sheet preparation, companies must conduct a mandatory inventory of:
- fixed assets;
- material stock and inventory;
- cash and bank accounts;
- settlements with partners and clients;
- liabilities and debts.
Inventory allows discrepancies between actual and recorded data to be identified and corrected promptly, ensuring accurate balances.
Preparing the Trial Balance
This document shows all debit and credit transactions and account balances:
- opening balances;
- debit and credit turnovers;
- closing balances.
It forms the basis for structuring the asset and liability sides of the balance sheet. Without an accurate trial balance, a correct balance sheet cannot be prepared.
Reconciliation with Accounting and Tax Records
All data in the balance sheet must align with tax reports (e.g., income tax, VAT declarations, etc.). Any discrepancies may raise red flags with regulatory authorities.
The preparatory phase is crucial to reliable financial reporting. It helps minimize the risk of fines, errors, and inaccuracies in the balance sheet.
Assets and Liabilities: Structure and Classification
The balance sheet consists of two sections — assets and liabilities, each with its own internal structure. Proper classification and allocation of line items are crucial for accurately reflecting the company's financial position.
✅ Assets
Assets represent what the company owns and are divided into:
Non-current assets:
- fixed assets (buildings, equipment);
- intangible assets (patents, licenses);
- long-term investments;
- construction in progress.
Current assets:
- inventory (raw materials, supplies, finished goods);
- accounts receivable;
- cash and bank balances;
- short-term financial investments.
✅ Liabilities
Liabilities reflect the sources of financing for the company’s assets:
Equity:
- share capital;
- additional paid-in capital;
- retained earnings;
- reserves.
Debt obligations:
- long-term (loans and borrowings due in over one year);
- short-term (payables to suppliers, taxes, employees).
Each line item in the balance must correspond to a specific accounting account. It’s essential to follow the principle of double-entry bookkeeping: every transaction affects two accounts — one debited and one credited. For example, receiving cash in the bank (debit) reduces a liability (credit).
Regulatory Framework in Moldova
Accounting and financial reporting in Moldova are governed by a set of legal regulations that are mandatory for all legal entities, regardless of ownership form.
Key legislative documents:
Law No. 287 of 15.12.2017 “On Accounting and Financial Reporting”
This is the primary law that outlines:
- companies’ responsibilities for maintaining accounting records;
- qualification requirements for accountants;
- deadlines and formats for financial reporting;
- liability for mistakes or late submission of reports.
National Accounting Standards (NAS)
Primarily applicable to small and medium-sized enterprises. They define:
- rules for recognition and valuation of assets and liabilities;
- reporting form structures;
- disclosures required in the notes to the balance sheet.
International Financial Reporting Standards (IFRS)
Applicable to:
- large companies subject to mandatory audit;
- companies with foreign investments or shareholders;
- those voluntarily seeking transparency and global integration.
Specifics of Moldovan accounting regulation:
- Companies must keep accounting records for at least 5 years.
- The balance sheet must be approved by management and submitted to tax authorities on time.
- Both the accountant and the company director are responsible for the accuracy of the information.
The choice between NAS and IFRS depends on the size and strategic goals of the business. Even under simplified reporting, strict compliance with all requirements is essential to avoid penalties and maintain corporate reputation.
Key Financial Indicators
Preparing a balance sheet is not just a formality — it is also a vital tool for analyzing a company’s financial health. Below are the main ratios that can be calculated from it.
Common financial ratios:
Current Ratio
Measures a company’s ability to cover its short-term liabilities with its current assets.
Formula:
Current Assets / Current Liabilities
Benchmark: ≥ 1.5–2.5
Equity Ratio (Financial Autonomy)
Indicates the proportion of equity in the total capital.
Formula:
Equity / Total Capital
Benchmark: ≥ 0.5 (the higher, the more financially stable)
Working Capital Coverage Ratio
Shows whether a company has enough own resources for operational activities.
Formula:
(Equity – Non-current Assets) / Current Assets
Financial Stability Ratio
Assesses the structure of financing sources.
Formula:
(Equity + Long-Term Liabilities) / Total Assets
How to use these indicators:
- compare against industry benchmarks;
- track performance trends over time;
- make informed decisions (investments, cost optimization, etc.).
Financial ratios help objectively assess a company’s “health,” identify risks early, and demonstrate stability to partners and financial institutions.
Common Balance Sheet Mistakes
Even experienced accountants can make mistakes when preparing the balance sheet. For small businesses with limited resources, this becomes a particularly risky area. Below are the most frequent errors and tips on how to avoid them.
❌ Typical mistakes:
1. Unreconciled balances
The balance sheet may contain inaccurate data if:
- no inventory check was conducted;
- account balances were not reconciled;
- errors exist in the trial balance.
2. Violation of the double-entry principle
Incorrect postings lead to discrepancies between assets and liabilities.
3. Misclassification of assets and liabilities
Examples include:
- outdated receivables not written off;
- expenses recorded as assets instead of being expensed immediately.
4. Incorrect capital calculation
Errors in retained earnings, reserves, or asset revaluation accounting.
5. Non-compliance with applicable standards
Transactions are not reported according to NAS or IFRS when required.
6. Formal mistakes
- missing management signature;
- incorrect dates;
- wrong reporting forms or codes.
«The biggest financial mistakes often begin with small balance sheet inaccuracies.»
— Chief Accountant, Intelcont
✅ How to avoid mistakes:
- perform mandatory inventory checks;
- use automated accounting software;
- train accounting staff regularly;
- implement internal accounting quality control;
- consult professional auditors or outsourced firms.
Errors in the balance sheet not only result in inaccurate reporting but also increase the risk of fines, loan denials, and reputational damage. Prevention and verification are the best path to reliable reporting.
How to Avoid Mistakes and Prepare: The Role of Outsourced Accounting
Given the many complexities and risks of preparing a balance sheet, more and more companies in Moldova are turning to professional outsourced accounting firms. This is especially relevant for small and medium-sized businesses that lack an in-house finance department.
Benefits of working with an outsourced accounting firm:
1. Expertise and experience
Specialists keep track of all changes in Moldovan tax and accounting legislation, helping to prevent typical errors and penalties.
2. Comprehensive balance sheet preparation
The accounting firm:
- conducts a preliminary review of records;
- assists with inventory procedures;
- prepares an accurate balance sheet;
- calculates ratios and analyzes financial standing.
3. Consulting and ongoing support
You receive advice on cost optimization, liquidity improvement, and tax planning.
4. Resource savings
There’s no need to maintain an in-house accountant — you pay only for services actually rendered.
5. Security and accountability
The outsourcing provider is responsible for data accuracy and timely reporting. Many firms also carry professional liability insurance.
👇 Example from Intelcont.md:
Intelcont offers full-cycle accounting services in Moldova:
- bookkeeping and financial records management;
- balance sheet preparation and filing;
- tax advisory services;
- auditing and legal support.
Working with professionals allows you to focus on growing your business, while experts handle the technical side of accounting.
Conclusion
The balance sheet is not just a reporting requirement — it's a strategic business management tool. It reflects how stable, liquid, and growth-ready your company is. Its accuracy affects not only tax audits but also your chances of attracting investors, securing loans, and building trust with partners.
To avoid mistakes, fines, and wasted time, it's best to entrust this critical area to professionals. Especially in Moldova’s legal environment, where accounting demands precision, transparency, and ongoing control.
Intelcont offers a full range of accounting services in Moldova — from balance sheet preparation to strategic financial consulting.
Gain confidence, compliance, and efficiency — leave your accounting to the experts.
📲 Contact us today and get a free initial consultation!
