Guide · Accounting
Guide to the Portuguese accounting system
Straight answer: the Portuguese accounting system turns the documents and transactions of an activity into organised records, trial balances, financial statements and tax information. It does not merely store invoices: it seeks to represent coherently what an entity owns, owes, sells, spends and generates over each period.
This guide is for: business owners, managers and professionals who receive accounting documents but want to understand how they are produced and what they are for.
Where does accounting begin?
Accounting begins with the real transactions of the activity: a sale, a purchase, a salary, a financing arrangement, the acquisition of equipment or the payment of a tax. Each transaction must be supported by adequate documentation and identified in the period to which it relates.
Documents are checked, classified and recorded in the appropriate accounts. The quality of the final information therefore depends on the quality and the timeliness of the material provided.
Are a payment and an expense the same thing?
No. An expense may be recognised in one period and paid in another; a sale may be invoiced before it is received; equipment may be paid for immediately, while its cost is recognised over several years. This distinction helps represent the economic activity, not just the movements in the bank account.
What is the Accounting Standardisation System?
The Accounting Standardisation System, usually referred to as SNC, brings together the conceptual framework, the chart of accounts, the models for financial statements and the standards applicable to the recognition and presentation of information. The specific framework depends, among other factors, on the nature and size of the entity.
The Accounting Standards Board makes the different frameworks available, including the standards for entities in general, small entities and micro-entities.
What is a trial balance for?
The trial balance presents the movements and balances of the accounts at a given moment. It allows you to check, for example, sales, expenses, bank balances, amounts owed by customers, amounts due to suppliers and obligations towards the State.
It is a working document. Read in isolation it can be difficult; it gains value when compared with previous periods and related to how the company actually operates.
What are the main financial statements?
The balance sheet shows the position of the entity on a given date: assets, liabilities and equity. The income statement presents the income, the expenses and the result of a period. Depending on the applicable framework, other statements and disclosures may be required.
These documents do not answer every management question, but they create a common basis for analysing how the activity is evolving, preparing decisions and meeting reporting obligations.
How does accounting connect to taxes?
Accounting information supports several tax returns, but the accounting result and the taxable result are not necessarily the same. Legislation may require adjustments, limits or specific treatments. For that reason, the tax assessment should not be reduced to applying a rate to the result shown in the accounts.
What happens at the year-end close?
At the close, balances, inventory, depreciation, accruals, deferrals, customer and supplier accounts, banks and other items are checked. Once the close is complete, the financial statements and the applicable annual obligations are prepared.
Which information should a business owner follow?
- The evolution of sales and of the main expenses.
- Amounts receivable from customers and payable to suppliers.
- Available funds and liquidity needs.
- Margins, where the activity allows them to be calculated.
- Foreseeable tax and contributory obligations.
- Significant differences compared with the previous period or with the budget.
Official source and related content
See the Accounting Standardisation System area of the Accounting Standards Board.
See also which documents to prepare each month and how to distinguish profit from liquidity.
Processing and regularly reading this information is part of the Certified Accounting service and can be taken further through management consulting.
Related concepts
SNC · Trial balance · Balance sheet · Income statement · Asset · Liability · Equity