Estonian annual report example: profit, cash and balances

The assumptions behind the example

This is a fictional service company and a simplified learning example, not a client report or a filing-ready template. All amounts are in euros. The company starts with no balances and its shareholder pays in €1,000 of share capital. Services delivered during the year earn €12,000, of which customers pay €11,000. Expenses relating to the year total €3,000, of which the company pays €2,500.

To isolate the accounting relationships, the example has no VAT entries, payroll, tax liabilities, fixed assets, loans or dividends. This is not a conclusion that a real service company has no such obligations. Its actual accounts must include all transactions and applicable taxes.

Calculate the profit for the year

Revenue of €12,000 − expenses of €3,000 = profit of €9,000. The calculation uses services delivered and expenses belonging to the year, rather than just money moving through the bank. Revenue therefore includes €1,000 for services the customer has not yet paid for. The shareholder’s capital contribution is not revenue.

Explain why profit differs from the bank balance

Closing cash is €9,500, while profit is €9,000. The difference reflects the €1,000 capital contribution, €1,000 still owed by customers and €500 still owed to suppliers. An unpaid invoice does not disappear from the accounts simply because the payment falls in the next year.

Check that the balance sheet balances

Assets of €10,500 = liabilities of €500 + equity of €10,000. Equity here consists of €1,000 share capital and €9,000 profit. These are grouped teaching figures; the actual reporting lines, comparative figures and notes depend on the applicable reporting format. A bank balance alone is not a balance sheet.

Match each figure to supporting records

• Sales invoices and evidence of when the services were delivered.
• Supplier invoices and the period each expense relates to.
• Statements from every bank account and payment platform.
• Lists of unpaid customer and supplier invoices at year-end.
• Evidence of the capital contribution and formation documents.

Reconcile the general ledger and trial balance to these records. When a customer pays an old invoice in the following year, the payment reduces the amount owed; it does not create revenue for the same service again. If collection is doubtful, the value of the receivable needs assessment.

What remains before filing a real annual report?

Check the company’s size category, reporting period, accounting policies and required notes. RIK explains that abridged annual accounts include at least a balance sheet, income statement and notes. The cash table on this page explains the calculation; it is not a statutory cash flow statement template.

The management board reviews the completed report and arranges the required signatures and shareholder approval. Check the deadline and filing steps. Profit or a large bank balance does not automatically make a payment to the shareholder permissible: its basis, restrictions and taxes need separate consideration. Get help preparing and filing your Estonian annual report.