Usually companies are not founded precisely on the 1st date of the financial year. Therefore, it is permitted with the Accounting Act that the length of the first financial year can be up to 18 months. The same exception is permitted upon transition to the second financial year or termination of the company. In all these cases the financial year can also be shorter than 12 months.
While preparing the annual report for the first year of activity, the companies often face the question as of which date the opening balance sheet should be prepared or whether it is at all necessary. The correct way is that in its first annual report the accounting entity shall prepare the opening balance sheet as of the date of incorporation, indicating the size of its assets, liabilities and equity before the start of its economic activities or accounting obligation. For example, if the payment is made in cash and in nominal value of capital, the opening balance sheet consists of cash and capital; the value of other entries is zero.
Usually it is required to present comparative data to all numerical indicators in the annual report, but in the income statement and cash flow statement the comparative figures are not presented. In cash flow statement the total of cash and cash equivalents recorded in the opening balance sheet is presented as the opening balance of cash and cash equivalents.