Small companies are required to include balance sheet in their company accounts. Many people leave the preparation of accounts to their professional accountant and rely on their accountant to tell them how much tax to pay and where to sign on the accounts.
To understand the balance sheet you need to learn the terminology used in Balance Sheet reporting. In accounting world, balance sheet is a statement of the business assets and liabilities at the end of your company’s financial year end and the terminology used in a balance sheet is explained below.
Cash
Amounts of money held in hand including coins and currency; money in the bank accounts.
Debtors
Amounts not yet collected from your customers or amount outstanding from credit sales.
Stock
Value of products hold in stock by your company, the stock value is normally made up of purchases cost, production costs or net releasable value of the products.
Fixed assets (Property, Plant and Equipment)
Amounts of costs invested in long life, tangible, productive, operating assets. People often referred this type of investment as capital expenditure.
Creditors and accrued liabilities
Amounts owing to suppliers for unpaid bills and invoices or directors for lending monies to the business.
Overdrafts and loans
Amounts borrowed on interest-bearing liabilities from bank and financial institution.
Share Capital
Amounts of capital invested in the business by owners (shareholders).
Retained earnings or reserves
Cumulative profits not yet distribute to shareholders.
The above is a simple set of balance sheet format that many small companies would have. There is more complex balance sheet for growing companies.
Concise Accountancy offers fixed fee accounts packages to limited companies. The packages are designed for startup businesses and they include taking care of your company accounts and corporation tax return. Feel free to contact concise accountants for assistance.
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