Statutory Accounts for Limited Companies

Director''s report is a statement of director confirming his responsibilities towards the company and making sure that the annual accounts are presented accurately and give a true and fair view of company's financial position. It explains that it is duty of a director to establish controls to ensure business process and the accounting is complete and transparent.

The profit and loss account or income statement is a ledger detailing the total income of a company during a financial year and it records all the expenses and overheads such as rents, rates, heat and light and other cost associated with running a business.

Tax is calculated on the taxable profits which are calculated by added back expenses which are not tax allowable such as entertainment. The corporation tax is recorded on the profit and loss or income statement to show the net profits available for distribution.

The profit loss or income statement is prepared on accrual basis which means that it should record expense for the period regardless of when its paid for example a rent might be paid in a last month of the year for a full quarter but only one months rent is for that year. Therefore, in profit and loss only one month that falls within the accounting period, will be recorded.

Balance sheet is one of the main components that shows the health and value of a company /business. As the name suggest the balance sheet must be in balance and not out of balance, which is vital for accurate bookkeeping of companies records.
Balance sheets records details of:

• Land and buildings
• Plant and machinery
• Fixtures and fittings
• Cash and bank balances
• Debtors creditors
• Loans and credit cards
• Share capital and distributions