Companies House - Simple Guide to Terms on a Balance Sheet
This film is essential viewing for people who are filling in the online Annual Accounts form for Limited Companies at Companies House. Please ALSO watch my other film that explains in more detail how to fill in the form for Companies House. More explanation of the terms in this film is given below.
IMPORTANT - This film is for information purposes only. Please always consult a qualified accountant if you are unsure of how to fill in the form, or if you have questions in relation to taxation accounts for HMRC.
MUSIC COPYRIGHT
Positive Corporate by Mixaund - https://mixaund.bandcamp.com
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CURRENT ASSETS
Stock – can be split into raw materials, work in progress and finished goods.
Trade Debtors – customers you have sold to on credit who have not yet paid.
Prepayments – goods/services that you have been invoiced for but not yet got the benefit of.
Accrued income – Work you have (partially) performed but not yet invoiced the customer (possibly because you have not yet finished the work).
Other Debtors – money owed by a non-customer. This could be a repayment of tax due from HMRC, or perhaps the business has issued a loan to another business.
Money in Bank – includes both current and deposit accounts. If you have a positive deposit account balance, but an overdraft on your current account, the two figures should not be combined. The deposit account should appear in Current Assets, and the overdraft in Current Liabilities.
Cash in hand - petty cash held in the office.
CURRENT LIABILITIES
Trade Creditors – Suppliers you have bought from but not yet paid.
Accruals – goods/services used by the business, but not yet invoiced.
Deferred income – Work you have invoiced in advance of performance.
Bank loan/overdraft – overdrawn balances on current accounts and loans. For long term loans, only the amount repayable within 12 months is shown here, the remainder in long term liabilities.
Tax – such as VAT, corporation tax, PAYE, National Insurance.
Other Creditors – money owed to someone other than any of the above. In small businesses this will sometimes include director loans to help improve the cash flow.
CAPITAL AND RESERVES
Capital and reserves are how the business is funded. It is normally an initial cash injection (share capital) plus retained profits to date. More complex companies may have several types of share capital, share premium (shares sold for more than face value), revaluation reserves (property valued above purchase price) or capital redemption reserve (although this is rare).