Business Accounts - Company Accounts Flashcards
(11 cards)
What is a company’s Accounting Reference Date (ARD)?
The date on which the company’s accounts are ruled off, usually the last day of the month in which the anniversary of incorporation falls
Can a company change its ARD?
Yes – provided it complies with CA 2006.
When must a private company file its accounts at Companies House?
Within 9 months of the end of its accounting reference period
When must a public company file its accounts?
Within 6 months of the end of the accounting reference period
What are the three main differences in company financial statements compared to sole traders and partnerships?
- Format – capital appears as equity and reserves, not personal capital
- Tax – companies pay corporation tax, which must be shown in the profit and loss account
- Dividends – shareholder returns shown as appropriations, not expenses
Why is corporation tax included in the company’s profit and loss account?
Company is a separate legal entity and must pay tax on its own profits, unlike sole traders and partnerships
How are dividends shown in company accounts?
As part of the Statement of Changes in Equity, reflecting profits appropriated to shareholders, not as expenses
What appears on the bottom half of company’s balance sheet?
The Equity and Reserves section, including:
- Share capital
- Reserves
- Retained earnings (profits not paid as dividends)
What is the Statement of Changes in Equity
A statement showing:
- Brought forward profits
- Current year profits
- Less dividends paid = Retained earnings
When must a company prepare consolidated accounts?
If it has subsidiaries, unless exemptions apply. The accounts must show the financial position of the group
Are subsidiaries usually required to prepare individual accounts?
Not in most cases
