Special features of company financial statements include:
Profit and loss account
The profit and loss account will be charged with directors’ remuneration and auditors’ remuneration. If the company has borrowings in the form of loan of debenture stock, the profit and loss account will be charged with interest. Company profits are assessable to corporation tax and the profit and loss account thus includes a charge of tax on profits. Finally, the profit and loss account will show appropriations of profit, for example, dividends paid and proposed.
Balance sheet
The balance sheet will include liabilities for tax and proposed dividends. If may also include long-term liabilities in the form of loan or debentures stock. Finally, the capital section of the balance sheet will include share capital reserves.
Company financial statements to be presented to shareholders are subject to detailed disclosure requirements. The illustration below shows the preparation of accounts in a form suitable for presentation internally.
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