The Financial Year End.  Each and every Limited Company trades for a period of One Year, this can be of 12 Calendar months or 13 ‘Lunar’ Months, a ‘Lunar’ Month consists of Four weeks only, at the end of which it has to present a ‘Set of Accounts’ to H.M.R.C. and Companies House.  As an employee you will have to prepare your ‘Final Accounts’, or assist in their preparation, from the balances shown in your Trial Balance.  From this point on if you make any mistakes you need backtrack only to the ‘Trial Balance’.

The Profit and Loss Account includes such items such as ‘Sales’, ‘Purchases’ and ‘Direct Expenses’ such as Promotional and Miscellaneous Expense are shown in one part whilst the second part bears the Overheads such as Licence Fees, Motor Expenses, Printing & Stationery and Postage & Telephones to name a few.  The sum arrived at by deducting Purchases & Direct Expenses from your Sales income would form a Sub Total to which would be added to, or subtracted from, the total of the ‘Overheads’ to give you a nett Balance on your Profit & Loss Account.

The Balance Sheet is the Final Account to be drawn up for the Year End.  It consists of your ‘Fixed Assets’ such as ‘Office Equipment’, ‘Furniture & Fittings’, ‘Motor Vehicles’ where they are the Property of the Company, to name a few and the respective Depreciation Accounts.  To these are added your ‘Current Assets’ such as your ‘Debtors’, ‘Bank Account’ and ‘VAT Liability’ and the sum total of these two categories becomes your ‘Total Assets.  The next sum would be ‘Current Assets less Current Liabilities’ which is deducted from, or added to, your ‘Total Assets’ and is shown as ‘Total Assets less Current Liabilities’.  To Balance your ‘Total Assets Less Current Liabilities’ you need to show on the opposing side of your Balance Sheet the figure you have for ‘Reserves’ plus ‘Profit & Loss Account’ which is the Balance of that Account within the Nominal Ledger.