LIMITED COMPANIES ACCOUNTS 3

As compared to the partnership and sole trader Balance Sheet, a limited company’s Balance Sheet

is quite similar except for the few following items:

 

 

 

Shareholders’ funds

 

Comprises of the ordinary shares, preference shares, statutory (capital) reserves and non-statutory (revenue) reserves.

 

-          Ordinary Shareholders’ Funds

 

This comprises of ordinary shares, statutory reserves and non-statutory reserves.

 

-          Preference Shareholders’ Funds

 

This comprises of preference shares.

 

 

 

 

 

Reserves

 

Refers to share premium, revaluation reserve and Profit & Loss Account of which are in excess of the Shareholders’ funds

over the nominal value of the shares.

Statutory (Capital) Reserves

 

These reserves are not available for distribution.

 

Examples include share premium and revaluation reserves.

 

 

 

 

 

 

 

 

Non-Statutory (Revenue) Reserves

 

It is made up of profits built up over the years but has not been distributed yet.

 

This reserve is available for distribution and can be made available for specific purpose.

 

Such reserve is not statutory reserve.

 

For example, Profit & Loss Account.

 

 

 

IMPORTANT REMINDER

 

THIS IS TO PROVIDE STUDENTS A COURTESY REMINDER THAT THIS BLOG IS CATERED

TO HELP ACCOUNTANCY STUDENTS AT BASIC LEVEL TO GAIN A QUICK SUMMARY OF

MAJORLY ALL THE BASIC COMPONENTS OF THE BOOK-KEEPING AND ACCOUNTING STUDIES.

 

IT IS NOT MEANT TO PROVIDE A COMPLETE CONTENT OF THE SUBJECT MATTER.

 

THEREFORE, STUDENTS ARE ADVISED TO TAKE THIS INFORMATION RESOURCE AS A SUPPLEMENTARY READING ONLY.

 

THIS READING MATERIAL IS ONLY A SUMMARY OF WHAT IS ESSENTIAL IN GETTING  A GOOD

UNDERSTANDING BUT NOT AN EXHAUSTIVE ONE OF THE RELATED TOPIC.

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