Can't get balance sheet to balance in my exceedingly small business although my books and every example I have looked at says I am doing it right and my previous contracting accounts prepared by accountants were done the same way. It isn't the figures, it is just that the accounting principles for fixed assets and stock appear to make no sense.
Keeping it very simple, no divis/loans to director and everything paid so no debtors or creditors except CT, ignore trivial bank interest/share capital. Also is first year so no carried forward stuff.
P&L
Income
-cost of stock purchases
+stock value
-current expenses
-depreciation
-corporation tax
=retained profit
Balance sheet
Fixed asset value
+Bank/cash
+stock value
-corporation tax (as creditor)
=retained profit from above P&L
CT/stock cancel out and I can see that surplus money goes into bank account, that all adds up fine, it's the fixed assets that are a problem. In P&L we have depreciation but in balance sheet we have current value which is purchase price less depreciation. That does not compute. If next year I start subtracting previous year's stock from profits with no corresponding entry on the balance sheet that computes even less.
Profit for CT is correct and the balance sheet errors are small but if I just fudge the balance sheet and leave a basic problem these errors will keep accumulating year on year. Anyone point out what I am doing wrong? The company has insufficient profits to pay accountants.
Cheers for any ideas.
Keeping it very simple, no divis/loans to director and everything paid so no debtors or creditors except CT, ignore trivial bank interest/share capital. Also is first year so no carried forward stuff.
P&L
Income
-cost of stock purchases
+stock value
-current expenses
-depreciation
-corporation tax
=retained profit
Balance sheet
Fixed asset value
+Bank/cash
+stock value
-corporation tax (as creditor)
=retained profit from above P&L
CT/stock cancel out and I can see that surplus money goes into bank account, that all adds up fine, it's the fixed assets that are a problem. In P&L we have depreciation but in balance sheet we have current value which is purchase price less depreciation. That does not compute. If next year I start subtracting previous year's stock from profits with no corresponding entry on the balance sheet that computes even less.
Profit for CT is correct and the balance sheet errors are small but if I just fudge the balance sheet and leave a basic problem these errors will keep accumulating year on year. Anyone point out what I am doing wrong? The company has insufficient profits to pay accountants.
Cheers for any ideas.
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