Last reviewed: July 2026.
Company Accounts Summary: Statements, Capital and Tax acts as a navigation hub for preparing and reviewing a single company’s accounts without duplicating the detailed specialist guides.
The company is a separate reporting entity
A company records transactions separately from shareholders and directors. Money introduced by owners is normally share capital or another equity contribution, not sales revenue. Amounts withdrawn require a lawful basis such as salary, expense reimbursement, loan repayment or dividend. The separate-entity principle drives the ledger structure, legal documentation and financial statement presentation. Personal and company transactions should never be mixed, and director or shareholder balances should be reconciled and classified according to their substance and contractual terms.
Move from records to an adjusted trial balance
The accounting process begins with complete journals and ledgers, followed by control-account, bank, supplier, payroll, tax and fixed-asset reconciliations. Post year-end accruals, prepayments, depreciation, impairment, inventory adjustments, expected credit losses, provisions, interest and tax entries. Investigate every suspense balance and unusual account. The adjusted trial balance is not merely a list that balances; each material balance should agree to a controlled supporting schedule and should contain transactions recorded in the correct reporting period.
Prepare the complete set of financial statements
A complete IFRS financial statement package includes statements of financial performance, financial position, changes in equity and cash flows, together with accounting policies and explanatory notes. IFRS 18 applies for annual periods beginning on or after 1 January 2027, with earlier application permitted, and replaces IAS 1 while retaining many general presentation principles. Comparative information is required. The statements and notes must be internally consistent, clearly classified and linked to the underlying ledgers and disclosure schedules.
Understand share capital
Share capital reflects issued ownership instruments. Records should distinguish classes of shares, nominal or stated amounts where relevant, share premium and unpaid amounts. Entries must agree with authorised corporate documents, cash receipts and the statutory share register. Issuing shares is an equity transaction; it does not create income. Redemptions, buy-backs, bonus issues and conversions require separate legal and accounting analysis. Reconcile opening and closing share quantities and values, and explain material movements in the equity notes.
Account for reserves and retained earnings
Retained earnings accumulate profits and losses after dividends and other permitted movements. Other reserves may arise from share premium, revaluation, foreign currency translation, hedging, legal requirements or discretionary transfers. A reserve label does not determine whether an amount is distributable. Maintain a roll-forward for each component of equity, showing opening balance, total comprehensive income, owner transactions, transfers and closing balance. Confirm that the statement of changes in equity agrees to both the ledger and related notes.
Separate dividends from expenses
Dividends are distributions to owners and are not operating expenses. Record them only when the relevant obligation is created under the applicable legal and governance framework. Proposed dividends that are not liabilities at the reporting date may require disclosure instead of recognition. Interest on loans and debentures is different because it arises from financing obligations and is recognised according to the instrument’s terms and applicable financial-instrument requirements. Board minutes and shareholder approvals should support each distribution.
Recognise debt and finance costs
Company financing may include bank loans, leases, debentures and other instruments. Classify balances as current or non-current using the reporting-date rights and relevant IFRS requirements. Separate principal, interest, transaction costs and any equity component where necessary. Reconcile lender statements, covenant calculations and security details. Accrue unpaid finance costs and disclose material terms and risks. A financing instrument should not be presented as share capital merely because it was provided by an owner or related party.
Calculate current and deferred tax
Current tax is based on taxable profit under the applicable tax law, not simply accounting profit. Reconcile accounting profit to taxable profit, including permanent differences, timing effects, losses and credits. IAS 12 requires deferred tax analysis for temporary differences between carrying amounts and tax bases, subject to recognition exceptions and recoverability conditions. Tax relating to items recognised outside profit or loss is generally recognised consistently. Reconcile tax balances to returns, payments, assessments and the effective tax-rate disclosure.
Prepare disclosures systematically
Use a disclosure checklist and supporting note schedules rather than drafting notes from memory. Typical areas include accounting policies, significant judgements and estimation uncertainty, revenue, expenses, property and equipment, financial instruments, tax, equity, related parties, commitments, contingencies and events after the reporting date. Aggregate immaterial detail but do not obscure material information. Every note should agree to the primary statements and ledger. Cross-references and comparative figures should be checked before approval.
Review governance and filing requirements
Financial statements should be approved through the company’s governance process and signed or authorised as required by applicable law. Statutory filing, audit or review obligations depend on jurisdiction, size, public accountability and industry. Accounting standards do not replace company law. Maintain a compliance calendar covering year end, board approval, shareholder processes, tax filings and registry deadlines. Record any departure, late adjustment or uncorrected misstatement and its effect on the final reporting package.
Final close checklist
Confirm the trial balance is final, reconciliations are reviewed, journals are authorised, equity movements are supported, tax is agreed, cash flow is reconciled, notes are complete and comparatives are consistent. Perform analytical review over margins, working capital, leverage, tax rate and cash conversion. Verify that all statements add and cross-cast, opening balances agree with the prior year and electronic filing data matches the signed accounts. Archive the closing pack with evidence, review sign-offs and a list of improvements for the next period.
Related Accounting Guides
- Company Financial Statements: IFRS 18 Structure and Disclosures
- Company Share Capital and Reserves: Accounting Guide
- Company Income Tax Accounting under IAS 12: Practical Guide
Authoritative References
- IFRS 18 Presentation and Disclosure in Financial Statements — Official presentation and disclosure requirements, effective for annual periods beginning on or after 1 January 2027.
- Process for preparing financial statements — Professional workflow from accounting records and reconciliations to year-end financial statements.