Contents:

1. Introduction
2. Very Basic Double Entry
3. Cash Transactions
4. Books of Prime Entry
5. Soletraders & Partnerships
6. Limited Companies
7. Credit Transactions
8. Accruals & Prepayments
9. Fixed Assets
10. Year-end Procedures
11. Reconciliations
12. Other Entries

6 - Limited Companies

This section looks at how capital is reflected in the books of a Limited Company.

Shareholders' Funds

The owners of a Limited Co. are its shareholders. The initial value of their holding is reflected in the nominal ledger (all Credit entries).

It is split into the Share Capital "T" account, which reflects the nominal value of the shares, & Share Premium "T" account which reflects the excess above nominal value at which the shares were initially issued.

The nominal value will be stated on the share certificates (& the company's Memorandum of Association) & is a meaningless figure as the name suggests (a minimum share value).

Reserves

In addition to the shareholders' funds, there will be the reserves.

The Profit & Loss Reserve is the main one - accumulated profits & losses from previous years. Each year-end the profit for the year will be Credited (or loss Debited) to this reserve.

Together with the shareholders' funds, this gives the funds which are essentially owed to the owners (shareholders).

The next section will introduce credit transactions.

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