Question

Beginning and ending balance sheets are reported where?

Answer 1

Limited companies and limited liability partnerships must produce a balance sheet as part of their annual accounts for submission to:

• Companies House
• HM Revenue & Customs (HMRC)
• shareholders - unless agreed otherwise

As well as the balance sheet, annual accounts include the:

• profit and loss account
• auditor's reports - unless exemptions apply
• directors' report
• notes to the accounts - these should provide any information you think may be relevant, eg supplementary financial information or additional detail

Other parties who may wish to see the accounts - and therefore the balance sheet - are:

• potential lenders or investors
• potential purchasers of the business
• government departments carrying out inspections
• employees
• trade unions

There are strict deadlines for submitting annual accounts and returns to Companies House and HMRC - you may have to pay a fine if you send them in late.The opening balance is the balance that is brought forward at the beginning of an accounting period from the end of a previous accounting period or when starting out

Opening balances are most important when a company finishes an accounting year, and ends up with a closing balance- the last balance in the accounts. This balance is carried forward to the new financial year accounts and then becomes the opening balance - the first entry in the new accounting period.

In addition, opening balances are important if you transfer your accounts from one accounting system to another. In this case, the last entry in the old accounts is the opening balance in the new accounts.