CHAPTER 14

COMPANY FINANCIAL
STATEMENTS UNDER UK GAAP

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 LEARNING OBJECTIVES
 Record and account for transactions and events resulting in
income, expenses, assets, liabilities and equity in
accordance with the appropriate basis of accounting and
the laws, regulations and accounting standards applicable
to the financial statements;
 Identify the main components of a set of financial
statements and specify their purpose and interrelationship;
 Prepare and present a statement of financial position,
statement of profit or loss, statement of changes in equity
and statement of cash flows (or extracts) from the
accounting records and trial balance in a format which
satisfies the information requirements of the entity.

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TOPIC LIST
14.1. What is UK GAAP?
14.2. Published accounts
14.3. UK GAAP terminology and formats

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14.1. WHAT IS UK GAAP?
 Financial statements are prepared under UK GAAP for
most private, unlisted companies, partnerships and
sole traders
 Recall: UK GAAP definition?
UK GAAP: The rules, from whatever source, that
govern accounting and financial reporting in the UK.

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14.1. WHAT IS UK GAAP?
14.1.1. The constituents of UK GAAP
 Company law
 UK Standards
 Listing rules
 IFRSs
 Note: GAAP is dynamic

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14.2. PUBLISHED ACCOUNTS
14.2.1. Publishing annual accounts
 Statutory accounts: financial statements which limited
companies are obliged by law to publish in a
particular form
 Note: Large companies must appoint an independent
person to audit and report on them

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14.2. PUBLISHED ACCOUNTS
14.2.2. True and fair view
 True and fair view is paramount
 CA 2006 may be overridden by ‘true and fair view’

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14.2. PUBLISHED ACCOUNTS
14.2.2. True and fair view
Accounts under UK GAAP include:
 Profit and loss account
 Balance sheet
 Directors’ report (and directors’ remuneration report for
quoted companies)
 Auditors’ report
 Strategic report
(NOTE: compare with set of F/Ss under IFRSs?)
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14.2. PUBLISHED ACCOUNTS
14.2.3. Published acounts of listed and unlisted
companies
 Listed companies - Listing Rules (by the UK Listing
Authority - part of the FCA): IFRSs
 In the UK there is currently the situation whereby:
Listed companies produce a SPL and SFP following
international terminology and formats.
Non-listed companies can choose between UK
GAAP or international terminology and formats
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14.3. UK GAAP TERMINOLOTY & FORMATS
14.3.1. UK GAAP terminology

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14.3. UK GAAP TERMINOLOTY & FORMATS
14.3.2. UK formats
 Note: UK GAAP presents net assets, with current
liabilities deducted from current assets (net current
assets), and long-term liabilities deducted to arrive at
net assets
 The lower half of the BS comprises the owners’
interest only (Compare with IFRSs’ format – IAS 1)

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14.3. UK GAAP TERMINOLOTY & FORMATS

14.3.2. UK formats
Company name
BS as at…
Fixed assets (1)
Current assets (2)
Creditors: am falling due within one year (3)
Net current assets (/liabilities) (4)=(2)-(3)
Total assets less current liabilites (5)=(4)+(1)
Creditors: am falling due after more than one year (6)
Net assets (7)=(5)-(6)
Capital and reseves (8) = (7)
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14.3. UK GAAP TERMINOLOTY & FORMATS
14.3.2. UK formats
Company name
Profit and loss account for the year ended…
Turnover (*)
COS (**)
Gross profit
Distribution costs
Admin expenses
…

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14.3. UK GAAP TERMINOLOTY & FORMATS
14.3.3. Fixed assets
14.3.3.1. Intangible fixed assets
14.3.3.2. Tangible fixed assets
Cost Accumulated Net book value
depreciation
£ £ £
Land and buildings X (X) X
Plant and machinery X (X) X
Fixtures and fittings X (X) X
Motor vehicles X (X) X
X (X) X

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14.3. UK GAAP TERMINOLOTY & FORMATS
14.3.4. Current and long-term liabilities
Terminology!

Worked example p.368

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14.3. UK GAAP TERMINOLOTY & FORMATS
14.3.5. Company financial statements for publication

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End of Chapter 14
Thank you!

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