Accounts, Accruals and Assets
Accounts
Whether you trade through a company, a partnership or as self-employed you must prepare your accounts for HM Revenue & Customs using a recognised accounting standard. In the UK we use UK accounting standards or International accounting standards.
Also your limited company accounts will have to comply with Company Law and include various disclosures about the shareholders and how you have prepared your accounts.
Accruals
This is one of the key accounting requirements for properly prepared accounts. When you complete your bookkeeping you may use a cash system and only add information onto your spreadsheet (or into your accounting system) when you pay for it, or when your customer pays you. Using accruals you must include items invoiced but your customer has not paid for and also purchases that you have made on credit. For some items such as web hosting you are charged for six months at a time. If this period covers the end of your accounting period you should only include a part of the cost.
Assets
These are the fixed assets (such as equipment), stock (inventory), unpaid customer invoices and cash that your business possesses. Liabilities include bank borrowings, amounts you owe on purchases and amounts you owe for tax.