Income & Expenditure Accounts
These show the money earned in an accounting period, less related expenses. They look something like this:-
| Income | 20,000 | |
| LESS EXPENSES:- | ||
| Materials | 750 | |
| Machinery Running Costs | 275 | |
| Business Motoring | 1,250 | |
| Repairs and Renewals | 50 | |
| Business Telephone | 250 | |
| Printing , Postage & Stationery | 25 | |
| Use of Home as Office | 365 | |
| Laundry & Cleaning | 52 | |
| Business Insurance | 200 | |
| Accountancy | 175 | |
| 3,392 | ||
| NET PROFIT | 16,608 |
They are normally used by small businesses, that have few fixed assets (business property and equipment), and are not registered for VAT.
The income and expenses shown may not have been paid or received during the accounting period. So work done will be included, even if payment is not received until later. Similarly, expenses incurred will be included, even if not paid for until later. There will also be adjustments for stock and prepaid expenses. This is so that the figures shown accurately reflect the income and expenses generated and incurred during the period.
Profit & Loss Accounts and Balance Sheet
These are basically the same as Income & Expenditure accounts, but with a balance sheet attached.
The balance sheet shows the assets and liabilities of the business at the balance sheet date, and proves that the figures are mathematically accurate. It also indicates that the accounts have been more carefully prepared, and are therefore more reliable.
This is the style of accounts used by all but the very smallest businesses.
Company Accounts
These are accounts drawn up to meet the requirements of the Companies Acts. They will include a Profit & Loss accounts and a balance sheet, together with additional requirements such as a Director's Report.
The level of information required will depend on the size of the company, and may include specially abbreviated accounts, to limit the information publicly available at Companies House.
Receipts & Payments Accounts
These are much the same as Income & Expenditure accounts, but only show payments actually received and paid. They are only acceptable for tax purposes in limited circumstances and are therefore rarely used.