As you already appreciate Accounting and Tax are quite seperate concepts.
The link between the two of course being the tax payment / refund feeding into the P&L.
Whatever your P&L says at the end gets reflected in retained earnings (or equivalet) in the balance sheet so it seems quite right that your outgoings have used up £6,793 whilst your tax is based on a far lower figure.
Having no access to your underlying data I cannot comment as to whether any given figure is actually correct and this reply is just intended to reflect general principles and the principle in this case dictates that in accounting if not cashflow terms you have in the period used up £6,793 of your equity.
This is the reason why under International Financial Reporting Standards a cashflow statement is compulsory (but note that under UKGAAP it's not).
Hope that helps,
kind regards,
Shaun.
P.S. amended because of poor grammar in the last paprgraph relating to UKGAAP.
-- Edited by Shamus on Sunday 17th of June 2012 12:57:34 PM
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I am looking for someone to help me understand my P/L and Balance sheet i have been working on Sagev12i have just donemy year endfollowing the book i have .
And the P/Lis saying(6.793 )a lossbut within that amounti haveDepreciationand there are some hp payments for Interest. Now i know i have to add back some of that for my own % along with the Dep and one or two other things on my tax form.
And after doing all that the loss on my tax form is only £1.720 but like i say on my p/l and balance sheet it says (6.793)so looks like i have lost more than i haveand i dont know if i have to do anythingtoshow the true lossof £1.720
And do i have to clear my Drawings and p/lin to my capital as if i do then this 6.793 would bring my capital right downand i dont understand as i have only used my drawingsof my capitalwitch at the moment my capital is £16.838 .
So if anyone could explain it all to me i words i can understand in my world lol as i am not a bookkeeper i would be grateful
Thank you for getting back to me so i just keep it as it is then can i move it to my capital account as to reflect that i have uesed it and so give me a new amount of capital for the next year .
Doesn't Sage sort all of that out for you automatically?
The only part outside Sage should be the actual tax calculation.
In principle though, yes this years profit or loss adjusts the retainied earnings part of equity to be carried forwards to the following period.
I don't know about you but I occassionally find myself even questioning the results from my desk calculator so trusting something like Sage would drive me insane if I didn't know exactly what to expect where in the final accounts before the software gave me those results.
It sounds like your in that grey area where you understand bookkeeping but are venturing into accountants territory of producing final accounts. Many bookkeepers can fulfil this role for smaller companies quite admirably but I feel that you need to have a firm understanding of the manual side of accounts to progress in this area.
The previous sentence is intended to be constructive for going forwards rather than any insult to your current skills and I hope that you do not take it in any other than the manner in which it was intended.
kind regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
You say the loss on SAGE is £6793 and the loss on your tax form is £1720.
What do you mean by "tax form"? do you mean tax return? Are you trying to check how your accountant has got from your accounts figure to your tax return? Is the "tax form" figure something within SAGE?
The amount of £6793 is what Sage is coming up with but that includes all Dep and Hp interest payments.
So on my Tax return i had to add back the dep and 50% of the hp payments for my pvt use
So after filling in all the boxs on the tax returnalong with my AIA for the yearit works out that my profit for tax is (1.720) Loss
And thanks to Shaun inow see what he is saying that my assets have gone down in value so Sage is right i have used 6.796 of my capitalso i have moved the P/L along with my Drawingsto my capital accountso now have a new amount of capital for the year of £8.866 and thats if i am right in what i have done .
