ballance sheet advice

infohunter

hi all, first time to log on here but have a question, i run a small company and my current accountant has at year end swung 12 months long term loans into current liability, this has had a big swing on our net current assets leaving us in a negative position relative to last month. should he have used a rolling 12 month period ? the way we are set up at the moment our current liabilities will diminish month on month on the ballance sheet until another big lob is added on at year end ?

Pawwed Rig

infohunter wrote: »

hi all, first time to log on here but have a question, i run a small company and my current accountant has at year end swung 12 months long term loans into current liability, this has had a big swing on our net current assets leaving us in a negative position relative to last month. should he have used a rolling 12 month period ? the way we are set up at the moment our current liabilities will diminish month on month on the ballance sheet until another big lob is added on at year end ?

This will be the amount of the long term loan that is repayable in the new accounting period. Current liabilities are those that are due within 12 months. Long term are those that are due in greater than 12 months.

infohunter

yes i appreciate why its done but should it be done on a monthly basis or wait till year end

kennyb3

infohunter wrote: »

yes i appreciate why its done but should it be done on a monthly basis or wait till year end

You could do it yourself month on month to give a more accurate position at each month end. The accountant was right and was only correcting what you failed to to.

Note: Your current liabilities will always show the next 12 months repayments due (capital element only) until you ve less than 12 months to pay.

So until you get to this point the current element will broadly be the same as it is now (give or take a little bit of interest )

infohunter

thank you kennyb3, the funny thing is that it was the same accountant that prepared the monthly accounts as year end . all year he has been deducting creditors payable less than a year by roughly one twelfth so on the 11th month it looked brill only to look crap at year end!! what you are saying is that it should roughly be the same figure every month subject to the loan not being paid back fully in that calendar year.?

kennyb3

infohunter wrote: »

thank you kennyb3, the funny thing is that it was the same accountant that prepared the monthly accounts as year end . all year he has been deducting creditors payable less than a year by roughly one twelfth so on the 11th month it looked brill only to look crap at year end!! what you are saying is that it should roughly be the same figure every month subject to the loan not being paid back fully in that calendar year.?

What im saying is best given by a simplified example:

Say you ve 36 months to repay.

12 months should always show under current liabilities as due as at any time during a year this is part of a companys current liabilities.

24 months is then shown in long term liabilities.

If your total repayments next year are €13,200 (€1,100 pm) with €12,000 capital and €1,200 interest.

It is the €12,000 capital that shows in current liabilites.

Also I would ask the accountant why they only made this adjustment now.

If you need anything else PM me.