ABSTRACT
On 1 April 2005 a number of investors subscribed £50 000 to set up a small trading company, IE Limited (the letters I and E standing for Initial Enterprises). Here is how the balance sheet then looks:
IE LIMITED Balance sheet at 1 April 2005 ASSETS (Use of funds)
Current asset Cash £50 000
LIABILITIES (Source of funds)
Capital and reserves Called up share capital £50 000
Notes
1 The company is separate from its shareholders Setting up (‘incorporating’) IE Limited establishes it as a legal body quite distinct from its shareholders (owners). Ultimate control belongs to a company’s shareholders, but they elect directors to exercise day-to-day control.
