# Small company accounts example (FRS 102 Section 1A)

Source: https://www.statutoryaccounts.io/templates/small-company-accounts-example/

Last reviewed: 28 October 2026

Small company accounts under FRS 102 Section 1A contain a profit and loss account, a balance sheet in the Companies Act format and the notes in Appendix C, with comparatives. For periods beginning on or after 1 January 2026 the notes must also include a compliance statement, going concern, dividends and the new lease and revenue disclosures.

## Key facts

| | |
| --- | --- |
| Who can use Section 1A | Small companies: within two of £15m turnover, £7.5m balance sheet total and 50 employees (years from 6 April 2025) |
| Primary statements | Balance sheet and profit and loss account; no cash flow statement; a statement of changes in equity may be needed when equity changes other than by profit |
| Formats | SI 2008/409, Schedule 1, Section B (Format 1 shown here) |
| Notes | FRS 102 Appendix C to Section 1A; from 2026 also the compliance statement, going concern, dividends, leases, revenue and tax |
| Balance sheet statement | The small companies regime statement above the signature (Companies Act 2006, s414(3)(b)) |
| Directors' report | Required (with the small companies exemption statement); it may be left out of the filed copy |

As at 25 October 2026.

## Profit and loss account for the year ended 31 December 2026

Illustrative only: the company, the names and every figure are invented. Adapt the wording to the company's facts; the directors remain responsible for the accounts they approve.

| | 2026 £ | 2025 £ |
| --- | --- | --- |
| Turnover | 1,450,000 | 1,320,000 |
| Cost of sales | (870,000) | (800,000) |
| Gross profit | 580,000 | 520,000 |
| Administrative expenses | (440,000) | (405,000) |
| Other operating income | 10,000 | 5,000 |
| Interest payable and similar expenses | (6,000) | (7,000) |
| Profit before taxation | 144,000 | 113,000 |
| Tax on profit | (34,000) | (26,000) |
| Profit for the financial year | 110,000 | 87,000 |

Format 1 (by function) of SI 2008/409. The profit before taxation line is required; items with nothing in either year are left out.

## Balance sheet as at 31 December 2026

| | Note | 2026 £ | 2025 £ |
| --- | --- | --- | --- |
| Fixed assets | | | |
| Tangible assets | 5 | 85,000 | 70,000 |
| Current assets | | | |
| Stocks | | 60,000 | 55,000 |
| Debtors | | 210,000 | 190,000 |
| Cash at bank and in hand | | 140,000 | 105,000 |
| | | 410,000 | 350,000 |
| Creditors: amounts falling due within one year | 6 | (215,000) | (190,000) |
| Net current assets | | 195,000 | 160,000 |
| Total assets less current liabilities | | 280,000 | 230,000 |
| Creditors: amounts falling due after more than one year | 7 | (40,000) | (42,000) |
| Provisions for liabilities: deferred tax | 8 | (9,900) | (7,900) |
| Net assets | | 230,100 | 180,100 |
| Capital and reserves | | | |
| Called up share capital | 9 | 100 | 100 |
| Profit and loss account | | 230,000 | 180,000 |
| Shareholders' funds | | 230,100 | 180,100 |

Above the signature: the small companies regime statement and, for an audit-exempt company, the three audit exemption statements; see [audit exemption and small companies regime wording](https://www.statutoryaccounts.io/templates/audit-exemption-statement-wording/). Then: Approved by the board of directors and authorised for issue on [date] and signed on its behalf by [printed name], Director.

## Statement of changes in equity

| | Called up share capital £ | Profit and loss account £ | Total £ |
| --- | --- | --- | --- |
| At 1 January 2026 | 100 | 180,000 | 180,100 |
| Profit for the year | - | 110,000 | 110,000 |
| Dividends | - | (60,000) | (60,000) |
| At 31 December 2026 | 100 | 230,000 | 230,100 |

From 2026 a small entity may need to present a statement of changes in equity when equity changes other than through the profit or loss for the year; dividends are such a change, so this example includes one.

## Notes to the accounts

1. Company information. [Company name] Limited. Registered in England and Wales, registered number [12345678]. A private company limited by shares. Registered office: [address].
2. Statement of compliance. These financial statements have been prepared in accordance with FRS 102, including the provisions of Section 1A Small Entities, and the Companies Act 2006.
3. Accounting policies. The accounts are prepared under the historical cost convention, in pounds sterling, rounded to the nearest pound. The policies for going concern, turnover, tangible fixed assets, leases and tax are set out in full in the [accounting policies example](https://www.statutoryaccounts.io/templates/accounting-policies-example/).
4. Average number of employees. 18 (2025: 17).
5. Tangible fixed assets. See the table below.
6. Creditors: amounts falling due within one year. Bank loan £12,000 (2025: £12,000); trade creditors £120,000 (2025: £110,000); taxation and social security £60,000 (2025: £50,000), of which Corporation Tax £32,000 (2025: £24,000); lease liabilities £5,000 (2025: nil); accruals and deferred income £18,000 (2025: £18,000).
7. Creditors: amounts falling due after more than one year. Bank loan £30,000 (2025: £42,000); lease liabilities £10,000 (2025: nil). The bank loan is secured by a fixed and floating charge over the company's assets.
8. Tax. Current tax £32,000 (2025: £24,000) and deferred tax £2,000 (2025: £2,000), a total charge of £34,000 (2025: £26,000). The deferred tax provision of £9,900 (2025: £7,900) arises on accelerated capital allowances.
9. Called up share capital. 100 ordinary shares of £1 each, allotted, called up and fully paid.
10. Dividends. Dividends of £60,000 (2025: £50,000), £600 per share, were declared and paid during the year.
11. Leases. The company leases two vans for four years. From 1 January 2026 the leases are on the balance sheet: at that date a right-of-use asset and a lease liability of £20,000 were recognised, without restating 2025. At 31 December 2025 the remaining payments of £24,000 were disclosed as operating lease commitments.
12. Related party transactions. The dividends were paid to the two directors, who hold all the shares.
13. Advances to directors, commitments and events after the year end. There were no advances, credits or guarantees to directors, no other commitments or contingencies, and no material events after the balance sheet date.

| Tangible fixed assets | Owned £ | Right-of-use £ | Total £ |
| --- | --- | --- | --- |
| Cost at 1 January 2026 | 120,000 | - | 120,000 |
| Recognised on 1 January 2026 (new lease rules) | - | 20,000 | 20,000 |
| Additions | 22,000 | - | 22,000 |
| Disposals | (6,000) | - | (6,000) |
| Cost at 31 December 2026 | 136,000 | 20,000 | 156,000 |
| Depreciation at 1 January 2026 | 50,000 | - | 50,000 |
| Charge for the year | 21,000 | 5,000 | 26,000 |
| On disposals | (5,000) | - | (5,000) |
| Depreciation at 31 December 2026 | 66,000 | 5,000 | 71,000 |
| Net book value at 31 December 2026 | 70,000 | 15,000 | 85,000 |
| Net book value at 31 December 2025 | 70,000 | - | 70,000 |

## How the figures fit together

- Profit and loss reserve: £180,000 at the start of the year, plus the profit of £110,000, less dividends of £60,000, gives £230,000.
- The bank loan falls from £54,000 to £42,000: £12,000 was repaid in the year and £12,000 is due within the next year.
- The lease liability starts at £20,000, increases by £1,000 interest (within interest payable) and falls by payments of £6,000, leaving £15,000: £5,000 within one year and £10,000 after.
- The Corporation Tax creditor equals the current tax charge, because a small company pays its tax 9 months and 1 day after the year end.
- Balance sheet total £495,000 and 18 employees: not a micro-entity (only one of the three micro limits is met), so Section 1A rather than FRS 105.

## What changed for periods beginning on or after 1 January 2026

| Disclosure | Before 2026 | From 2026 |
| --- | --- | --- |
| Statement of compliance with FRS 102 | Encouraged | Required (1AC.2A) |
| Going concern basis and material uncertainties | Encouraged | Required (1AC.2C) |
| Dividends declared and paid | Encouraged | Required (1AC.40) |
| Leases | Operating lease commitments off the balance sheet | Right-of-use assets and lease liabilities on the balance sheet; general description of leases (1AC.31A) |
| Revenue | Old Section 23 | Five-step model; performance obligations disclosed (1AC.32B) |
| Current and deferred tax | Not in Appendix C | Components disclosed (1AC.11A, 1AC.32C) |
| Related parties | Material transactions not concluded under normal market conditions | All related party transactions, subject to exemptions |

For a year ending 31 December 2025 or earlier, the old requirements apply and the comparatives in this example would not show the new disclosures. The company qualifies as small under the thresholds for years beginning on or after 6 April 2025; check yours with the [company size calculator](https://www.statutoryaccounts.io/tools/company-size-calculator/).

## Frequently asked questions

**Do small company accounts need a cash flow statement?**
No. A small entity applying Section 1A of FRS 102 does not have to present a statement of cash flows.

**What changed in FRS 102 Section 1A in 2026?**
For periods beginning on or after 1 January 2026, small companies must state compliance with FRS 102, disclose going concern and dividends, put most leases on the balance sheet and apply the new five-step revenue model.

**Does a small company have to file its profit and loss account?**
No. It may file filleted accounts: the balance sheet and notes, without the profit and loss account and the directors' report. The members still receive the full accounts.

**Are comparatives required?**
Yes. Every item in the statements and notes shows the previous year's amount, except in the company's first period. Where a figure is not comparable, it may be adjusted with an explanation.

## Sources

- [Companies Act 2006, section 382](https://www.legislation.gov.uk/ukpga/2006/46/section/382)
- [Companies Act 2006, section 396](https://www.legislation.gov.uk/ukpga/2006/46/section/396)
- [Companies Act 2006, section 414](https://www.legislation.gov.uk/ukpga/2006/46/section/414)
- [Companies Act 2006, section 444](https://www.legislation.gov.uk/ukpga/2006/46/section/444)
- [Companies Act 2006, section 475](https://www.legislation.gov.uk/ukpga/2006/46/section/475)
- [The Small Companies and Groups (Accounts and Directors' Report) Regulations 2008 (SI 2008/409), Schedule 1](https://www.legislation.gov.uk/uksi/2008/409/schedule/1/part/1)
- [SI 2008/409, Schedule 1 Part 3 (notes to the accounts of a small company)](https://www.legislation.gov.uk/uksi/2008/409/schedule/1/part/3)
- [Companies Act 2006, section 411](https://www.legislation.gov.uk/ukpga/2006/46/section/411)
- [Companies Act 2006, section 413](https://www.legislation.gov.uk/ukpga/2006/46/section/413)
- [Companies Act 2006, section 410A](https://www.legislation.gov.uk/ukpga/2006/46/section/410A)
- [FRC: FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland](https://www.frc.org.uk/library/standards-codes-policy/accounting-and-reporting/uk-accounting-standards/frs-102/)
- [FRC: FRS 102 (September 2024)](https://www.frc.org.uk/documents/7668/FRS_102_September_2024_tmKYWO6.pdf)
- [FRC: amendments to FRS 102 and other FRSs, Periodic Review 2024](https://www.frc.org.uk/documents/7128/Amendments_to_FRS_102_and_other_FRSs.pdf)
- [FRC: Periodic Review 2024, key changes](https://www.frc.org.uk/documents/7131/Periodic_Review_2024_Key_changes.pdf)
- [Companies House: preparing and filing Companies House accounts](https://www.gov.uk/government/publications/filing-your-companies-house-accounts/life-of-a-company-part-1-accounts)

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