For a voluntary organisation a set of accounts normally consists of the following:

1. an income and expenditure account
2. a balance sheet
   1. Fixed Assets
   2. Other Assets
      • Current Assets
      • Debtors
      • Accrued Income
      • Prepayments
   3. Liabilities
      • Creditors
      • Deferred Income
      • Accruals
   4. Reserves
3. notes to the accounts

In addition a charity may have an additional document called a "statement of financial activities" or SOFA. This is broadly similar to an income and expenditure account with last years reserve funds added to this years surplus or deficit.

This shows the operating position of the company in the year. It shows all income due (whether or not received) and all expenses incurred (whether or not actually paid).

In other words it reflects the transactions relating to that period not just amounts physically paid and received.

This shows the net worth of the company at a specific point in time, normally the year end.

The balance sheet shows:-

These are items that the company physically owns 
e.g. minibus, computers etc.

These are shown at net book value, that is cost less an amount written against income each year to reflect the use of the asset.

Current assets are amounts in the company's favour that are easily convertible into cash, e.g. a fee that is due to you.

Debtors are amounts owed to the company e.g. an outstanding instalment of a grant.

Accrued income occurs where monies are accumulating and will be due to you on a certain date after the period end, (e.g. bank interest). It is an accounting estimate of the amount relating to the financial period.

Prepayments are amounts paid in advance, e.g. insurance premiums.

These are classified into current and long term liabilities. Current liabilities are due within the next year.

Liabilities are amounts you owe or amounts that belong to a future period.

e.g. bank overdrafts, loans and hire purchase agreements

Creditors are people to whom the organisation owe money.

Deferred Income is income that belongs to a future accounting period, e.g. a grant received in advance.

Accruals are estimates of amounts owed where the bill has not yet been raised.

The organisation should always aim to have current assets greater than current liabilities, i.e. in simple terms,

These are unspent funds and are made up of cash, fixed assets and other net assets (amounts owed to company less amounts owed by company).

These are an explanation and expansion of the figures shown in the Income and Expenditure Account and Balance Sheet.