How Financial Statements Grow with a Startup: The Case of Dhruvi Infinity Inspiration Ltd
1. The Beginning: The Empty Books
At the start, your business legally exists — but it has no financial activity yet.
Dhruvi Infinity Inspiration Ltd has just been registered at Companies House.
Initial Balance Sheet: 1 January 2025
| Assets |
£ |
Liabilities & Equity |
£ |
| Cash |
0 |
Share Capital |
0 |
| Total Assets |
0 |
Total Equity & Liabilities |
0 |
You have no assets, no debts, and no equity yet. The company is a legal shell.
## **2. The First Transaction: Your Investment**
You invest £10,000 into the company bank account.
From an accounting viewpoint:
The business receives cash = an increase in an asset.
It also owes you that amount in equity — because as the owner, you provided the funds.
**Journal Entry:**
Debit: Cash £10,000
Credit: Share Capital (Owner’s Equity) £10,000
Balance Sheet After Investment
| Assets |
£ |
Liabilities & Equity |
£ |
| Cash |
10,000 |
Share Capital |
10,000 |
| Total Assets |
10,000 |
Total Equity & Liabilities |
10,000 |
**The equation Assets = Liabilities + Equity holds.**
Your company now “owns” £10,000 in cash — but it belongs to shareholders (you).
