Financial Statements
Accounting · Final Accounts
Syllabus tag: KCSE | Business Studies | Form 4 | Topic 24 Financial Statements
Lesson objectives
By the end of this topic, you should be able to:
- State the sequence followed at the end of an accounting period.
- Calculate net sales, cost of goods sold, gross profit and net profit.
- Prepare a trading, profit and loss account.
- Prepare a balance sheet and explain the accounting equation.
Summary
Financial statements or final accounts show how a business performed and where it stands. The trading account finds gross profit — sales less the cost of what was sold. The profit and loss account deducts expenses to find net profit. The balance sheet lists assets, liabilities and capital at a date, and must balance because of the accounting equation.