Accounting·Final accounts & financial statements · NSSCO 2.1a
The Income Statement (sole trader)
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The Income Statement tells a sole trader whether the year made a profit or a loss. We'll build it in two sections — a Trading section that gives gross profit, and a Profit and Loss section that gives net profit — learning to work out cost of sales, gross profit and net profit step by step, handle closing transfers and a year-end adjustment, and finally draw up a full statement in vertical format from a trial balance, with every N$ figure adding up correctly.
What you'll learn in this lesson
By the end you should be able to (NSSCO Accounting 2.1a):
- Draw up a Post-adjustment Trial Balance
- State the purpose of preparing the trading account and profit and loss account
- Differentiate between gross profit and net profit/net loss
- Record closing transfers
- Calculate cost of sales, gross profit and net profit/net loss
- Draw up a trading account and a profit and loss account including year-end adjustments and closing transfers
- Draw up a Post-closing Trial Balance
- Define Income Statement and draw one up in vertical format including year-end adjustments and closing transfers
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Ms Pieters and Mike talk through the whole topic — with the figure and working drawn live.