Overview of Financial Reporting The Business External Environment Financial Transactions Financial Accounting Process Annual Financial Statements The Balance Sheet A snapshot of the business assets and liabilities The Income Statement Explains change in wealth of an business over a period of time The Cashflow Statement Explains the movement of liquid i.e., money resources over a period of time

Published Financial Statements The Balance Sheet – a snapshot of the organisation’s financial status at a given point in time Income Statement – explains change in wealth of an organisation over a period of time Cashflow Forecast – predicts the movement of liquid i.e. money resources during business set-up

Cost of Goods Sold (COGS) Opening Stock + Purchases – Closing Stock COGS $ Opening Stock 15,000 + Purchases 90,000 Available for Sale 105,000 Closing Stock (25,000) COGS 80,000

Cost of Goods Sold (COGS) Opening Stock 10,000 + Purchases 5,000 Available for Sale 15,000 Closing Stock (4,500) COGS 10,500

Gross Profit $ Net Sales 14,000 - COGS Gross Profit 3,500 Opening Stock 10,000 + Purchases 5,000 Available for Sale 15,000 Closing Stock (4,500) COGS (10,500) Gross Profit 3,500

Income Statement Income Statement Net Sales 120,000 Less Cost of Goods Sold (80,000) Gross Profit 40,000 -Operating Expenses (25,000) Net Profit 15,000

Maybe… Income Statement $ Less Cost of Goods Sold (80,000) Net Sales 120,000 Less Cost of Goods Sold (80,000) Gross Profit 40,000 -Operating Expenses (25,000) Net Profit 15,000 -Dividends (10,000) Retained Profit 5,000