1. 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

2. 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

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

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

5. 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 ,500

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

7. 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 ,000
-Dividends (10,000)
Retained Profit ,000