1. Final Accounts
At the end of every financial year, all businesses will prepare a set of final accounts
These accounts enable the business to assess their performance over the year and help with planning their work for the following year.
Most businesses will prepare the following final accounts
Trading Account
Profit and Loss Account
Statement of Financial Position
These two are normally combined into one account called the Income Statement

2. The Trading Account
This shows how much money has been made from selling your product.
The profit made is known as GROSS PROFIT. (Profit before expenses are deducted from SALES REVENUE)

3. The Profit & Loss Account
This shows how much PROFIT has been made
It starts with the GROSS PROFIT from the Trading account
EXPENSES are then deducted from the Gross Profit to give the PROFIT FOR THE YEAR

4. Statement of Financial Position
This is a statement prepared at the end of the financial year
States how much the business is worth
Shows what the business OWNS (ASSETS) and what the business OWES (LIABILITIES)
It also shows how much EQUITY (CAPITAL) was invested in the business by the owner

5. Final Accounts Definitions
Sales
This is the money received from selling goods or services
Sales Returns
This is the value of goods/services that have been returned by customers because they are faulty, damaged or simply not wanted
Cost of Sales
This is the cost to the business of making the sales

6. Final Accounts Definitions
Opening Inventory (Stock)
The value of stock at the start of the financial year
Purchases
This is the cost of goods bought for the business to sell
Purchase Returns
The value of goods returned to the supplier by the business
Closing Inventory (Stock)
The value of stock at the end of the financial year

7. Final Accounts Definitions
Expenses
These are the costs incurred during the day to day running of the business
Profit for the Year
This is the profit made after all expenses have been paid
Equity (Capital)
The amount of money initially invested in the business by the owner

8. Final Accounts Definitions
Assets
These are the things that the business OWNS
Can be split in to CURRENT and NON-CURRENT (FIXED)
Current assets change value frequently and can easily be turned in to cash.
Non-current (Fixed) assets are a bit more permanent and are worth a lot more

9. Final Accounts Definitions
Liabilities
These are the things a business OWES
Can be split in to CURRENT and NON-CURRENT (LONG TERM).
Current liabilities are short term debts paid back within 12 months
Non-Current (Long term)liabilities are debts paid back for more than 12 months

10. Profit Statements
The following slide has an example of an Income Statement
The layout of the account is the same for almost all organisations

11. Example Income Statement
Activities

12. Example Statement of Financial Position
Activities