The Accounting

Scene
The Framework of Financial Accounts
 The balance sheet should be presented using the vertical format,
this would result in the above accounting equation to be arranged.
 Assets - Liabilities = Capital
 The profit and loss account (Revenue statement or Income
statement)
Trading Account
£ £
Sales X
Less: Cost of sales
Opening stock X
Add: Purchases X
X
Less: Closing stock
(X)
Cost of goods sold X (X)
Gross profit/(loss) X/(X)
Income statement
£
Gross profit/(loss) X/(X)
Less: Expenses
Light and heat (X)
Telephone (X)
Motor expenses (X)
Add: Other Income
Discount received X
Rent received X
Interest received X
Net profit/(loss) X/(X)
The Accounting System in Action