Financial Statements-I

Class 11 · Accountancy

4 ideas in Class 11 Accountancy, explained in plain words, with games and quizzes to practise.

Nature and Stakeholders

Part of: Nature and Capital Revenue

Trading, profit loss and balance sheet summarise performance, position; owners, lenders, staff, tax bodies read for decisions.

Why it matters. Decisions need numbers. Users differ.

Key words

Financial statements: : The trading, profit and loss and balance sheet summaries of a firm.
Performance: : The profit or loss shown by the trading and profit and loss account.
Financial position: : The assets, capital and liabilities shown by the balance sheet.
Stakeholder: : Any reader of statements, such as owners, lenders, staff or tax bodies.

Try it in two minutes

Name the statements.
List the users.
Match needs.

Try at home. Ask who reads results.

Capital versus Revenue

Part of: Nature and Capital Revenue

Capital buys lasting capacity; revenue runs daily trade; capital receipts fund, revenue receipts earn; wrong split distorts profit.

Why it matters. Profit true. Position true.

Key words

Capital expenditure: : Spending that buys lasting capacity, recorded in the balance sheet.
Revenue expenditure: : Daily running spending, charged to the trading and profit and loss account.
Capital receipt: : Money bringing an obligation, like fresh capital or a bank loan.
Revenue receipt: : Money earned without obligation, like sales or interest received.
Wrong split effect: : The distortion of profit when a capital item is treated as revenue or reverse.

Try it in two minutes

Lasting or daily?
Fund or earn?
Classify each.

Try at home. Split home spends.

Trading and Profit Loss

Part of: Final Accounts

Trading matches sales with cost of goods; profit loss charges indirect expenses, adds incomes; gross then net profit emerge.

Why it matters. Margins known. Costs controlled.

Formulas

Gross Profit = Sales - (Purchases + Direct Expenses)
Cost of Goods Sold = Opening Stock + Net Purchases + Direct Expenses - Closing Stock
Net Profit = Gross Profit + Other Incomes - Indirect Expenses

Key words

Trading account: : The first part matching sales with cost of goods to find gross profit.
Gross profit: : The excess of sales over purchases and direct expenses.
Direct expenses: : Costs tied to making and bringing goods to sale, like wages and carriage inwards.
Indirect expenses: : Running costs like salaries and rent charged to the profit and loss account.
Net profit: : The final excess of incomes over expenses transferred to the capital account.

Try it in two minutes

Cost of goods sold.
Gross profit first.
Net profit next.

Try at home. Margin a shop sale.

Balance Sheet

Part of: Final Accounts

Balance sheet lists assets against capital plus liabilities; order by liquidity or permanence; both sides must agree.

Why it matters. Position read. Solvency judged.

Formulas

Assets = Capital + Liabilities
Capital = Assets - Liabilities

Key words

Balance sheet: : The statement listing assets against capital plus liabilities on a date.
Assets: : Resources owned by the firm, shown on the assets side of the sheet.
Liabilities: : Outsider claims on the firm, shown with capital on the claims side.
Liquidity order: : Listing items from most easily encashed to most fixed.
Permanence order: : Listing items from most fixed to most easily encashed.

Try it in two minutes

List assets owned.
List claims owed.
Match both sides.

Try at home. Draft family sheet.

What your child will practise

Balance Sheet: Candy Puzzle (Clue Puzzle)
Balance Sheet: Candy Quick Fire (Quick Fire)
Capital versus Revenue: Desert Puzzle (Clue Puzzle)
Nature and Stakeholders: Candy Quest (Flip and Match)
Trading and Profit Loss: Ocean Quick Fire (Quick Fire)

Quiz: Balance Sheet (8 questions)
Quiz: Capital versus Revenue (8 questions)
Quiz: Nature and Stakeholders (8 questions)
Quiz: Trading and Profit Loss (8 questions)

Financial Statements-I

Class 11 · Accountancy

4 ideas in Class 11 Accountancy, explained in plain words, with games and quizzes to practise.

Nature and Stakeholders

Part of: Nature and Capital Revenue

Trading, profit loss and balance sheet summarise performance, position; owners, lenders, staff, tax bodies read for decisions.

Why it matters. Decisions need numbers. Users differ.

Key words

Financial statements: : The trading, profit and loss and balance sheet summaries of a firm.
Performance: : The profit or loss shown by the trading and profit and loss account.
Financial position: : The assets, capital and liabilities shown by the balance sheet.
Stakeholder: : Any reader of statements, such as owners, lenders, staff or tax bodies.

Try it in two minutes

Name the statements.
List the users.
Match needs.

Try at home. Ask who reads results.

Capital versus Revenue

Part of: Nature and Capital Revenue

Capital buys lasting capacity; revenue runs daily trade; capital receipts fund, revenue receipts earn; wrong split distorts profit.

Why it matters. Profit true. Position true.

Key words

Capital expenditure: : Spending that buys lasting capacity, recorded in the balance sheet.
Revenue expenditure: : Daily running spending, charged to the trading and profit and loss account.
Capital receipt: : Money bringing an obligation, like fresh capital or a bank loan.
Revenue receipt: : Money earned without obligation, like sales or interest received.
Wrong split effect: : The distortion of profit when a capital item is treated as revenue or reverse.

Try it in two minutes

Lasting or daily?
Fund or earn?
Classify each.

Try at home. Split home spends.

Trading and Profit Loss

Part of: Final Accounts

Trading matches sales with cost of goods; profit loss charges indirect expenses, adds incomes; gross then net profit emerge.

Why it matters. Margins known. Costs controlled.

Formulas

Gross Profit = Sales - (Purchases + Direct Expenses)
Cost of Goods Sold = Opening Stock + Net Purchases + Direct Expenses - Closing Stock
Net Profit = Gross Profit + Other Incomes - Indirect Expenses

Key words

Trading account: : The first part matching sales with cost of goods to find gross profit.
Gross profit: : The excess of sales over purchases and direct expenses.
Direct expenses: : Costs tied to making and bringing goods to sale, like wages and carriage inwards.
Indirect expenses: : Running costs like salaries and rent charged to the profit and loss account.
Net profit: : The final excess of incomes over expenses transferred to the capital account.

Try it in two minutes

Cost of goods sold.
Gross profit first.
Net profit next.

Try at home. Margin a shop sale.

Balance Sheet

Part of: Final Accounts

Balance sheet lists assets against capital plus liabilities; order by liquidity or permanence; both sides must agree.

Why it matters. Position read. Solvency judged.

Formulas

Assets = Capital + Liabilities
Capital = Assets - Liabilities

Key words

Balance sheet: : The statement listing assets against capital plus liabilities on a date.
Assets: : Resources owned by the firm, shown on the assets side of the sheet.
Liabilities: : Outsider claims on the firm, shown with capital on the claims side.
Liquidity order: : Listing items from most easily encashed to most fixed.
Permanence order: : Listing items from most fixed to most easily encashed.

Try it in two minutes

List assets owned.
List claims owed.
Match both sides.

Try at home. Draft family sheet.

What your child will practise

Balance Sheet: Candy Puzzle (Clue Puzzle)
Balance Sheet: Candy Quick Fire (Quick Fire)
Capital versus Revenue: Desert Puzzle (Clue Puzzle)
Nature and Stakeholders: Candy Quest (Flip and Match)
Trading and Profit Loss: Ocean Quick Fire (Quick Fire)

Quiz: Balance Sheet (8 questions)
Quiz: Capital versus Revenue (8 questions)
Quiz: Nature and Stakeholders (8 questions)
Quiz: Trading and Profit Loss (8 questions)