JC
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Final Accounts
Ch26
LO 2.13
LO 2.13
📌 Tap each section to expand it.
📈 Chapter 26 — Final Accounts
A. Trading Account
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Sales — total income from selling goodsFirst line of the Income Statement
Cost of Sales = Opening Stock + Purchases + Carriage Inwards − Closing StockOnly includes the cost of goods actually sold
Gross Profit = Sales − Cost of SalesMeasures income from trading before expenses
Top Tip: Opening Stock is added because it was available to sell. Closing Stock is subtracted because it was not sold that year.
B. Profit and Loss Account
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Expenses — running costs such as wages, rent, insurance, advertisingEach correct expense earns 1 mark
Depreciation = Cost × Rate. Loss in value of a fixed asset over timeEarns 3 marks each (cost, rate, figure)
Net Profit = Gross Profit − Total ExpensesProfit left after all running costs
Top Tip: If no depreciation rate is given for a fixed asset, do not depreciate it. NBV = Cost.
C. Appropriation Account
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Dividends Paid — payments to shareholders from profitsDeducted from Net Profit
Opening P&L Balance — profits kept from previous yearsAdded back after dividends
Closing P&L Balance — carries to the Statement of Financial PositionAppears under Reserves in Financed By
D. Fixed Assets
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Fixed Assets — owned and used for more than one yearBuildings, equipment, vehicles
Net Book Value = Cost − DepreciationCurrent value after wear and tear
E. Working Capital
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Current Assets — converted to cash within one yearClosing stock, cash, debtors
Current Liabilities — owed within one yearCreditors, bank overdraft
Working Capital = Current Assets − Current LiabilitiesMeasures liquidity (short-term health)
Total Net Assets = Fixed Assets + Working Capital
F. Financed By / Capital Employed
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Issued Share Capital — shares actually sold to investorsAuthorised is shown for information only
Reserves — the Closing P&L Balance
Long-term Liabilities — loans over one year
Capital Employed = Issued SC + Reserves + LTLMust equal Total Net Assets
Top Tip: If Total Net Assets does not equal Capital Employed, the accounts do not balance. Go back and check.
📚 Tap any term to reveal its definition.
Income Statement
Sales
The total income earned from selling goods or services during the year.
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Cost of Sales
The direct cost of the goods sold during the year. Calculated as: Opening Stock + Purchases + Carriage Inwards − Closing Stock.
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Opening Stock
The value of stock the business held at the start of the year (1 January). Added to Cost of Sales because it was available to sell.
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Closing Stock
The value of stock left unsold at the end of the year (31 December). Subtracted from Cost of Sales because it was not sold that year.
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Carriage Inwards
The cost of delivering goods into the business from a supplier. A direct cost, added to Purchases in the Cost of Sales section.
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Gross Profit
Sales − Cost of Sales. The profit earned from trading before expenses.
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Expenses
Running costs not directly related to buying goods, such as wages, rent, insurance, advertising, light and heat, depreciation.
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Depreciation
The loss in value of a fixed asset over time due to wear and tear. Formula: Cost × Depreciation Rate (%). Treated as an expense.
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Net Profit
Gross Profit − Total Expenses. The profit left after all running costs.
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Dividends Paid
Payments to shareholders from profits, as a reward for investing.
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Closing P&L Balance
Net Profit − Dividends + Opening P&L Balance. The retained profit at year end. Carries to the SOFP.
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Statement of Financial Position
Fixed Assets
Items owned and used for more than one year (buildings, equipment, vehicles). Shown at Net Book Value.
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Net Book Value (NBV)
Cost − Depreciation. The current value of a fixed asset.
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Current Assets
Items of value converted to cash within one year: closing stock, cash, debtors.
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Current Liabilities
Amounts owed within one year: creditors, bank overdraft.
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Working Capital
Current Assets − Current Liabilities. Measures whether the business can pay short-term debts.
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Liquidity
How easily a business can pay short-term debts. If CL > CA, there is a liquidity problem.
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Total Net Assets
Fixed Assets (NBV) + Working Capital. Must equal Capital Employed.
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Capital Employed
Issued Share Capital + Reserves + Long-term Liabilities. Must equal Total Net Assets.
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Issued Share Capital
The value of shares actually sold to investors. Only this figure goes into Capital Employed.
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Remember: Figures without headings score zero in the exam (except Net Profit and P&L Balance date). Every heading earns 1 mark.
🎦 Chapter 26 video walkthroughs. Watch alongside your textbook.
Videos coming soon. Check the JC Business Hub for updates.
⚡ Work through the pile. Tap a card to flip. Tick when you know it. Cross to send it back.
🅻 Account-style questions. Each shows a piece of an account with a missing figure. Pick a section or try the full set.
📄 Past paper questions with model answers. Tap “Show Answer” on each part.
Key Skills Tested
① Complete a Trading Account to calculate Gross Profit
② Calculate depreciation on buildings and equipment
③ Complete the Profit and Loss and Appropriation Account
④ Complete the Statement of Financial Position
⑤ Analyse and evaluate the financial position of a business
② Calculate depreciation on buildings and equipment
③ Complete the Profit and Loss and Appropriation Account
④ Complete the Statement of Financial Position
⑤ Analyse and evaluate the financial position of a business
📄 2025 Paper — Q14 6m
Complete the Income Statement of Doyle Ltd for the year ended 31/12/2023.
| € | € | |
|---|---|---|
| Sales | 500,000 | |
| Less Cost of Sales | ||
| Opening Stock | 20,000 | |
| Purchases | 280,000 | |
| 300,000 (2m) | ||
| Less Closing Stock | 15,000 | |
| Cost of Sales | 285,000 (2m OF) | |
| Gross Profit | 215,000 (2m OF) | |
Top Tip: The first step (Opening Stock + Purchases = 300,000) is right or wrong. The next two figures earn own figure (OF) marks.
📄 2024 Paper — Q6 6m
Complete the Fixed Assets section. Buildings: Cost €550,000, Dep €11,000. Equipment: Cost €92,000, NBV €82,800.
| Fixed Assets | Cost | Dep | NBV |
|---|---|---|---|
| Buildings | 550,000 | 11,000 | 539,000 |
| Equipment | 92,000 | 9,200 | 82,800 |
| 642,000 | 20,200 | 621,800 |
Top Tip: Cost − Dep = NBV. If Dep is missing, work backwards: Cost − NBV = Dep.
📄 2022 Paper — Q17 41m total
Cadden Ltd. Full accounts from Trial Balance. Equipment depreciated 20%. No dep rate on buildings.
Income Statement: GP €103,000. Expenses €90,300 (inc Dep Equip €8,000). NP €12,700. Dividends €10,000. Opening P&L €17,000. Closing P&L €19,700.
SOFP: FA NBV €252,000. CA €22,700. CL €14,000. WC €8,700. TNA €260,700. Issued SC €160,000. Reserves €19,700. LTL €81,000. CE €260,700.
SOFP: FA NBV €252,000. CA €22,700. CL €14,000. WC €8,700. TNA €260,700. Issued SC €160,000. Reserves €19,700. LTL €81,000. CE €260,700.
Top Tip: Buildings had no dep rate, so NBV = Cost = €220,000. Students who depreciated buildings lost marks.
📄 2023 Paper — Q17 42m total
Cupán Eco Ltd. Full accounts. Dep Buildings 2%, Equipment 20%.
Income Statement: GP €149,600. Dep Buildings €5,480. Dep Equip €18,560. Total Exp €140,040. NP €9,560. Div €9,200. Opening P&L €48,000. Closing P&L €48,360.
SOFP: FA NBV €342,760. CA €66,600. CL €21,000. WC €45,600. TNA €388,360. Issued SC €340,000. Reserves €48,360. CE €388,360.
SOFP: FA NBV €342,760. CA €66,600. CL €21,000. WC €45,600. TNA €388,360. Issued SC €340,000. Reserves €48,360. CE €388,360.
Top Tip: Dep on Buildings: €274,000 × 2% = €5,480. Dep on Equipment: €92,800 × 20% = €18,560. Always show workings.