Grade 11 IEB Accounting Notes
1. Financial Statements & Analysis
Financial statements are formal records of a business’s financial activities. They provide
insight into the financial position, profitability, and cash flow of a business. The three main
financial statements studied in Grade 11 are:
1. Income Statement – Shows profit or loss for a specific period.
2. Balance Sheet (Statement of Financial Position) – Shows assets, liabilities, and owner’s
equity.
3. Cash Flow Statement – Tracks cash inflows and outflows.
1.1 Income Statement
The income statement (also called the Statement of Comprehensive Income) reports a
business’s financial performance over a period. It calculates whether the business made a
net profit or loss by comparing income and expenses.
Format of an Income Statement:
Sales (Turnover) XX
Less: Cost of Sales (XX)
= Gross Profit XX
Add: Other Income XX
= Operating Income XX
Less: Operating Expenses (XX)
= Operating Profit XX
Less: Tax Expense (XX)
Key Sections Explained
1. Sales (Turnover)
Sales revenue is the total income earned from selling goods or services. It is recorded before
deducting any costs.
2. Cost of Sales
Cost of Sales (also called Cost of Goods Sold - COGS) represents the direct costs of producing
or purchasing goods sold by the business.
Formula: Cost of Sales = Opening Inventory + Purchases - Closing Inventory
3. Gross Profit
Gross profit shows how much the business earns after deducting the cost of sales.
Formula: Gross Profit = Sales - Cost of Sales
1. Financial Statements & Analysis
Financial statements are formal records of a business’s financial activities. They provide
insight into the financial position, profitability, and cash flow of a business. The three main
financial statements studied in Grade 11 are:
1. Income Statement – Shows profit or loss for a specific period.
2. Balance Sheet (Statement of Financial Position) – Shows assets, liabilities, and owner’s
equity.
3. Cash Flow Statement – Tracks cash inflows and outflows.
1.1 Income Statement
The income statement (also called the Statement of Comprehensive Income) reports a
business’s financial performance over a period. It calculates whether the business made a
net profit or loss by comparing income and expenses.
Format of an Income Statement:
Sales (Turnover) XX
Less: Cost of Sales (XX)
= Gross Profit XX
Add: Other Income XX
= Operating Income XX
Less: Operating Expenses (XX)
= Operating Profit XX
Less: Tax Expense (XX)
Key Sections Explained
1. Sales (Turnover)
Sales revenue is the total income earned from selling goods or services. It is recorded before
deducting any costs.
2. Cost of Sales
Cost of Sales (also called Cost of Goods Sold - COGS) represents the direct costs of producing
or purchasing goods sold by the business.
Formula: Cost of Sales = Opening Inventory + Purchases - Closing Inventory
3. Gross Profit
Gross profit shows how much the business earns after deducting the cost of sales.
Formula: Gross Profit = Sales - Cost of Sales
