Statements and notes (every paper)

Income Statement in Q1, Statement of Financial Position and its notes in Q2.

The two skeletons worth knowing cold

Income Statement Sales − COGS = gross profit; + other income; − distribution, administrative, finance costs = profit "Fully classified" — the grouping is marked Cost of goods sold opening inventory + purchases + freight inwards − purchase returns − closing inventory Freight outwards is a distribution cost, not COGS Statement of Financial Position current assets + non-current assets = current liabilities + non-current liabilities + equity Notes carry the detail for receivables and PPE Equity section opening capital + profit + capital introduced − drawings = closing capital Drawings hit equity, never profit ✕

Classifying an expense into the wrong group

A "fully classified" Income Statement is marked on WHICH GROUP each expense sits in, not only on the arithmetic. Finance costs (interest paid) is its own separate group, distinct from both distribution costs (getting goods to customers) and administrative expenses (running the office) — a common error is lumping interest paid in with administrative expenses, which loses the classification mark even when the total profit figure comes out correct.

Practice for this standard covers the whole topic — flashcards and quiz.