Financial Statements (Modern Method) || Class 12 Account || Single Step Income Statement - Gurubaa

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Regarding the coming NEB exams, we have covered this video for class 12 Account from the chapter titled Financial Statement (Modern Methods). Here, we have explained the general format of single step income statement. In the coming days, we will cover the remaining videos from this chapter which include multi-step income statement and balance sheet.
The financial statements have the following features: expressed in terms of monetary value, based on recorded facts, historical in nature, personal judgements and fixed time period. There are also limitation of financial statements like t provide quantitative data only, summarized reports, chances of biasness, based on past data and no adjustment of price level.
The major components of financial statements are Income statement, balance sheet, statement of retained earnings, statement of changes in shareholders’ equity and cash flow statement.
This video clearly explains the format of single step income statement. It is calculated simply with the difference between total revenue (a) and total expenses (b). Total revenue (a) is calculated by the sum of sales revenue and other income. Similarly, total expenses (b) are determined by adding cost of goods, sold, office expenses, factory expenses, selling and distribution expenses and other expenses and losses. Finally, we calculate profit before tax by using the simple formula (a) – (b). Now, we subtract it with provision for tax and finally net income (profit or loss) after tax is evaluated.
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