ACCA FA Syllabus F. Preparing Basic Financial Statements - Statement of profit or loss - Notes ^{1 / 7}

The first step in the process of preparing the financial statements is to open up another ledger account, called the statement of profit or loss.

The balances on all the income and expenditure T-accounts are transferred to the statement of profit or loss and the closing inventory adjustment is made.

The statement of profit or loss is part of the double entry system, so the basic rule of double entry still applies: every debit must have an equal and opposite credit entry.