Statements

Financial statements of a sole trader

Gross profit is sales minus cost of sales. Net profit is gross profit minus operating expenses.

CAPS

Grade 10 · Accounting · Statements

Accounting is a system: document, journal, ledger, then the statement.

  • The papers

    Grade 10 is the accounting equation, journals, the ledger and trial balance, and the financial statements of a sole trader, with VAT at a basic level.

  • The logic

    Assets equal owner’s equity plus liabilities. Every entry needs a source. VAT on sales is output VAT. VAT on qualifying purchases is input VAT. Profit is not the same as cash.

  • The relation

    Gross profit = Sales − Cost of sales. Then subtract expenses to reach net profit

  • How a marker reads it

    Do not subtract expenses before cost of sales and still call the result gross profit.

Each paper is 150 marks. A foreign total that does not balance is wrong even if the individual entries look neat. Show the note or the calculation the face of the statement came from.

DrCrassetequity

Worked example

A nursery in Stellenbosch has sales of R56000, cost of sales of R33600 and operating expenses of R7000. Calculate gross profit and net profit.

Before any working — hunt first

Given

Numbers and units already in the sentence: R56000 · R33600 and · R7000. Copy each one into a column. A name without a number is not given.

Missing

After you copy the given, the letter that still has no number is missing. The paper is pointing at: gross profit and net profit. Circle that word — that is the missing variable.

Find

We are required to find: gross profit and net profit. Write that as a symbol on the left, with a question mark, before you touch a formula.

Calculate

Write Gross profit = Sales − Cost of sales with empty letters. Cross out every letter that already has a number. Calculate the letter that is still standing — that gives gross profit and net profit.

Simplified approach

Gross profit is sales minus cost of sales. Net profit is gross profit minus operating expenses.

Culture note

A plant nursery in Stellenbosch, closing its first year.

Formulas

Gross profit=Sales−Cost of sales

Then subtract expenses to reach net profit

Step 1 / 6

Gross profit

Sales R56000 minus cost of sales R33600 is gross profit R22400.

Sales−COS

Why this step: We only do one job per line so a marker can follow the marks — and so you can find a slip without starting over.

4. Step-by-step working

  1. 01

    Gross profit

    Sales R56000 minus cost of sales R33600 is gross profit R22400.

    Sales−COS
  2. 02

    Net profit

    R22400−R7000=R15400.

  3. 03

    Step F — Box the answer with its unit

    Gross profit = R56000 − R33600 = R22400. Net profit = R22400 − R7000 = R15400.

More worked examples

Board walkthroughs on this topic. Open one, copy the working, then try the next.

Example 1 / 20

Sales R420 000; cost of sales R252 000; other income R18 000; expenses R96 000. Calculate gross profit and net profit.

4. Step-by-step working

  1. 01

    Subtract

    GP=420 000−252 000=R168 000.

  2. 02

    Calculate

    NP=168 000+18 000−96 000=R90 000.

How we got there

Read this like a teacher at the board. We go slowly, name every number, and say why we take each step.

Explain in another language · 11

1. What is the question asking?

Read the question twice. Circle the unknown. Underline every number and unit. The paper is asking: Sales R420 000; cost of sales R252 000; other income R18 000; expenses R96 000. Calculate gross profit and net profit.

Before any working — hunt first

Given

Numbers and units already in the sentence: R420 · 000 · R252 · 000 · R18 · 000 · R96 · 000. Copy each one into a column. A name without a number is not given.

Missing

After you copy the given, the letter that still has no number is missing. The paper is pointing at: gross profit and net profit. Circle that word — that is the missing variable.

Find

We are required to find: gross profit and net profit. Write that as a symbol on the left, with a question mark, before you touch a formula.

Calculate

What we need to calculate: GP = sales − COS; NP = GP + other income − expenses. Then substitute the given, one line at a time, to get gross profit and net profit.

In other words — as if you have never seen this before

If you have never seen this before: GP = sales − COS; NP = GP + other income − expenses. We will name a method in words, write the formula with no numbers, then substitute one line at a time.

2. What do we already know?

Sales, cost of sales, other income, expenses.

3. Which method — and why this one?

GP = sales − COS; NP = GP + other income − expenses.

4. Step-by-step working

  1. 01 / 05

    Subtract

    GP=420 000−252 000=R168 000.

    Why this step: We only do one job per line so a marker can follow the marks — and so you can find a slip without starting over.

  2. 02 / 05

    Calculate

    NP=168 000+18 000−96 000=R90 000.

    Why this step: We only do one job per line so a marker can follow the marks — and so you can find a slip without starting over.

  3. 03 / 05

    Step G — Sense-check the size

    Ask: is this the kind of number a Grade 10–12 paper would want? A speed of 3 000 ms for a learner walking, or a probability bigger than 1, means a unit or algebra slip. Estimate first: round the numbers and do the sum in your head.

    Why this step: Markers write ‘unrealistic’ in the margin when the method is right but the size is wild. A 10-second head check often finds a missing 10² or a unit that never changed.

  4. 04 / 05

    Step F — Box the answer with its unit

    Gross profit R168 000; net profit R90 000.

    Why this step: A number without a unit is half a mark on a Physics paper, and a marker can miss a Maths answer that is buried in working.

  5. 05 / 05

    Step H — What the marker is looking for

    On an NSC memo you usually earn: (1) a method mark for naming the right formula or idea in words, (2) an accuracy mark for substituting the given numbers with units, (3) an accuracy mark for the boxed answer with its unit. Write those three lines even if you are unsure of the arithmetic — blank pages score zero.

    Why this step: First-timers chase the final number and leave the method blank. The memo still pays out for the idea and the substitution even when the last line is wrong.

5. The answer

Gross profit R168 000; net profit R90 000.

Copy onto your answer sheet — in this order

Answer: Gross profit R168 000; net profit R90 000.

6. Check it like a marker

GP % on sales=40%.

7. A trap first-timers fall into

First-timers often grab the first formula they remember, mix units (cm with m, minutes with seconds), or drop a minus sign. Write the formula in words first: “this equals that, because…”

Ntsako · fx-991ZA PLUS. Tap to calculate.