Class: Senior Secondary School 2 (SS2 / SSS2)
Term: 1st Term
Week: 10
Age: 16 years
Duration: 45 minutes
Subject: Store Management
Curriculum Theme: Financial Accounting
Previous Lesson: Final Accounts: Profit and Loss Preparation and Balance Sheet Basics.
Topic: Final account cont.
Subject Matter: Meaning of final accounts (statements prepared to show profit or loss and financial position), posting of items into balance sheet in T format, posting items using horizontal format, more illustration on item posting.

Specific Objectives

By the end of the lesson, pupils should be able to:

Cognitive Domain:

Define final accounts and state their purpose.
Differentiate between the T format and horizontal format of the balance sheet.
Identify various items posted into a balance sheet.

Affective Domain:

Appreciate the importance of preparing accurate final accounts.
Show interest in learning different formats for presenting financial statements.

Psychomotor Domain:

Prepare a simple balance sheet using the T format.
Prepare a simple balance sheet using the horizontal format.

Collaborate with peers to solve problems related to final accounts.
Develop a systematic approach to financial record keeping.

Reference Materials

The following resources were used in planning this lesson:

Senior Secondary Schools Education Curriculum
State Unified Scheme of Work
O.A. Longe, A. O. Adegoke, B. A. Bakare. (2018). Comprehensive Certificate Business Studies for Senior Secondary Schools 2. University Press PLC.
https://www.accaglobal.com/gb/en/student/exam-support-resources/fundamentals-exams-study-resources/f3/technical-articles/balance-sheet.html
https://www.investopedia.com/terms/f/final-accounts.asp

Instructional Materials

The teacher will teach this lesson with the aid of:

Chart showing vertical and horizontal forms of a balance sheet.
Whiteboard and markers.
Textbooks and notebooks.

Rationale for the Lesson

This lesson helps pupils understand how businesses track their financial performance and position. It enables them to interpret financial statements, which is important for business decision-making and personal financial literacy.

Prerequisite/Previous Knowledge

Pupils have basic knowledge of accounting principles, ledger accounts, and the preparation of a trial balance from previous lessons.

Lesson Content/Board Summary

Final Accounts (Continued)

Meaning of Final Accounts

Final accounts are financial statements prepared at the end of an accounting period (usually a year) to show the financial performance (profit or loss) and financial position (assets, liabilities, and capital) of a business.

Purpose of Final Accounts

The following are the purposes of final accounts:

To determine the net profit or net loss of the business.
To show the financial position of the business at a specific date.
To provide information for decision-making by management, investors, and creditors.
To comply with legal and regulatory requirements.

Components of Final Accounts

Final accounts typically consist of:

The Trading Account (to determine Gross Profit/Loss).
The Profit and Loss Account (to determine Net Profit/Loss).
The Balance Sheet (to show the financial position).

The Balance Sheet

The Balance Sheet is a statement that shows the financial position of a business at a specific point in time. It lists the assets, liabilities, and owner’s capital. The fundamental accounting equation is always maintained: Assets = Capital + Liabilities.

Formats of Balance Sheet

There are two main formats for presenting a Balance Sheet:

1. T Format (Vertical Format) Balance Sheet

In the T format, the Balance Sheet is presented in a vertical style. Assets are listed first, followed by Capital and Liabilities. The total assets must equal the total of capital and liabilities.

Example 1: Prepare a Balance Sheet in T-format for Bola Enterprises as at 31st December 2023 from the following balances:

Capital: N200,000
Cash: N50,000
Debtors: N30,000
Creditors: N20,000
Bank Loan: N40,000
Furniture: N80,000
Stock: N100,000

Solution:

BOLA ENTERPRISES
BALANCE SHEET AS AT 31ST DECEMBER 2023

ASSETS                                        N
Current Assets:
  Cash                                      50,000
  Debtors                                   30,000
  Stock                                    100,000
                                          ---------
  Total Current Assets                     180,000

Fixed Assets:
  Furniture                                 80,000
                                          ---------
  Total Fixed Assets                        80,000
                                          ---------
TOTAL ASSETS                               260,000
                                          =========

CAPITAL AND LIABILITIES                     N
Capital:
  Capital                                  200,000
                                          ---------
  Total Capital                            200,000

Long-term Liabilities:
  Bank Loan                                 40,000
                                          ---------
  Total Long-term Liabilities               40,000

Current Liabilities:
  Creditors                                 20,000
                                          ---------
  Total Current Liabilities                 20,000
                                          ---------
TOTAL CAPITAL AND LIABILITIES              260,000
                                          =========

2. Horizontal Format Balance Sheet

In the horizontal format, the Balance Sheet is presented with Assets on one side (usually the left) and Capital and Liabilities on the other side (usually the right). Both sides must balance.

Example 2: Prepare a Balance Sheet in Horizontal format for Grace Ventures as at 31st March 2024 from the following balances:

Capital: N150,000
Land & Building: N120,000
Bank: N30,000
Accounts Payable: N15,000
Accounts Receivable: N25,000
Mortgage Loan: N30,000
Office Equipment: N20,000
Inventories: N20,000

Solution:

GRACE VENTURES
BALANCE SHEET AS AT 31ST MARCH 2024

ASSETS                           N      |     CAPITAL AND LIABILITIES       N
----------------------------------|-----------------------------------
Fixed Assets:                     |     Capital:
  Land & Building          120,000  |       Capital                    150,000
  Office Equipment          20,000  |
----------------------------------|     Long-term Liabilities:
Current Assets:                   |       Mortgage Loan               30,000
  Bank                      30,000  |
  Accounts Receivable       25,000  |     Current Liabilities:
  Inventories               20,000  |       Accounts Payable            15,000
----------------------------------|-----------------------------------
TOTAL ASSETS               215,000  |     TOTAL CAPITAL AND LIABILITIES 215,000
==================================|===================================

Teaching Methods/Instructional Techniques

Discussion, Lecture, Demonstration, Question and Answer, Visual Aids

Instructional Procedures

Step 1: Introduction

Time: 5 minutes
Teaching Skill: Set Induction
Teacher’s Activity: The teacher greets the pupils, reviews the previous lesson on final accounts (introduction), and introduces the day’s topic, “Final Accounts (Continued): Balance Sheet Formats.”
Pupils’ Activity: Pupils respond to greetings, recall previous knowledge, and listen attentively to the new topic.
Learning Point: Pupils are prepared for the day’s lesson.

Step 2: Meaning and Purpose of Final Accounts

Time: 5 minutes
Teaching Skill: Explanation/Questioning
Teacher’s Activity: The teacher explains the meaning of final accounts and their purposes, drawing on pupils’ prior knowledge and the board summary.
Pupils’ Activity: Pupils listen and contribute to the discussion by sharing their understanding.
Learning Point: Pupils understand what final accounts are and why they are prepared.

Step 3: Introduction to Balance Sheet Formats

Time: 7 minutes
Teaching Skill: Explanation/Demonstration
Teacher’s Activity: The teacher introduces the Balance Sheet as a component of final accounts and explains that it can be presented in different formats: T format (vertical) and horizontal format, using the chart.
Pupils’ Activity: Pupils observe the chart and listen to the explanation of the two formats.
Learning Point: Pupils are aware of the different presentation formats for a balance sheet.

Step 4: Demonstration of T Format Balance Sheet

Time: 10 minutes
Teaching Skill: Demonstration/Illustration
Teacher’s Activity: The teacher uses a prepared example (Example 1 from the board summary) to demonstrate how to prepare a balance sheet using the T format, explaining each item and its placement.
Pupils’ Activity: Pupils pay close attention, copy the example, and ask clarifying questions.
Learning Point: Pupils learn the practical application of preparing a balance sheet in T format.

Step 5: Demonstration of Horizontal Format Balance Sheet

Time: 10 minutes
Teaching Skill: Demonstration/Illustration
Teacher’s Activity: The teacher uses another example (Example 2 from the board summary) to demonstrate how to prepare a balance sheet using the horizontal format, highlighting the differences from the T format.
Pupils’ Activity: Pupils observe, copy the example, and compare the two formats.
Learning Point: Pupils understand how to prepare a balance sheet in horizontal format.

Step 6: Class Practice/Activity

Time: 5 minutes
Teaching Skill: Guided Practice
Teacher’s Activity: The teacher provides a short practice question for pupils to attempt in their notebooks, circulating to provide guidance and correct mistakes.
Pupils’ Activity: Pupils work individually or in pairs to practice posting items into a balance sheet using either format.
Learning Point: Pupils reinforce their understanding through practical application.

Step 7: Evaluation/Review

Time: 5 minutes
Teaching Skill: Questioning/Assessment
Teacher’s Activity: The teacher evaluates the learning by asking the following questions:

What are final accounts, and what is their main purpose?
Mention the three main components of final accounts.
Distinguish between the T format and horizontal format of a balance sheet.
List three items found on the asset side of a balance sheet.

Pupils’ Activity: Pupils answer orally and in writing.
Learning Point: Pupils demonstrate understanding of the lesson.

Step 8: Conclusion

Time: 3 minutes
Teaching Skill: Summarization
Teacher’s Activity: The teacher summarizes the key learning points on final accounts and their balance sheet formats, and assigns relevant homework from the textbook.
Pupils’ Activity: Pupils listen to the summary and copy down the homework.
Learning Point: The lesson is concluded, and pupils have follow-up tasks.

Lesson Keywords

Final Accounts – Financial statements showing profit/loss and financial position.
Balance Sheet – A statement showing assets, liabilities, and capital at a specific date.
T Format – A vertical presentation of the balance sheet.
Horizontal Format – A side-by-side presentation of the balance sheet.
Assets – Resources owned by the business.
Liabilities – Debts owed by the business.
Capital – Owner’s investment in the business.

Differentiation

For pupils who are struggling, the teacher will provide simplified examples and one-on-one guidance during practice. Advanced learners will be challenged with more complex transactions and encouraged to analyze the implications of different balance sheet figures.

Note for teachers using this lesson plan

Teachers should ensure that pupils have a solid grasp of basic accounting terms before introducing the balance sheet formats. Emphasize the accounting equation (Assets = Capital + Liabilities) throughout the lesson. Encourage pupils to practice with various examples to build confidence in preparing financial statements.