Class: Senior Secondary School 1 (SS1 / SSS 1)
Term: 3rd Term
Week: 6
Age: 15 years
Duration: 45 minutes
Subject: Book Keeping
Curriculum Theme: Trade
Previous Lesson: Correction of Errors: Suspense Account and Non-Affecting Errors.
Topic: Trading Accounts
Subject Matter: Purpose of trading account, Trading terminologies, Cost of goods sold

Specific Objectives

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

Cognitive Domain:

Define a trading account.
State the purpose of preparing a trading account.
Identify and explain common trading terminologies.
Calculate the cost of goods sold.

Affective Domain:

Appreciate the importance of accurate record-keeping in business.
Participate actively in class discussions on trading accounts.

Psychomotor Domain:

Prepare a simple trading account from given information.
Solve practical problems involving the calculation of cost of goods sold.

Share ideas with peers on the components of a trading account.

Reference Materials

The following resources were used in planning this lesson:

9 Years Basic Education Curriculum for Senior Secondary Schools.
State Unified Scheme of Work for Senior Secondary School Book Keeping.
Simplified Book-Keeping and Accounts for Senior Secondary Schools by A. L. Olufemi.

Instructional Materials

The teacher will teach this lesson with the aid of:

A chart showing a sample trading account.
Whiteboard and markers.
Textbooks and notebooks.
Calculators.

Rationale for the Lesson

This lesson helps pupils understand how businesses calculate their gross profit or loss from buying and selling goods. Knowing how to prepare a trading account is important for pupils to grasp basic business performance and to make informed decisions about managing finances.

Prerequisite/Previous Knowledge

Pupils are expected to have basic knowledge of ledgers, trial balance, and general accounting concepts.

Lesson Content/Board Summary

Trading Accounts

Definition of Trading Account

A trading account is a financial statement prepared by businesses to determine the gross profit or gross loss of a business for a specific accounting period. It is the first part of the final accounts of a trading concern.

Purpose of Trading Account

The following are the purposes of preparing a trading account:

To determine the gross profit or gross loss made by the business during an accounting period.
To show the cost of goods sold during the period.
To provide information that can be compared with previous periods to assess business performance.
To help management make important business decisions, such as pricing and purchasing strategies.

Trading Terminologies

The following are common terms used in trading accounts:

Opening Stock: The value of unsold goods available at the beginning of an accounting period.
Purchases: The total value of goods bought by the business for resale during the accounting period.
Returns Outwards (Purchase Returns): Goods returned by the business to its suppliers. This reduces the total purchases.
Carriage Inwards: Expenses incurred on transporting goods purchased by the business to its premises. These are direct expenses.
Sales: The total value of goods sold by the business during the accounting period.
Returns Inwards (Sales Returns): Goods returned to the business by its customers. This reduces the total sales.
Closing Stock: The value of unsold goods remaining at the end of an accounting period.

Cost of Goods Sold

The cost of goods sold (COGS) represents the direct costs attributable to the production of the goods sold by a business. It includes the cost of the materials and direct labour used to create the goods.

The formula for calculating the cost of goods sold is:

Opening Stock + Net Purchases + Carriage Inwards – Closing Stock

Where Net Purchases = Purchases – Returns Outwards

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 briefly, and then introduces the topic “Trading Accounts” by asking pupils how businesses know if they are making a profit or a loss from selling goods.
Pupils’ Activity: Pupils respond to questions and listen attentively.
Learning Point: Pupils are prepared for the new lesson.

Step 2: Definition and Purpose of Trading Account

Time: 7 minutes
Teaching Skill: Explanation/Lecture
Teacher’s Activity: The teacher defines a trading account and explains its primary purpose using the chart of a sample trading account. The teacher highlights that it is used to determine gross profit or loss.
Pupils’ Activity: Pupils listen, take notes, and ask questions for clarification.
Learning Point: Pupils understand what a trading account is and why it is prepared.

Step 3: Trading Terminologies

Time: 7 minutes
Teaching Skill: Explanation/Listing
Teacher’s Activity: The teacher lists and explains key trading terminologies such as opening stock, purchases, sales, returns inwards, returns outwards, carriage inwards, and closing stock. The teacher uses examples to clarify each term.
Pupils’ Activity: Pupils listen, write down the terms and their explanations.
Learning Point: Pupils are familiar with the specific terms used in trading accounts.

Step 4: Cost of Goods Sold

Time: 7 minutes
Teaching Skill: Calculation/Formula Presentation
Teacher’s Activity: The teacher explains the concept of ‘Cost of Goods Sold’ and presents the formula for its calculation: Opening Stock + Net Purchases + Carriage Inwards – Closing Stock. The teacher further explains how to calculate Net Purchases.
Pupils’ Activity: Pupils write down the formula and ask questions about its components.
Learning Point: Pupils understand how to calculate the cost of goods sold.

Step 5: Practical Illustration

Time: 7 minutes
Teaching Skill: Demonstration/Problem Solving
Teacher’s Activity: The teacher demonstrates a simple example on the whiteboard, showing how to calculate the cost of goods sold and how to prepare a basic trading account using hypothetical figures and the terminologies explained earlier.
Pupils’ Activity: Pupils observe the demonstration, follow the steps, and copy the example.
Learning Point: Pupils see a practical application of the concepts taught.

Step 6: Class Activity

Time: 6 minutes
Teaching Skill: Application/Practice
Teacher’s Activity: The teacher provides a short exercise for pupils to calculate the cost of goods sold and prepare a simple trading account. The teacher moves around to provide guidance.
Pupils’ Activity: Pupils attempt the exercise individually or in pairs.
Learning Point: Pupils practice applying their knowledge and skills.

Step 7: Evaluation/Review

Time: 3 minutes

Teaching Skill: Questioning/Assessment

Teacher’s Activity: The teacher evaluates the learning by asking the following questions:

Define a trading account.
State two purposes of preparing a trading account.
List three common trading terminologies.
How is the cost of goods sold calculated?

Pupils’ Activity: Pupils answer orally and in writing.

Learning Point: Pupils demonstrate understanding of the lesson.

Step 8: Conclusion

Time: 3 minutes
Teaching Skill: Summarisation/Assignment
Teacher’s Activity: The teacher summarises the key points of the lesson and gives homework, asking pupils to find and prepare a trading account for a small business.
Pupils’ Activity: Pupils listen to the summary and copy the homework assignment.
Learning Point: The lesson is concluded, and pupils have further practice.

Lesson Keywords

Trading Account – An account prepared to determine the gross profit or gross loss of a business.
Gross Profit – The profit a business makes after deducting the cost of goods sold from sales revenue.
Opening Stock – The value of inventory at the beginning of an accounting period.
Purchases – Goods bought for resale.
Sales – Goods sold to customers.
Cost of Goods Sold – The direct costs attributable to the production of goods sold by a company.
Closing Stock – The value of inventory remaining at the end of an accounting period.

Differentiation

For pupils who grasp concepts quickly, the teacher can provide more complex exercises involving additional direct expenses. For pupils requiring more support, the teacher will provide simplified examples and one-on-one guidance during the class activity, focusing on understanding the basic formula and terminologies.

Note for teachers using this lesson plan

Ensure pupils have a solid understanding of basic ledger entries before introducing trading accounts. Use visual aids like a large chart of a trading account format to help pupils visualise the structure. Encourage pupils to bring calculators for practical exercises. Emphasise the practical relevance of knowing how to calculate gross profit for any business.