Class: Junior Secondary School 3 (JSS3, JSS 3)
Term: 2nd Term
Week: 6
Age: 14 years
Duration: 45 minutes
Subject: Business Studies
Curriculum Theme: Business Studies
Previous Lesson: Balancing the Ledger Account
Topic: Trading Profit And Loss Account (Part 1)
Subject Matter: Purpose of preparing trading profit and loss account, Ruling of trading profit and loss account, Determination of cost of goods sold, Determination of gross profit

Specific Objectives

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

Cognitive Domain:
(a) Explain the purpose of preparing a trading profit and loss account.
(b) Calculate cost of goods sold and gross profit correctly.
Affective Domain:
(a) Show interest in keeping proper business financial records.
Psychomotor Domain:
(a) Draw and rule a standard trading profit and loss account accurately.
Social Domain:
(a) Work collaboratively in groups to solve profit and loss account tasks.

Reference Materials

The following resources were used in planning this lesson:

9 Years Basic Education Curriculum
Lagos State Unified Scheme of Work for Junior Secondary Schools
Bajaj Finserv – Trading And Profit And Loss Account: Meaning, Types, Benefits
Relevant Textbooks

Instructional Materials

The teacher will teach this lesson with the aid of:

Chart showing a sample trading profit and loss account
Whiteboard and markers
Calculator
Ledger book samples
Printed examples of cost of goods sold calculations

Rationale for the Lesson

Pupils need to understand how businesses determine profit or loss so they can appreciate basic accounting processes and develop skills needed for future business activities.

Prerequisite/Previous Knowledge

Pupils already have basic knowledge of buying and selling, stock records, and simple financial calculations from previous lessons.

Lesson Content/Board Summary

Lesson Content

Trading Profit and Loss Account

Purpose of Preparing Trading Profit and Loss Account

A trading profit and loss account is prepared to determine whether a business has made a profit or a loss over a given period. It summarizes all income and expenses related to buying and selling goods.

The following are the purposes of preparing a trading profit and loss account:

To calculate the gross profit or gross loss of a business.
To determine the net profit or net loss for the period.
To show the relationship between sales, cost of goods sold, and expenses.
To assist in decision-making on business performance.

Ruling of Trading Profit and Loss Account

Ruling of the account means drawing the proper format used in presenting the financial information. It follows a T-account structure divided into the debit and credit sides.

The following are the main rulings of a trading profit and loss account:

The debit side shows opening stock, purchases, and direct expenses.
The credit side shows sales and closing stock.
Gross profit is transferred to the credit side of the profit and loss section.
Net profit is transferred to the capital account.

Determination of Cost of Goods Sold

Cost of goods sold (COGS) is the total cost of goods sold during the period after adjusting purchases and stock. It helps the business know how much it spent to generate sales.

These include the elements of cost of goods sold:

Opening stock
Add purchases
Add direct expenses
Less closing stock
The result is cost of goods sold

Determination of Gross Profit

Gross profit is the difference between sales and cost of goods sold. It shows how much the business gained from its trading activities before deducting expenses.

Examples are steps in calculating gross profit:

Write down total sales.
Subtract cost of goods sold from total sales.
The balance is the gross profit.

Teaching Methods/Instructional Techniques

Discussion, Lecture, Explanation, Demonstration, Group Work, Visual Aids

Instructional Procedures

To deliver this lesson, the teacher will adopt the following steps:

Step 1: Introduction

Time: 5 minutes
Teaching Skill: Set Induction
Teacher’s Activity: The teacher reviews the previous lesson and asks pupils if they know how businesses determine profit or loss.
Pupils’ Activity: Pupils respond by sharing their ideas.
Learning Point: Pupils recall basic financial concepts.

Step 2: Purpose of Trading Profit and Loss Account

Time: 8 minutes
Teaching Skill: Explanation
Teacher’s Activity: The teacher explains the purpose of preparing the trading profit and loss account.
Pupils’ Activity: Pupils listen attentively and ask questions.
Learning Point: Pupils understand the importance of the account.

Step 3: Ruling of Trading Profit and Loss Account

Time: 8 minutes
Teaching Skill: Demonstration
Teacher’s Activity: The teacher draws the trading profit and loss format on the board.
Pupils’ Activity: Pupils observe and note the structure.
Learning Point: Pupils learn how the account is structured.

Step 4: Calculation of Cost of Goods Sold and Gross Profit

Time: 10 minutes
Teaching Skill: Application
Teacher’s Activity: The teacher demonstrates how to calculate COGS and gross profit using simple examples.
Pupils’ Activity: Pupils solve similar examples in pairs.
Learning Point: Pupils can calculate COGS and gross profit.

Step 5: Note-Taking

Time: 5 minutes
Teaching Skill: Reinforcement
Teacher’s Activity: The teacher guides pupils to copy the board summary.
Pupils’ Activity: Pupils copy notes correctly.
Learning Point: Pupils retain the main points of the lesson.

Step 6: Evaluation/Review

Time: 6 minutes
Teaching Skill: Evaluation
Teacher’s Activity: The teacher evaluates the learning by asking the following questions:

What is the purpose of the trading profit and loss account?
List the components needed to calculate cost of goods sold.
Explain gross profit.
Draw a simple trading profit and loss account format.
Calculate the gross profit if sales = ₦50,000 and COGS = ₦32,000.
Pupils’ Activity: Pupils answer the questions orally.
Learning Point: Pupils demonstrate understanding of the lesson.

Step 7: Conclusion

Time: 3 minutes
Teaching Skill: Summary
Teacher’s Activity: The teacher summarizes the key points and links the lesson to the next topic.
Pupils’ Activity: Pupils listen and ask final questions.
Learning Point: Pupils consolidate learning.

Lesson Keywords

Trading Account – record of buying and selling activities
Cost of Goods Sold – total cost of goods sold during a period
Gross Profit – sales minus cost of goods sold
Purchases – goods bought for resale
Closing Stock – value of unsold goods at the end of the period

Differentiation

Provide simpler examples for slower learners, use group work to support peer learning, and give advanced calculations to fast learners.

Note for Teachers Using This Lesson Plan

Use practical examples from familiar businesses to make the topic relatable. Encourage pupils to practice drawing the account format repeatedly.