This document discusses the preparation of financial statements. It explains that financial statements are prepared to provide meaningful information to various stakeholders, including internal users like owners and managers, and external users like government and prospective owners. The document distinguishes between capital and revenue items, which is important for correctly preparing the trading and profit and loss account and balance sheet. Financial statements include the trading and profit and loss account, which shows profit or loss, and the balance sheet, which shows assets, liabilities, and capital.