Lesson Plan

• Describe the prudence principle and its purpose in financial reporting.
• Identify situations where prudence requires early recognition of expenses or liabilities.
• Apply prudence to prepare journal entries for provisions, depreciation, inventory write‑downs, and warranties.
• Analyse the impact of prudence on the income statement and balance sheet.
• Evaluate exam‑style questions related to the prudence principle.

• Projector and screen
• Whiteboard and markers
• Accounting textbook (IGCSE 0452)
• Worksheet with journal‑entry practice
• Calculator for each student
• Printed handout of the prudence flowchart
• Sample trial balance for demonstration

Begin with a brief news headline about a company that overstated profits, prompting a discussion on why such optimism can be risky. Ask students to recall how the accruals principle ensures expenses are recorded when incurred. Explain that today they will learn to apply the prudence principle and will be able to recognise when to record provisions, depreciation, and write‑downs.

1. Do‑now (5') – Quick quiz on accrual vs. cash basis accounting.
2. Mini‑lecture (10') – Define prudence, illustrate with examples of provisions, depreciation, inventory valuation, and warranties.
3. Guided practice (12') – Using the projector, walk through a journal entry for a provision for doubtful debts.
4. Group activity (10') – Students calculate depreciation and inventory write‑down on the worksheet, then share answers.
5. Class discussion (8') – Analyse how prudence affects profit and net assets; connect to consistency, accruals, and going‑concern principles.
6. Exit ticket (5') – Write a concise answer to one of the provided exam‑style questions on prudence.

Summarise that prudence ensures expenses and liabilities are recognised early, leading to more reliable financial statements. Collect the exit tickets to gauge understanding, and remind students to complete the additional journal‑entry worksheet for homework, focusing on warranty provisions.