Step 11 - Net profit calculated in SOPL is transferred to the capital/equity section in SOFP.

Step 11 - Net profit calculated in SOPL is transferred to the capital/equity section in SOFP.

STEP 1: Finish the SOPL

At the bottom of the SOPL, you will get either: Net Profit, or Net Loss

STEP 2: Identify where it goes in SOFP Net profit It goes to Equity (Capital / Retained Earnings)

STEP 3: Transfer Net Profit to SOFP (Equity section)

Net profit increases retained earnings.

STEP 4: Check the accounting equation

If SOPL → SOFP transfer is correct, the statement will balance; i.e. A = E + L