AccountingCode 7707
Sole traders
What this topic asks you to be able to do
- the advantages and disadvantages involved in running a business as a sole trader
- the ways in which a sole trader may operate as a trading, service or manufacturing business, or a mix of these
- why it is significant to draw up the statements of profit or loss, as well as the statements of financial position
- how to prepare a statement of profit or loss for a business that trades, provides services or manufactures, or does a mix of these
- why it matters to produce statements of financial position as a record of a business's assets and liabilities at a particular date
- how to define what goes into a statement of financial position, under the headings capital, non-current assets, intangible assets, current assets, non-current liabilities and current liabilities
- how altering one account's balance flows through to the balances of other accounts in the financial statements
- how to prepare a statement of financial position for a business that trades, provides services or manufactures, or does a mix of these
- how to adjust the accounts for accumulated depreciation by each method: revaluation, reducing balance or straight line
- the way to adjust for expenses that are accrued or prepaid and for income that is accrued or prepaid
- the way to adjust the accounts for irrecoverable debts and for the allowance for irrecoverable debts
- the way to adjust for drawings, both where the owner takes goods or other assets and where the business pays the owner's private expenses