The profit of sole trader increases his
Question 1 Report
The profit of sole trader increases his
Answer Details
The profit of a sole trader increases his capital. When a business earns a profit, it means that its revenues exceed its expenses. This increase in revenue results in a higher profit, which, in turn, increases the owner's equity in the business. For a sole trader, the owner's equity is the same as their capital. Therefore, a profit will increase the owner's capital, making the business more financially stable and able to invest in growth opportunities or pay down liabilities.
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