Accounting (9-1) - 0985 CIE

Sole Traders

Gbogbo ọrọ náà

A sole trader is the simplest form of business: one person owns it, runs it, keeps the profit and carries the risk. At the end of every financial year that owner needs to answer two plain questions. How much profit did the business make this year, and what is it worth right now? The income statement answers the first, the statement of financial position answers the second, and learning to build both cleanly is the single most examined skill in Cambridge IGCSE Accounting.

In this lesson you will prepare a full income statement from a trial balance, splitting it into the trading section that produces gross profit and the profit and loss section that produces the profit for the year. You will then lay out a statement of financial position in the proper vertical order, dealing with the adjustments examiners love to slip in: depreciation, accruals and prepayments, irrecoverable debts and goods taken by the owner. Every figure here ties together, so you can see exactly how one adjustment ripples through the whole set of statements.

Ebumnobi

the advantages and disadvantages of operating as a sole trader.
how a sole trader can be a trading, service, manufacturing business or a combination of these.
the importance of preparing statements of profit or loss and statements of financial position.
how to prepare statements of profit or loss for trading, service, manufacturing businesses, or businesses which are a combination of these.
the importance of producing statements of financial position to record assets and liabilities on a specified date.
how to define the content of a statement of financial position: non-current assets, intangible assets, current assets, current liabilities, non-current liabilities and capital.
the effect of a change in an account balance on other account balances in the financial statements.
how to prepare statements of financial position for trading, service, manufacturing businesses, or businesses which are a combination of these.
how to make adjustments for accumulated depreciation using the straight line, reducing balance and revaluation methods.
how to make adjustments for accrued and prepaid expenses and accrued and prepaid income.
how to make adjustments for irrecoverable debts and allowance for irrecoverable debts.
how to make adjustments for drawings: goods and other assets taken by the owner, owner’s private expenses paid by the business.

Akọmọ Ojú-ẹkọ

A sole trader does not have to publish accounts, but every owner still needs them. The bank wants to see profit before it lends, the tax authority wants to see profit before it charges, and the owner wants to know whether the business is growing or quietly draining away. The two year-end statements turn a year of bookkeeping into those answers. Master the layout once and you have the template that partnerships and limited companies simply extend.

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Ayẹwo Ẹkọ

Ekele diri gi maka imecha ihe karịrị na Sole Traders. Ugbu a na ị na-enyochakwa isi echiche na echiche ndị dị mkpa, ọ bụ oge iji nwalee ihe ị ma. Ngwa a na-enye ụdị ajụjụ ọmụmụ dị iche iche emebere iji kwado nghọta gị wee nyere gị aka ịmata otú ị ghọtara ihe ndị a kụziri.

Ị ga-ahụ ngwakọta nke ụdị ajụjụ dị iche iche, gụnyere ajụjụ chọrọ ịhọrọ otu n’ime ọtụtụ azịza, ajụjụ chọrọ mkpirisi azịza, na ajụjụ ede ede. A na-arụpụta ajụjụ ọ bụla nke ọma iji nwalee akụkụ dị iche iche nke ihe ọmụma gị na nkà nke ịtụgharị uche.

Jiri akụkụ a nke nyocha ka ohere iji kụziere ihe ị matara banyere isiokwu ahụ ma chọpụta ebe ọ bụla ị nwere ike ịchọ ọmụmụ ihe ọzọ. Ekwela ka nsogbu ọ bụla ị na-eche ihu mee ka ị daa mba; kama, lee ha anya dị ka ohere maka ịzụlite onwe gị na imeziwanye.

Which item is deducted from gross profit to help arrive at the profit for the year? A. Revenue B. Closing inventory C. Wages D. Capital Answer: C
A trader has opening inventory $5,000, purchases $40,000 and closing inventory $7,000. What is the cost of sales? A. $38,000 B. $42,000 C. $45,000 D. $52,000 Answer: A
Revenue is $90,000 and cost of sales is $54,000. What is the gross profit? A. $36,000 B. $54,000 C. $90,000 D. $144,000 Answer: A
Where do trade payables appear in the statement of financial position? A. Non-current assets B. Current assets C. Current liabilities D. Capital Answer: C
Opening capital is $50,000, profit for the year is $18,000 and drawings are $12,000. What is the closing capital? A. $44,000 B. $56,000 C. $62,000 D. $80,000 Answer: B