Final Accounts of a Sole Trader or Proprietor

Contents / notes

• Statement of profit or loss or income statement
• Statement of financial position
• Provision for bad and doubtful debt
• Provision for discounts
• Provision for depreciation using straight-line and reducing-balance methods
• Accruals and prepayments

Candidate objectives

• Determine the cost of sales, gross profit and net profit of a sole trader.
• Identify non-current assets, current assets, long-term liabilities, current liabilities and proprietor's capital.
• Compute adjustable items relating to expenditure and income in the statement of profit or loss.
• Differentiate between bad debts and provision for bad and doubtful debts.