The Final Accounts of a Sole Trader
In this chapter we bring together some the knowledge you have gained from earlier chapters in this book. In Chapters 5–7 we have described how a trial balance can be drawn up from the accounting records of a business and explained the purpose and content of the profit and loss account and balance sheet. We are now at the stage where we can draw up the final accounts of a sole trader from the trial balance. The final accounts are the profit and loss account and the balance sheet. This is a crucial stage in the accounting process. It transforms the trial balance, which is an arithmetical check of the business’s accounting records, into two financial statements which are used to communicate the accounting information to various users.
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