Preparing financial statements for a sole trader

This week’s topics

Preparing financial statements for a sole trader

1. Recording financial transactions
2. Income statements
3. Balance sheets

What you will be able to do

• 2.2 Prepare financial statements for a sole trader.

Activity

Start with this week’s video, then discuss how they apply to this week’s topic and note one example from a real business.

Study materials

Videos

• What motoring expenses can I claim if I'm self-employed? · YouTube · HMRC · 2 min · for registered students

Further resources

• Principles of Accounting Vol. 1, ch. 2.2: Assets, liabilities, equity, income, expenses · PDF · OpenStax (2019), section 2.2 defining the elements of the accounting equation; pp. 67–70 · for registered students
• Principles of Accounting Vol. 1, ch. 3.2–3.4: The accounting equation and transactions · PDF · OpenStax (2019), sections 3.2–3.4 working through transactions and their effect on assets = liabilities + capital; pp. 109–122 · for registered students
• Principles of Accounting Vol. 1, ch. 3.5–3.6: Journals, T-accounts and the trial balance · PDF · OpenStax (2019), sections 3.5–3.6 on debits and credits, posting to ledger accounts and preparing a trial balance; pp. 123–161 · for registered students
• On Double-Entry Bookkeeping: The Mathematical Treatment · Open-access article · Ellerman (2014), Accounting Education. Treats assets = liabilities + capital and T-accounts as simple algebra; a stretch read for maths-minded students. · for registered students