CAPS ACC 10 TERM 2 WEEK 4 – 7 Financial Accounting of a Sole Trader

TOPIC – Financial Accounting of a sole trader

Preparation of final accounts of a sole trader taking into account year-end adjustments
Related concepts
Application of GAAP principles
Accounting equation
Pre-adjustment Trial Balance
Year-end adjustments:
• trading stock deficit/surplus
• consumable stores on hand
• depreciation (on cost price/straight line, on diminishing balance
methods)
• bad debts
• bad debts recovered (Including reciepts from solvent estates)
• correction of errors/omissions
• accrued income (receivable)
• income received in advance (deferred)
• expenses prepaid
• accrued expenses (payable).
• Interest on mortgage bond (capitalised)
Post-adjustment Trial Balance
Closing transfers
Final accounts:
• Trading Account
• Profit and Loss Account
Post-closing Trial Balance
Reversal of certain yearend adjustments at beginning of next
financial period, i.e. accruals, income received in advance and
prepayments.