Which accounting standard is most relevant for the preparation of final accounts for sole traders?
Practice Questions
1 question
Q1
Which accounting standard is most relevant for the preparation of final accounts for sole traders?
IFRS
GAAP
IAS
None of the above
Sole traders often follow simplified accounting principles rather than formal accounting standards like IFRS or GAAP.
Questions & Step-by-step Solutions
1 item
Q
Q: Which accounting standard is most relevant for the preparation of final accounts for sole traders?
Solution: Sole traders often follow simplified accounting principles rather than formal accounting standards like IFRS or GAAP.
Steps: 5
Step 1: Understand what a sole trader is. A sole trader is a person who runs their own business and is personally responsible for its debts.
Step 2: Learn about accounting standards. These are rules that guide how financial statements should be prepared.
Step 3: Recognize that sole traders usually do not need to follow complex accounting standards like IFRS (International Financial Reporting Standards) or GAAP (Generally Accepted Accounting Principles).
Step 4: Know that instead, sole traders often use simplified accounting principles to prepare their final accounts.
Step 5: Conclude that the most relevant 'standard' for sole traders is not a formal one, but rather simplified methods that suit their business needs.
