Which accounting standard is primarily applicable to the preparation of final accounts for sole traders?
Practice Questions
1 question
Q1
Which accounting standard is primarily applicable to the preparation of final accounts for sole traders?
IFRS
GAAP
IAS
None of the above
Sole traders often follow simplified accounting principles and may not be strictly bound by IFRS or GAAP.
Questions & Step-by-step Solutions
1 item
Q
Q: Which accounting standard is primarily applicable to the preparation of final accounts for sole traders?
Solution: Sole traders often follow simplified accounting principles and may not be strictly bound by 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 have simpler accounting needs compared to larger businesses.
Step 4: Know that sole traders often do not have to follow complex standards like IFRS (International Financial Reporting Standards) or GAAP (Generally Accepted Accounting Principles).
Step 5: Understand that instead, sole traders may use simplified accounting principles to prepare their final accounts.
