You overheard two students discussing after a class on the difference between the financial statements of limited liability companies and sole traders. Below is what each student said:

 

Student 1: “When it comes to recording accounting transactions for both sole

traders and companies, the principles are the same. They only differ for the preparation of financial statements.”

 

Student 2: “I think if we are asked to prepare the profit and loss account and

balance sheet for a large UK-based public limited company with international operations, transacting in different currencies and having frequent revaluation of fixed asset, the balance sheet can be prepared immediately after preparing a profit and loss account.”

 

Required

1. Discuss how far you agree/ disagree with the statement made by each student.    

  

2. Compare the essential features of the financial statements for both sole traders and public limited companies, considering a public limited company as described by student 2 above.                                                                            

Answer rating: 100% (QA)

Answer a I agree with the student 1 opinion that the principles of recording the accounting transact... View the full answer