1. Compare and contrast the financial statements of sole traders’ and limited liability companies by: 
2. (i) explaining features and examples of account items (maximum 10) that are common to both sole traders’ and limited liability companies, 
3. (ii) explaining and illustrating differences in how profits are disbursed/distributed, and 
4. (iii) explaining how both types of organizations are financed. These should be presented under subheadings.
5. Referring to and using the trial balance in appendix A of this brief prepare an income statement and statement of financial position for the named business. 
6. Discuss to what extent the financial statements prepared in ‘2’ above will be useful to the business owners and any other stakeholder, for example: supplier, employee, government and management.

   APPENDICES:

   Appendix A: Trial Balance of Godwin Trading Enterprise

   	DR	CR
   Capital Salaries & Wages Sales Opening inventory Purchases Carriage in Purchases returns Carriage out Rent & Rates Motor expenses Telephone Electricity General expenses Buildings Motor Vehicles at cost Fixtures & Fittings Trade receivables Cash at Bank Trade payables Sales returns Drawings	23,172 19,208 91,244 1,860 1,200 2,292 2,656 2,624 996 1,884 50,000 20,800 12,100 23,376 2,892      1,230 7,200	105,816 136,600 1,932 20,386
   Total	264,734	264,734

   Additional information:

7. Closing inventory 27,700
8. Electricity charges amounting to £150 had been omitted from the books and remain unpaid.
9. Management has decided that an amount of £376 of trade receivables cannot be recovered and should be written off from the books completely.

Answer rating: 100% (QA)

1i similarity between sole traders and Limited Liabilty Partnership ... View the full answer