Financial accounting and reporting involves producing financial statements for users who are external to the business. In the case of sole traders, the information in the financial statements can be used to apply for bank loans or other types of borrowing. It also serves as the starting point for calculating the taxable income of the owner of the business.

In the UK$,$ the taxation authorities are called Her Majesty$$s Revenue & Customs $($HMRC$).$

If you are in the UK$,$ find and visit HMRC$$s website and try to find out what information is required to file a tax return for the owner of a sole trader. If you are not in the UK$,$ you can choose to find out this information from the taxation authority in your jurisdiction, or you can choose to also look at the HMRC website and retrieve the information for the UK$.$

Write down the items and think about where to find them in the financial statements.