a. To answer the (a) sub-questions that follow you must think about the financial position and financial performance of a small local sole trader that has one owner/manager and no more than 3 full-time employees. If you can, answer the questions in the context of a real business you are aware of. If not, use the example of what you think is the likely financial situation of a small local sole trader.

i. Give an example of five assets (two non-current and three current) that  a business might own, and which would be recorded in its balance sheet at its accounting year end. Your answer should also explain why each of the five assets should be treated/classified as either a non-current asset or a current asset.
ii. Give an example of three liabilities (one non-current and two current) that such a business might owe, and which would be recorded in its balance sheet at its accounting year end. Your answer should also explain why such liabilities should be treated/classified as either a non-current liability or a current liability.
iii. In which section/part of the balance sheet might each item in (i) and (ii) be recorded?
iv. Construct a likely income statement for the sole trader for the accounting year that ends at the balance sheet date in (i) to (iii) above. Based on whatever knowledge and information you have or can realistically assume, give a reason for each of the sales, cost of sales (if applicable), expenses and net profit or loss figures of the business you have identified. (For example, if you gave the sales figure as £50,000 explain why that amount seems reasonable and based on some evidence or knowledge.)

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Assuming the business in question is a small local sole trader Assets Noncurrent Property plant and equipment eg machinery vehicles office furniture e... View the full answer