You overheard two students discussing after a class on the difference between the financial statements of limited
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Question:
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
- Discuss how far you agree/ disagree with the statement made by each student.
- 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.
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