Sole trader accounts

Rooms in this module

How this works

Each room answers one problem. A task is a few lines of reading, then questions you answer in the books: post to an account, type a figure, sort, match or write a journal. Every answer is marked at once, with the rule behind it. There are no videos.

Words in this module

Capital

Capital is what a business owes its owner: the money the owner put in, plus any profit left in the business.

Cost of sales

Cost of sales is what the goods sold in a year cost the business: opening inventory, plus purchases, less closing inventory.

Current asset

A current asset is cash, or something that should turn into cash within a year: inventory, trade receivables, money in the bank.

Drawings

Drawings are money or goods the owner takes out of the business for their own use. They reduce capital.

Expense

An expense is a cost of running a business in a period, such as rent, wages or electricity.

Gross profit

Gross profit is revenue less cost of sales: the profit on trading, before the running expenses of the business.

Income

Income is what a business earns, mostly from sales. An income account goes up on the credit side.

Net profit

Net profit is the profit for the year: gross profit less all the other expenses of running the business.

Non-current asset

A non-current asset is an asset a business keeps and uses for more than a year, such as a van, an oven or shop fittings.

Statement of financial position

The statement of financial position lists what a business owns and owes at one date: its assets, liabilities and capital.

Statement of profit or loss

The statement of profit or loss sets the income of a period against its expenses, to show the profit or loss.

Questions