Question

Final accounts with the help of journal /subsidiary book of sole trading concern need and importance

Answer 1

Answer:

trader is not a separate legal entity, like a partnership or a corporation. No legalformalities are necessary to create a sole trader, other than appropriate licensing to conduct business and registration of a business name if it differs from that of the sole proprietor. ecausea sole trader is not a separate legal entity, it is not itself a ta!able entity. "he sole proprietor mustreport income and e!penses from the business on #chedule $ of her or his personal federalincome ta! return.A ma%or concern for persons organizing a business enterprise is limiting the e!tent to which their personal assets, unrelated to the business itself, are sub%ect to claims of business creditors. A soletrader gives the least protection because the personal liability of the sole proprietor is generallyunlimited. oth the business assets and the personal assets of the sole proprietor are sub%ect toclaims of the sole trader&s creditors. 'n addition, e!isting liabilities of the sole proprietor will not be e!tinguished upon the dissolution or sale of the sole trader.(nlike the managers of a corporation or a partnership, a sole proprietor has total fle!ibility inmanaging and controlling the business. "he organizational e!penses and level of formality in asole trader are minimal as compared with those of other business organizations. )owever, because a sole trader is not a separate legal entity, it terminates when the sole proprietor becomesdisabled, retires, or dies. As a result, a sole trader lacks business continuity and does not have a perpetual e!istence as does a corporation.*or working capital, a sole trader is generally limited to the individual funds of the sole proprietor, along with any loans from outsiders willing to provide e!tra capital. +uring her lifetime, a sole proprietor can sell or give away any asset because the business is not legallyseparate from the sole proprietor. At the death of the sole proprietor, the business is usuallydissolved. "he proprietor&s estate, however, can sell the assets or continue the business.