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Accounting for Non-Accountants, 9th Edition by David Horner

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06

Accounting for other business organizations

Introduction

So far we have looked at the accounting records of a very simple type of business organization – that of a sole trader. The sole trader, as the name suggests, is owned and run by one person. This owner will contribute their own capital and this will probably be supplemented with forms of borrowing. The sole trader will be the sole beneficiary of any profits that are earned. However, if this business makes a loss, they would have to cover this out of business resources (with capital falling) and might have to use personal resources to cover any unpaid debts, owing to their lack of limited liability.

In addition, we have dealt with a particular type of sole trader so far – that of a trader. ...

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