Financial Statements
Sole Trader
The cornerstone of IGCSE Accounting — questions require you to prepare a full income statement and statement of financial position for a sole trader, incorporating adjustments for depreciation, accruals, prepayments, bad debts, and provisions. Accuracy and layout both carry marks.
Work through adjustments methodically — depreciation, accruals, prepayments, and provisions must all be reflected in both the income statement and the SFP. Common mistakes: forgetting to adjust both statements, misplacing prepayments and accruals on the SFP, and showing assets at cost instead of net book value.
Key Concepts to Revise
Income Statement
Revenue − Cost of Sales = Gross Profit. Then deduct all expenses (including adjustments) to arrive at profit for the year.
Adjustments
Depreciation, accruals, prepayments, bad debts, and provision changes must all be applied before finalising the income statement.
Statement of Financial Position
Non-current assets at NBV, current assets (including prepayments), current liabilities (including accruals), and capital section with profit added.
Capital Section
Opening capital + profit for the year − drawings = closing capital. Drawings reduce capital — never shown as an expense.