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Find out How to Write Down the Sole Trader Financial Statements On Words Form

hello.great-aunt how you doing hello everybody.my name is upon me and I'd like to.welcome you to mindset learn extra it is.of course the exam revision show and I'm.very happy and excited to be part of.this it is of course proudly sponsored.by empty NSF Foundation and endorsed by.the Department of Basic Education now.mine statistic today in studio I am.joined by our awesome teacher it is of.course mr. Martin hello Martin hi they.put me hat this high day very well thank.you.hi mine setters so Martin tell us what.are we going to be learning about today.okay so today's show mine setters is a.very very important section of your.grade 10 syllabus those are the.financial statements of sole traders.awesome stuff you know what Martin I.haven't done economics and I think this.is the best time for me to learn right I.mean it's accounting so this is the.start of everything you know in grade 10.that's when learners really get to.understand what accounting is and it's.the best time for me to learn for the.very first time or I think it's the best.time for you to learn Bhoomi and it's.the based on mindset is as well your.exams are coming up and we're doing a.section that's very very important and.we're doing a section that forms the.groundwork for what you'll be doing in.grade 11 and carrying on in grade 12.would be I'm very excited guys please.make sure that you grab yourself a glass.of water because I have mine right next.to me so during the show make sure that.you also dropped me all the questions.that you have based on financial.statement so that I can ask Martin all.of the questions that we have so during.the show I will try and talk to him and.see if we don't have if we have time.enough time so you tackle all of them.all right now guys without any further.talking let us just get straight to.learning okay thank you very much boo me.and mine setters welcome to our lesson.on financial statements of sole traders.and what we're really going to be.focusing on today is the two items that.I've written.for you we need to understand mainly how.to do these year-end adjustments those.are vitally vitally important in fact I.can't stress how important they are.because those adjustments are going to.come back in grade 11 and they're going.to come back in grade 12 and you're.going to end up having to do them at.university as well as when you run your.own business one day you're going to be.able to doing those here in the.justments so we're going to do that and.today we're going to pay particular.reference to the income statement you.will know from your accounting that.there are two financial statements that.we prepare at the end of a financial.year I'm going to tell you which two.they are in a moment think about them so.long and see if you can get them before.I tell you which ones they are but today.is particularly France - our income.statement also we need to just.understand the main concepts relating to.the matching principle in accounting so.you'll know that their various core.principles that we have to understand.and use and one of them is called the.matching principle I'd like somebody if.you know the answer what the matching.principle is send us what the answer is.on Facebook and I'll tell you later on.if anybody knows what the matching.principle is so without further ado.let's get to our challenge question for.the day for those of you that are.watching the show for the first time we.usually ask a challenge question at the.beginning of the show where you have to.try and work out what the answer is to.the question and I will answer the.question later on at the very end.today's challenge question is how would.you journalize the following end-of-year.adjustment and it says t modular a.debtor was declared insolvent so you.need to know what insolvency means I'm.sure you know that already and T modular.owned us we are called wallaby traders.he owed us an amount of 800 R and a.dividend of 30 cents in the R and was.received and the balance of the account.is to be written off that's your.challenge question for today mine.setters tell me which accounts or.accounts are going to be debited and.tell me which accounts or accounts are.going to be creditors send us the answer.on Facebook write in to us and I'll tell.you what the correct answer is at the.end of the show.now when you are doing year-end.adjustments what we need to be aware of.is that every business has got a.financial year end that is called the.end of the financial year.and for many businesses it's usually on.the 28th of February but that can vary.any business can choose when its.financial year is going to end.normally businesses choose the 20th of.February because that is the time that.corresponds with the government's.national budget for those of you that.are doing maybe economics or business.studies you'll know that the government.delivers a national budget on the 28th.of or in February every year to close.off its accounts on the 28th of February.so many businesses do that to have the.tax year coincide with the government's.financial year and what we do at the end.of this financial year we prepare two.different financial statements I'll ask.you a few minutes ago which ones they.were the first one is our income.statement and the income statement is.prepared in order to calculate our net.profit or if our business is doing very.badly our net loss for the year so we.prepared this income statement and what.we do is we take all our incomes.subtract all our expenses and that's.going to give us our profit any business.would want to know whether we make a.profit or a loss at financial year end.the second important one is that we.prepare a balance sheet and the balance.sheet shows our financial position you.will often hear the balance sheet by the.front name it's also often called the.statement of financial position and that.is because it shows us in our business.what our businesses financial position.is it basically shows us the accounting.equation at the end of the financial.year I'm sure you remember the.accounting equation from this year.studies and maybe grade 9 the accounting.equation is our assets are equal to our.owner's equity plus our liabilities and.what the balance sheet does is it shows.this in a table form it tells us these.are how many assets we have these are.how many liabilities we have and the.cesare owner's equity and at the end the.two figures have to show you the same.because our assets are equal to.our owner's equity plus our liabilities.then we say that our books are balanced.because our assets are shown to be equal.to our equity plus our liabilities very.very important now in case you're.wondering what goes into these two.statements in the income statement we.are only going to include our income.accounts and our expense accounts where.our incomes and expenses usually shown.they shown in the specific section of.the general ledger they are shown in the.nominal section of the general ledger so.basically what we can say is that our.income statement always contains our.incomes and our expenses in other words.it contains everything in the nominal.section of our general ledger as for the.balance sheet that shows the remaining.accounts that we have it shows our.assets it shows our liabilities it shows.our capital and it shows our drawings.those are the four items that are shown.in the balance sheet and in case this.isn't making sense to you think back to.your general ledger and think back to.the other section not the nominal.section but the section that we call the.balance sheet section yes that's right.all the accounts in the balance sheet.section are the ones that are going to.be shown in our balance sheet also.please bear in mind that these two.financial statements have now got new.names in terms of the new Companies Act.what they've done is they've changed.their names from an income statement to.a statement of comprehensive income so.I'll just write that for you it's.sometimes called a statement of.comprehensive income so if you see that.anywhere don't get afraid it's exactly.the same as our income statements it's.just got a new name and the balance.sheet has also been renamed we now call.the balance sheet a statement of our.financial position so if you see.anything called a statement of financial.position just know that that's more.terminology for a balance sheet now very.important what we do at year-end we show.all our incomes and all our expenses in.our income statements or our statements.of comprehensive income but what is.vitally important and this is why we do.here in the justments.is that we want to show in our income.statement all the income that we have.earned this here and all the expenses.that we have incurred this year.regardless of whether we've received the.money or whether we've paid the money so.in other words if I've got to telephone.account for February and my financial.year ends in February but I've used the.phone during February and I get from.Telecom or from any other service.provider I get my telephone account.what's going to happen is I'm going to.look at that telephone account and that.money even if I haven't paid it by the.28th of February that money must be.recorded as an expense and this year.because we used the telephone in.February so in other words our income.statement must reflect the incomes and.the expenses that happened in this.financial year regardless of whether.we've received the money or paid the.money for them or not so those are.called year-end adjustments year-end.adjustments are the changes that we make.to the figures so that they reflect the.correct values for this financial year.so we're going to include things that we.have earned any income that we've earned.but we haven't yet received the money.for we must include in this year's.income statement because we have earned.the income in this year in the same way.if we've done something that's cost us.money.and that happened in this financial year.then we have to include those expenses.in this financial year so that is the.answer to the question earlier about the.matching principle I'll give you a.statements exactly what the matching.principle means just now because I want.to see if somebody can answer give us a.proper definition of it's on face book.but that's a little hint on how to.answer my question about the matching.principle so there are usually some.important adjustments that you need to.know and you will get most of these in.the final exam you will get different.types of adjustments usually between ten.or fifteen adjustments in a question and.most of them you can put into one of.these categories that I've put in here.so you need to know how to do your.trading stock deficit or your trading.stock surplus that comes up very often.when you they give you the physical.stock take amount you've got to be able.to compare it.- you're trading stock figure and see.whether there's a deficit or whether.there's a surplus so make sure you.revise how to do that adjustment very.similar to that one is the consumable.stores on hand adjustment these two.always go together in a question that.shows the following it usually starts.with a physical stock take charge so.when we're talking about a physical.stock take it tells us what our.inventory is how much trading stock we.have and how many conceivable stores we.have left over at the end of the.financial year and the adjustment will.tell you that there was a physical stock.take done and that the following were on.hand when you see that you need to know.how to deal with it and what to do I'll.show you an example of this just now.when we work through our exam question.the next important thing that you need.to know is how to write off a bad debt.or how to record your bad debts.recovered remember these items are.adjustments where you've got a debtor.that doesn't pay or later on the data.comes back and pays you a bad debt that.you'd written off you thought you'd.never see him again and he comes back.and pays you his money you need to know.how to record that because very often at.the end of the financial year they're.going to give you a question involving a.bad debt and our challenge question for.the day actually involved a bad debt if.you've been trying that so far I'll show.you how to do this at the end of the.show the next one that's important is.knowing how to deal with your bank.charges your stop orders and your debit.orders these are all things that you're.going to see on the bank statements.extra payments that were made this month.that you have to record that you don't.know about and usually you can remember.that all of these items need to go in.the cpj so what's going to happen is.they're going to affect DANC.in some way Bank is going to decrease.because we're paying money and whatever.we're paying the money for we're going.to show that as an expense usually in.our income statement then the next four.adjustments are very very important and.you will typically get a question.containing all four of them they're the.same types of adjustments they just work.in opposite ways so our first one is.accrued income accrued income is income.that we've earned but that we haven't.yet received so we've done something to.earn that money but the person hasn't.paid us that money yet when you see an.accrued income you need to know how to.deal with it you'll remember that that.gets added to the relevant income and.that will be shown as accrued income in.trade and other receivables but I'll.show you an example of that just now.next thing that we have is the opposite.of accrued income this is income that's.been received in advance all I'm going.to do is swap those two words around.income received in advance is income.that we've received but that we have not.yet earned so somebody has paid us the.money for something so income received.but not yet earned let me just erase.that and write it properly income.received but not yet earned so the.person has given us the money but we.still have to do the service so this is.like somebody who paid his rent in.advance we still have to let that person.live in up in our building or occupy our.premises then accrued expenses and.prepaid expenses are the opposite to.these accrued expenses are not yet paid.the expenses that you haven't paid yet.so they have to be added to the relevant.expense and the opposite of this is.prepaid expenses these are expenses that.have been paid in advance for the next.financial year so you need to understand.how to identify those and how to deal.with them how to record them when we.work through our exam practice I'm going.to show you how to do that then another.one that you may or may not have done in.class it's really covered in detail in.grade 11 and this is how to work out.depreciation on an asset I'm not going.to cover that today but make sure you.know how to do it if your teacher has.done it with you in class already you'll.do it in way more detail in grade 11 and.then a very important one that you need.to know is how to calculate interest you.need to know how to calculate interest.following on alone all you need to.calculate interest that is still owed to.you on a fixed deposit those are those.timeline calculations where you work out.different percentages make sure you.practice enough of those examples so.that you can go into your final exam.confidently and accurately and be able.to answer these questions well and then.finally you need to know the closing.transfers the closing transfers also.very important when I speak about.closing transfers I just mean what we do.at financial year end specifically.subtracting debtors allowances from your.sales account so that should always be.the very first thing you do you take.sales and your - debtors allowances on.the front of your income statement.finally what's important here just.another tip is that you cannot cannot.cannot do these questions unless you.know the format of the notes and the.income statement very very well you need.to study where every note goes you need.to know what everything is because so.many many of these questions can be.answered just like almost like a jigsaw.puzzle what you do is you've get given a.number and you must take that figure and.put it in the correct place in the.income statement or on the balance sheet.so you need to know the format of your.notes and you need to know particularly.interest income which is note 1 interest.expense which is no.2 inventory which is.note 4 then we have trade and other.receivables note 5 cash and cash.equivalents note 6 owner's equity note 7.and trade and other payables note 8 I.have left out note 3 I know that no.3 is.the nodes on fixed assets which often we.don't cover in grade 10 but perhaps your.teachers taught that to you if not don't.worry about it right now.you'll do is in grade 11 but I think.before we tackle the exam question I.think it's about time for a break now.absolutely Thank You Martin alright then.great taste let's take a quick break.we'll see you shortly after this break.welcome back my setters from that very.short break um it is not time we get.more learning and extra Racha on mindset.we are still during the exam refresh it.so please make sure that you drop all.the questions that you have.so that Martin and I can see how we can.get to answer them Martin are you ready.for the next session yes I am awesome.stuff.thanks very much roomie and welcome back.mind sitters what we're going to do now.is we're going to look at a typical.examine this is one it's quite an old.question it was from the 2006 Department.of Education exam but to be honest the.basic principle stay the same even eight.years ago they still the same as today.and what's going to happen is we're.going to read the information and try.and make the different adjustments.it says Peggy perumal owns a ladies.dress shop I think this might be.something that would appeal to the.ladies in the audience it's a ladies.dress shop called Peggy's fashions and.her bookkeeper has drafted an income.statement for the year in the 28th of.February 2005 so we've been given a.draft income statement so the bookkeeper.has prepared it but she has not taken.certain adjustments into account so.basically she's prepared this income.statement but the income statement is.incorrect and it's your job or our job.together to try and help her fix the.mistakes that have been made or take.into account for these adjustments the.question says that we must number one.correct the income statement to reflect.the correct profit or loss for the year.it says correct any errors by crossing.out for original figures and inserting.the correct figures so what we're going.to do is we're going to make our.adjustments directly on the income.statement that has been prepared there.is a second part to this question which.is also to prepare a balance sheet but.in the interest of time I'm not going to.do that part of the question now because.we said that today we're going to.concentrate only on the income statement.so we're going to look at what's going.to happen with income statement when we.have to correct the figures that the.bookkeeper has put in there.incorrect but bear in mind that the.question is usually a larger question.which combines and income statements on.one side and the balance sheet or.statements of financial position which.as I've said are the same thing on the.other side so let's take a look at what.we've been given first of all we've been.given the draft income statements over.here so you can see that she's included.a whole bunch of figures over there and.there's some space for additional things.that you might have left out then what.we've been given on the next page is.we've been given the balance sheet.section so remember these items in the.balance sheet section do not appear in.the income statement but we're going to.need those figures firstly to prepare.the balance sheet and secondly also to.calculate some of our missing figures in.the income statement but I'm going to.show you that as we start with some of.the adjustments so just bear in mind.that we may have to make adjustments to.these figures here as well even though.they are not physically going to be.shown in the income statement okay so.without further ado let's get to the.first adjustment our first adjustment.says Peggy took stock of dresses for her.personal use at the cost price of 4200.rent so what she did is she took stock.from the shop that instead of selling.assets are good for personal use when.you see the words personal use that.should always ring some alarm bells.because you know that when it's personal.use we've got a special rule in the.counseling that says that the owner and.the business their finances are always.separators when you see the word.personal use you know that drawings is.going to be involved so what does owner.did is she took stock out of the.business for a personal use.we know that she's made a drawing and.when you account for a drawing this is.something that you should know how to do.in the general journal you are going to.record the drawing and on the other side.you're going to make whatever the owner.took out from the business go down in.value if the owner took money out we're.going to make Bank go down in value if.the owner took stationery out stationery.is going to decrease if the owner took.equipment out equipment is going to.decrease in this example what is it.she took she took stock of dresses so we.know that was it what has to happen in.this adjustment is that trading stock.has to be affected and we know the.trading stock is going to decrease this.adjustment comes up often when the owner.takes stock for personal use and what.they testing you here is that you know.that the owner takes the stock at the.cost price if I'm the owner of the.business I'm not going to take my stock.at the selling price I'm not going to.make a profit on buying dresses from our.own shop that would be really really.pointless because I can get the dresses.of cost price because it's my business.anyway so they've given us luckily here.the cost price of four thousand two.hundred grand so we don't need to.calculate anything but bear in mind that.when you see this particular adjustment.very often you're going to have to use.that markup formula that you all know to.calculate your cost price so the.adjustment is going to be trading stock.is going to decrease and drawings is.going to increase and the amount is.going to be four thousand two hundred in.each case nothing else that has to be.done now what we've got to bear in mind.is that this adjustment doesn't have to.do with the income statements at all.because trading stock doesn't appear in.the income statement and drawings.doesn't appear in the income statement.however as I'm going to show you later.on it's very important that we keep.track of these adjustments because they.could come an adjustment later on that.needs this piece of information so what.I'm going to do is I'm going to go back.here to where my balance sheet accounts.are and what I'm going to do I'm going.to take my drawings figure you see here.it is forty four thousand I'm just going.to write there that is not forty four.thousand but actually forty four.thousand plus four thousand two hundred.because the owner has now drawn.additional stock normally it's a good.idea to open a bracket and then close.the brackets at the end of the question.to work out the final answer in the same.way there's a problem here with trading.stock this figure of 180 thousand is not.correct because that is before the.adjustment we've just done has been.taken into account so what I must do is.I must take my trading stock of 180.thousand and because the owner has taken.out four thousand two hundred grams.worth of stock I'm going to subtract.4200 round from that in my trading stock.account I'll tell you why this is.important later on but right now we're.not going to make any changes to the.income statement okay so that was our.first adjustment our second adjustment.here is number two and it tells me that.I stock counts this is the same as the.physical stock take stock count at the.year-end revealed dresses of one hundred.and seventy thousand rand on hand so.when you see this adjustment you know.that you're doing a physical stock take.you might have seen if you sometimes.walk through a shopping center or some.where they are closed or for music shop.where people are counting these CDs to.try and do a physical stock tech or they.close off a bookstore people are doing.stock taking on their books what they do.then is they count every single item of.stock that they have on the premises and.they compared it to the figure that they.have in their books to determine whether.or not something has maybe gone lost.being stolen or something like that.so what you do when you see an.adjustment like this you compare the.stock take value with what we call the.book value so in our books we must now.look and see how much trading stock we.think we have and we need to check.whether there's any physical stock.that's actually gone missing so let's.look back at the balance sheet so you.can see here that we started the year.with a hundred and eighty oh sorry we.ended the year with a hundred and eighty.thousand grams worth of trading stock.now normally people might just say okay.there's a hundred and eighty thousand.grams worth of trading stock and either.the physical stock take and I counted.only 170 thousand rands worth of trading.stock so obviously there's ten thousand.rands worth of stock that's gone missing.yes it's true there is a trading stock.deficit but it is not ten thousand Rand.reason being that this previous.adjustment here where the owner took.four thousand two hundred Rand that.needs to be taken into account first.before we can work out what our actual.trading stock deficit is so that's why.it's very important to calculate the.right book value of the trading stock.it's not this one eighty thousand it's.actually one eighty thousand minus four.thousand two hundred so let's work that.out on the calculator the trading stock.figure that we should actually have.is 180-thousand just get that calculates.on the screen 180 thousand.okay let's try that again 180 thousand.minus four thousand two hundred grams.worth of trading stock that was taken by.the owner for her personal use the.answer that I get here is 175 thousand.eight hundred so we've been able to.account for the four thousand two.hundred that the owner took so in fact.we've got one seventy-five thousand.eight hundred grams worth of trading.stock after that adjustments has taken.place so now if we have to calculate our.trading stock deficit we can see here.that in our books our trading stock is.actually 175 thousand eight hundred.range not one eighty thousand because.adjustment number one reduces our.trading stock value by four thousand two.hundred so that it becomes one.seventy-five eight hundred and we're.going to minus our stock take value of.170 thousand so we thought we had one.seventy-five thousand eight hundred when.we counted that we saw we had 170.thousand which means that there is a.deficit of 175 thousand eight hundred.minus 170 thousand gives me the answer.of five thousand eight hundred Rand so.what we know is that our stock has gone.missing.their stock to the value of five.thousand eight hundred Rand that somehow.is gone we don't know if it was lost if.it was stolen if it was destroyed the.factors remains that there's five.thousand eight hundred Rand less worth.of stock than we thought we actually had.so to make this entry what we're going.to do we're going to actually show that.on the income statement so here's my.income statement over here you need to.know that trading stock deficit is a.special expense that we create at the.end of the financial year so I'm going.to write it in here trading stock.deficit and the trading stock deficit is.simply going to be that figure of five.thousand eight hundred grand that I've.just calculated so make sure you.understand where the trading stock.deficit goes it's the unexplained loss.of trading stock to the value of five.thousand eight hundred if it had been.the other way around if somehow we had.more trading stock than we thought we.had then we would record it up at the.top here under other.rating income we would record it as a.trading stock surplus and that would be.money that we got extract would have.been an income also what we should do is.if we're doing the balance sheets at the.same time what we should do is we should.go to our balance sheets adjustment and.you can literally just cross out the.figure of 180 thousand or you replace it.with 170 thousand because you've counted.it you know that that's how much trading.stock you actually have on hands at the.physical stock take at the end of the.year make sure you now to do that.adjustment that comes up again and again.and again okay let's look at adjustment.number three adjustment number three.says a computer was purchased on credit.on the 31st of December for eight.thousand rand this has not been recorded.and the amount you will be paid in March.2005 this is relatively straightforward.and simple adjustment all that's.happened is that we have now purchased a.computer for eight thousand rand and we.purchased it on credit remember if you.purchase something on credit what that.means is you haven't paid for it yet.you've bought it now and you're going to.pay later on so all that you need to.know is which two accounts are going to.be affected here first of all we have.purchased a computer and the computer.counts as equipment remember all.machinery and all Serene's not vehicles.all furniture that you have in the.business will count as equipment so we.know that our equipment has to increase.by eight thousand rand because that was.the cost price of the computer because.we haven't paid for it yet we've.purchased us on credit we also need to.increase our creditors control by.another eight thousand rand so that's.really all that has to happen here.that's the only adjustment that we're.going to make and you should see that.both of these accounts are actually not.in the income statement they're both.going to appear on the balance sheet so.I'm just going to go back to my balance.sheet account which is here my equipment.what I must do is not 29,000 it's.actually 29,000 rand plus an additional.8,000 because we haven't recorded that.we purchased that equipment yet.we've got creditors control over here of.35,000 100 it's not true to say that we.owe our creditors 35,000 100 because we.have not yet recorded the 8,000 round.that we owe them based on the equipment.that we've built just so the adjustments.is easy add 8,000 to equipment add a.thousand to creditors control our next.adjustment here says that what we have.to do is provide for interest owing on.the line now this is one that comes up.again and again when you see interest.oiling on the loan you usually have to.calculate using a time line how much.interest is owing its interest owing on.the loan from grid fund and it says that.no loan repayments have been made since.the loan was originally received in 2003.so we've borrowed this money since 2003.our financial years 2005 so we've had.that money in our business.owing that money on the loan for two.years what we've got to do is we've got.to work out how much interest is owing.and this is actually a simple one.because we have not repaid or borrowed.any additional money during the year all.it tells us is that 20 thousand rand has.to be repaid on the 30th of June 2005.this is a balance sheet adjustment the.second part and it falls outside our.financial year because that's only going.to happen on the 30th of June and we.know that our financial year ends on the.28th of February so for now I'm going to.ignore that part of the adjustment.because that falls outside our financial.year what you do when you see something.like this it's always two steps the.first thing you do is you calculate how.much interest you should have paid and.then you compare it to the figure that.you have for interest and adjust it.appropriately so if you look here in our.income statement we've got at the bottom.an amount of interest expense of 11,000.Rand this is the interest that we've.recorded to date on the line so that's.what we have but the question is asking.us to calculate and check whether that.figure is right and whether we owe any.money whether we still have anything to.pay so the way we're going to do it is.quite.easy if you look at your balance sheet.you're going to see that the loan from.cred fun is highlighted at the bottom.here loan from grid fun the loan is 13%.per annum and it's in the amount of.100,000 grand so what we need to do is.we need to do the adjustment to work out.how much interest we should have paid we.don't need a timeline because the loan.didn't change during the year we didn't.pay off anything or we didn't increase.the loan it told us that's and the.question so our adjustment is very easy.all we do is we work out the interest we.should have paid and the interest we.should have paid it's on a hundred.thousand grand that's the value of my.loan and I multiply it by thirteen.percent so 13 over 100 the interest that.we should have paid is thirteen thousand.range so that is the interest that the.loan cost us it cost us thirteen.thousand rand however if we look at our.income statement we will see that we've.so far only paid eleven thousand so this.figure of eleven thousand rand is wrong.it should be thirteen thousand so we.started off with eleven thousand and it.should have been thirteen thousand so.that means that there's actually an.amount of two thousand rand.that we have not yet paid his two.thousand rand that we still owe on this.loan we paid eleven thousand and we.should have paid $13,000.please remember what that is called the.mm round that we have here is actually.an accrued expense so what we're going.to do to finish the adjustment we're.adding two thousand on to my eleven.thousand to make the number thirteen.thousand that's the correct figure for.interest expenses here and at the same.time we're going to go to our balance.sheet and just record that accrued.expenses are going up by two thousand.Randy still two thousand Rand that's.owing on that loan please mind setters.that's a very very important adjustment.remember you can summarize it like this.you work out the interest that you.should have paid and you compare it to.the interest that you've already paid in.your income statement you then.just the figures necessary to ensure.that the figures in your income.statement actually match the reality of.what that loan cost you this this year.so I think it's about time for another.break for me and are we doing for time.awesome stuff thank you so much Martin.mindset says let's take a very quick.break when we come back we are going to.be learning more and learning extra.watcher and the exam school free version.welcome back my setters from that very.short ad break we are still doing an.accounting with Martin right here in.studio and please do make sure that you.drop all the questions that you have.right here on our Facebook page if you.can also go through our Facebook page.some of you are asking for the Nerds we.do have the note so please log on to our.Facebook page it is triple W.facebook.com forward slash learn extra.that is where you will find all of the.notes that we are going through right.now Martin I'm ready I ready yes I am.thank you very much boo me and welcome.back everyone we did the first four.adjustments and I've seen that the.fourth adjustments is an adjustment that.affects the balance sheet only so I'm.going to leave that adjustment out for.now because it's not going to affect our.income statement to make sure that we.get through the others so let's look at.adjustment number six adjustment number.six is an adjustment from the bank.statement and it says that the bank.statement for February reflected the.following which have not yet been.recorded yet it says service fees for.300 rand and interest on favorable bank.account 60 Rand so remember mine setters.at the end of every month you get a.statement from the bank showing all the.transactions that happened in your bank.accounts for that month and you must.then make adjustments for anything that.you've not yet recorded so the first.thing here service fees you need to know.that service fees are always known as.bank charges we don't know how much.money the bank charges us for using.things like checkbooks credit cards ATM.deposits and that sort of thing.but they do charge us money and on the.bank statement we can see how much was.charged us now in this example they are.service fees of 300 grand.to do this adjustments is very easy.there are just expenses that haven't.been recorded yet so we're going to go.to our income statements and we're going.to find the figure here for Bank charges.here it is 3000 this figure is wrong we.need to just take for three thousand.Rand and we've got to add the extra.three hundred that have not yet been.recorded so that the correct answer is.actually three thousand three hundred.that's very important because we must.make sure that our income statement.reflects the real amounts for February.in the sorry for the whole year not just.February so anything that happens in.February must be added in the same way.what we're going to do is we're going to.go to our bank account our bank account.appears in the general ledger and it.appears in the balance sheet section.what we need to know is that if the bank.has charged us three hundred Rand all.that's going to happen is that our bank.is going to be reduced by three hundred.Rand and I'm sure you'll know by now.that Bank appears in the notes for cash.and cash equivalents it gets reduced by.three hundred Rand because we've paid.three hundred rounds worth of bank.charges the bank takes that money.directly out of our bank accounts at the.end of every month as a charge for using.their service the second part of the.adjustment involves interest on a.favorable bank account so if my bank.accounts is favorable I need to know.that that sixty rounds is going to be.interest that I have actually earned.it's interest income because it's on a.favorable bank balance so this is going.to serve to increase my bank account so.what I'm going to do is I'm going to go.to my bank accounts and add sixty again.this doesn't happen in the income.statement you do that on the note for.cash and cash equivalents but I must.find the corresponding income that.matches it and it's over here my.interest income my interest income is.standing a 2000 Rand but that's actually.incorrect it's 2,000 Rand plus an extra.60 grams worth of income that I haven't.recorded yet that I just found out now.why not got the bank statement so that's.how we do that adjustment if you look at.your next adjustment this is one that.you'll see often.it says the rent for February 2005 has.not been paid yet.provide for the amount owing so what.we've got in our income statement is an.incorrect figure for rent if we look.over here we've got a figure for rent.income.sorry rent expense we've got a figure.for rent expense for forty four thousand.rand what we've done is we've paid the.person forty four thousand rand for the.rent for this year but it says that we.have not yet paid for February so we've.lived in the premises or we've used the.premises for our business up to the end.of February but we've actually only paid.for every month up to the end of January.so there's one month's rent that's still.outstanding what we need to do is we.need to work out what that amount is.this should be clear if you see that.this forty four thousand is actually for.eleven months rent because we haven't.paid for twelve months.we've paid for all the rent up to end of.January and not February so if we want.to know what one month's rent is what we.do is we take our calculator and we take.the forty four thousand that we've paid.and we divide it by eleven months.because we've only paid for eleven.months that tells me that my rent is.four thousand rand per month but this.income statement needs to reflect the.range for the entire year so what I must.do it should actually show twelve months.rent in other words I've got to add an.extra four thousand rand to the syringe.so Maureen's expense wasn't forty four.thousand it was actually forty four.thousand plus another four thousand it.should have been twelve months rent.instead of eleven and because this rent.hasn't been paid yet it's an expense to.us that we haven't paid yet what we need.to do we need to record its contra entry.over here as accrued expenses are going.to go up by another four thousand rand.because we owe two thousand rounds for.this interest on the loan that we did.previously and now an additional four.thousand Rand is going to be for the.rent that we still haven't paid okay so.that's that adjustments let's look at.the next one.our next adjustment says a data in.Norris complained that she was.overcharged on her latest invoice piggy.agreed to adjust her account by eight.hundred range but this has not been.recalled.it does however say that the cost of.sales was correctly recorded so this is.one of those examples where a debtor has.been declared insolvent and oh sorry.where data has been overcharged and what.we must do is we must take that 800.round and we are actually giving what we.call a debtors allowance debtors.allowances what you need to remember is.that when I said right at the beginning.of this lesson I see a debtors.allowances are subtracted from sales so.this data was overcharged by 800 grams.we have to subtract the 800 ran from.sales which I'm going to do now go back.to my income statement go to my sales.figure here sales figure was 600,000.that's actually wrong let's cross it out.it should be 600,000 minus 800 range.because that 800 grand was an.overcharging of a data in the same way.what we're going to do is we're going to.go to our debtors control the melt which.appears usually in note number 5 on.trade and other receivables and we're.going to reduce it by 800 Rand because.we gave this data and allowance we're.not going to make her pay that's 800.grams anymore make sure you understand.how to do that one because it comes up.very often okay now if we look at our.next one this one is very very similar.to our challenge question so I'm going.to do this one and then I'm going to.answer the challenge question I think.Bhoomi there were some people that.answer the challenge question already on.that yes I'm actually I'm looking at one.from oh by gangs can and Louisville.saying account debited is a bad depth by.two hundred and forty rounds and I'll.count it credited is if T Majella also.by 240 that's that's exactly the right.answer these just one little part of.that question missing so I'm going to.get get back to that now but let's look.at this one this is the same sort of.thing it says here that a data if rich.has been declared insolvent very very.similar to the question about T modulo.who's been declared insolvent he owes us.1250 and the insolvent estate will pay.out sixty cents in the rand what we do.is we do a quick calculation with three.figures the first thing is that this.data is insolvent so we're going to.cancel.part.his debt that he's not going to pay but.it says that the insolvent estate will.pay out 60 cents in there and so we need.to calculate how much we receive and how.much we write off the way we do that if.he's paying us 60 cents for every round.that he owes us what we do is we take.the calculator and we take the amount he.owes us which is 1250 and we multiply it.by 0 comma 6 because 0 comma 6 will tell.me he's playing me 60 cents for every.round that he owes so it comes to 750.round we're going to receive from him.750 round and he owed us originally 1250.if you subtract the 750 that we're going.to receive that means we have to write.off an additional 500 range 750 plus 500.gives you the 1250 that the data.originally owed so what we're going to.do is we're going to make two entries.here first thing we're going to do is.we're going to subtract the 1250 from.debtors control or in this case the.datas name if fruit you can do either.one the second thing we're going to do.is we're going to add 750 round to bank.because that is the money that we have.received and the third thing we're going.to do is we're going to add 500 grand to.bad debts so those are the three steps.in our adjustment if we have to do it on.our income statement the only item that.goes on the income statement here is the.500 grand if I go back to my income.statement here what's going to happen is.I'm going to create a special account.here called bad debts and in my bad.debts I'm going to put the 500 grand.that I've written off same way here in.Bank what I'm going to do is I'm going.to add the 750 that I received and from.debtors control I'm going to subtract.the 1250 that's the part that here as to.owe us that we've written off as well as.the part that he's paid very quickly.let's useless information to answer our.challenge question our challenge.question is very similar to this our.challenge question said that our data.was declared insolvent and he owed us.800 grand.what happened was he paid us.thirty cents in the round so to.calculate what he paid us he we're going.to take the 800 round that he originally.owed us multiplied by 0 comma 3 or 30.cents 30 over 100 is actually going to.pay us 240 around so what's going to.happen because we receive that money.from him we're going to increase Bank by.240 we're also going to decrease T.medulla or credit T medulla by actually.the full amount of 800 Rand because the.part that we are not receiving in the.bank is the part that we are actually.going to write off so the part that has.to be written off is the difference.between these two so what I'm going to.do is I'm going to take eight hundred.Rand is what he owed us he paid us two.hundred and forty so what that means is.that the 560 has to be written off and.what will happen in this case is we will.create an extra expense called bad debts.and that will increase by five hundred.and sixty and that's the amount that's.written off so mine setters that is the.answer to our challenge question put me.I don't know if I have time to do one.more adjustment otherwise we'll ask the.mind senses to practices and put the.answers up on the internet I think that.we have to try and yeah get to the next.question okay so let's let's see if I.can finish this last one okay looks like.we've only got 20 seconds left see if.you can do this one I'll quickly tell.you what happens if you've read it.already what we're going to do it says.Commission of 1500 is owed to Peggy's.fashions for sale of fashion magazines.this will be received in March 2005.so this 1500 we still have to receive.that's actually quite easy we need to.know that that's accrued income our.adjustments is going to be simple all.we're going to do is we're going to go.back to our income statement it's money.that we haven't received yet we're going.to add one thousand five hundred to.Commission income and then we're going.to go down to our balance sheet create.an account called accrued income and add.one thousand five hundred grand to that.so Matt lion sitters this is a very.essential part of your accounting.syllabus make sure you practice enough.of these that you get good at there.they're going to come up again and again.and again I wish you the best of luck.and keep adjusting your balance sheets.and income statements well some stuff.and thank you so much Martin for today.regular birthdate monster says this.unfortunately of what we have the time.for for today.please make sure that you write all of.your exams very well and also represent.yourselves and your schools and.everybody else that you love at home but.for me you put me and Martin and of.course the massive t it is a pie.

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Sole Trader Financial Statements On Words Form FAQs

Here are the answers to some common inquiries regarding Sole Trader Financial Statements On Words Form. Let us know if you have any other confusion.

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Do I need to fill out a financial statement form if I get a full tuition waiver and RA/TA?

If that is necessary, the university or the faculty will inform you of that. These things can vary from university to university. Your best option would be to check your university website, financial services office or the Bursar office in your university.

When is it mandatory to fill out a personal financial statement for one's bank? The form states no deadline about when it must be returned.

The only time I know that financial statements are asked for is when one applies for a business or personal loan, or applying for a mortgage. Each bank or credit union can have their own document requirements, however for each transaction. It really is at their discretion.

Can I use broker statements to fill out form 8949 instead of a 1099-B?

You can but it would be wise to wait. Your broker will be sending a copy of the 1099-B that they send to you to the IRS also. The IRS will be checking to make sure your reported numbers match up with your brokers. If you make a mistake and have to file an amended return this could end up costing you additional filing fees depending on how you are having your return prepared. We typically advise clients to wait. We’ll use broker statements if there is a legitimate issue getting the broker to send the 1099-B.

How can I apply for an education loan from SBI online?

When bank grant a loan to borrowers some authentication is compulsory and this process is completed by signing papers of loan. If some time adjustments is on your side then talk to manager before going but your education loan documents must be checked before processing loan .

How does Ivy League schools’ need-based financial aid policy work? Do they offer aid to everybody who can not afford costs?

I’m not sure about all of them, but Harvard initiated a very generous financial aid program just under a decade ago, where if your family makes under $65,000 per year, then you go for free! (https://news.harvard.edu/gazette/story/2011/09/harvards-record-166-million-financial-aid-program-will-increase-aid-to-low-income-students-and-provide-a-new-financial-aid-calculator-for-students-and-families/ ) In general, the Ivy Leagues are quite generous with respect to financial aid - and are becoming increasingly so over time.

How do I fill out the application form for an educational loan online?

Depending on which country you are in and what kind of lender you are going for. There are bank loans and licensed money lenders. If you are taking a large amount, banks are recommended. If you are working, need a small amount for your tuition and in need of it fast, you can try a licensed moneylender.

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