The difference between the financial statements of a sole trader and a partnership is:
A) sole trader financial statements must be prepared according to the AASB accounting standards.
B) partnership capital has more than one account.
C) partnership financial statements are simpler to prepare.
D) there is no difference.

Question

Quizplus · Accepted Answer

Partnership capital has more than one account as each partner has their own capital account. This is not the case with a sole trader who only has one capital account. Additionally, while it is true that sole trader financial statements must be prepared according to AASB accounting standards, this is not a difference between sole trader and partnership financial statements as partnerships also must comply with these standards. The complexity of preparing financial statements may vary between individual businesses and is not necessarily related to whether the business is a sole trader or a partnership. Therefore, choice C is also not correct. Lastly, choice D is incorrect as there is indeed a difference between the financial statements of a sole trader and a partnership.

The Difference Between the Financial Statements of a Sole Trader