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Recording Business Transactions Assessment 2 – Individual Report NECULAI ALEXE STUDENT ID:21551021 LECTURER NAME:ADEMOLA OLUWARANTI NOTTINGHAM CAMPUS UWL Student Name Student ID number Your Lecturer’s Name 1 | P a g e

Table of Contents Introduction ................................................................................................................................ 3 Overview of the Report .......................................................................................................... 3 Part A ...................................................................................................................................... 3 Explain the advantages and disadvantages of sole trading and partnership. .................... 3 provide 5 steps for starting a new business ........................................................................ 3 Part B: ..................................................................................................................................... 4 Journal Entries ................................................................................................................... 4 Trial Balance ....................................................................................................................... 4 Benefits and limitations of Trial Balance ........................................................................... 4 Conclusion .................................................................................................................................. 5 Overall argument summary .................................................................................................... 5 References List ........................................................................................................................... 5

Introduction Overview of the Report The benefits and drawbacks of going into company on one's own vs forming a partnership will be the subject of this analysis. The five-stage process for launching a business will also be outlined. This analysis will help readers better grasp journal entries, the trial balance, and the merits and drawbacks of using the latter. Part A: Pros of Operating as a Sole Proprietor Sole proprietorships are typically very small enterprises. Sole proprietors fund their businesses with personal resources such as savings, bank loans, and personal gifts. One benefit of being a sole proprietor is having total say over your company's day-to-day operations as well as your long-term goals and other strategic imperatives. When operating as a solo proprietor, there is no need to get approval from a board of directors or other shareholders. One of the benefits of being a sole proprietor is how simple it is to set up a firm and begin operations (Huu et al., 2020). There are less initial outlays of money when starting a business as a lone proprietor. A consultant's services are unnecessary in this case, hence the cost to the individual is minimal. Source: Huu Nguyen, A., Thuy Doan, D. and Ha Nguyen, L., 2020. Corporate governance and agency cost: Empirical evidence from Vietnam. Journal of Risk and Financial Management, 13(5), p.103. Consequences of Operating as a Sole Proprietor A number of factors can work against sole proprietors, reducing their efficiency. When operating as a solo proprietor, you don't have the financial backing of other business people, thus you may find yourself short on resources. Since there is a cap on how much cash may be used, gains are often (Duryan et al.,2020). One major drawback of being a solo proprietor is the infinite personal liability for the business's debts. It's difficult to expand a one-person company because there isn't much money available for that purpose. You must account for taxes as part of your earnings if you operate as a lone proprietor. Every single pound that your company makes must be taxed.

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What You Can Gain From Forming a Business Partnership At least two people are required to form a partnership. While the number of potential partners is unlimited, there is no guarantee that two parties will actually form a relationship. Since more than one individual is invested in a partnership, the amount of money put into it might be substantial (Aghimien et al., 2022). Partnerships benefit from a diverse team since members can contribute in many ways to the company's operations. Taxes: A partnership's company is not treated as a distinct entity for tax purposes. Income tax is not required. Negative Aspects of Business Partnerships Partnerships carry with them a number of drawbacks. One of the drawbacks of being in a partnership is having to consult with others before making important choices. Partners have an equal say in all major decisions. Disagreement: When business partners have differing ideas about how to run the company, disagreements can occur and threaten the partnership's success. (Huu, 2020)

• Profit Sharing: In a partnership, each partner receives a portion of the earnings, no matter how small they may be. Give the reader a list of five things they need to do to launch their own company. Steps to Start a Business Before launching a firm, it's important to give careful consideration to whether or not the concept has commercial viability. Market Research: Once an entrepreneur has developed a product or service concept, they must examine the market to gauge interest from consumers and the potential for growth. To keep the processes one needs go through when establishing a business in place, a complete business plan must be developed. Choosing a business structure is crucial since it specifies the various laws and regulations that must be followed (Diender, Olm, and Sousa, 2021). Last but not least, a business owner needs to register for an Employer Identification Number (EIN) in order to legally operate.

Part B: Journal Entries

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Trial Balance Benefits of Trial Balance A trial balance is an accounting term for a summarised report of all the procedures performed. It's a representation of a financial record that includes both debits and credits. Kuter et al. (2017) state that it has all relevant transactional history. A trial balance is a tool used to ensure the correctness of numerical calculations, namely by double-checking the debit and credit totals.

Constraints of the Trial-and-Error Balance Trial balances, as stated by Gurskaya et al. (2019), solely display the financial transactions between the accounts. A trial balancing system is not possible without a double-entry system in place. Incorrect entries in the trial balance will not be able to be spotted. Since incorrect amounts are occasionally entered in the book entry, the trial balance cannot reveal the recording error. Conclusion One definition of a sole trader is an individual who starts a firm with no partners. As opposed to sole proprietorships, partnerships involve multiple persons working together toward a common goal. This study gave me a good understanding of the pros and cons of both options. Furthermore, the trial balance and journal entries used to compile these financial statements were presented in an easy-to- understand format in this report.

References List Aghimien, D., Aigbavboa, C., Oke, A., Thwala, W. and Moripe, P., 2022. Digitalisation of construction organisations–a case for digital partnering. International Journal of Construction Management, 22(10), pp.1950-1959. Duryan, M., Smyth, H., Roberts, A., Rowlinson, S. and Sherratt, F., 2020. Knowledge transfer for occupational health and safety: Cultivating health and safety learning culture in construction firms. Accident Analysis & Prevention, 139, p.105496.. Diender, M., Olm, I.P. and Sousa, D.Z., 2021. Synthetic co-cultures: novel avenues for bio- based processes. Current Opinion in Biotechnology, 67, pp.72-79. Gurskaya, M., Kuter, M. and Bagdasaryan, R., 2019, May. The structure of the trial balance. In International Conference on Integrated Science (pp. 103-116). Springer, Cham. Huu Nguyen, A., Thuy Doan, D. and Ha Nguyen, L., 2020. Corporate governance and agency cost: Empirical evidence from Vietnam. Journal of Risk and Financial Management, 13(5), p.103. Kuter, M., Gurskaya, M., Andreenkova, A. and Bagdasaryan, R., 2017. The early practices of financial statements formation in Medieval Italy. Accounting Historians Journal, 44(2), pp.17-25.

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