If a sole trader has the same net profit each year as is earned by a small

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If a sole trader has the same net profit each year as is earned by a small company, all other things being equal, which business will show the greater accumulated profits if

(a) The sole trader pays income tax out of the business bank account;

(b) The sole trader pays income tax out of a personal bank account and does not draw any extra funds out of the business to cover the payment.

Why are these two answers different?

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Frank Woods Business Accounting Volume 2

ISBN: 9780273693109

10th Edition

Authors: Frank Wood, Alan Sangster

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Question Posted: Sep 08, 2023 06:51 AM

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If a sole trader has the same net profit each year as is earned by a small

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a Both businesses will have the same amount of accumulated pr...View the full answer

Frank Woods Business Accounting Volume 2

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