A sole trader will be responsible for preparing their own accounting records. Even the smallest sole trader often benefits from using double-entry bookkeeping when recording transactions.

i. What are the principal rules of double-entry bookkeeping they should be aware of? (5 marks)

ii. Explain the steps in, or process of, recording a transaction using double-entry bookkeeping. (4 marks)

iii. Briefly explain three business services that a professionally qualified accountant can provide to a sole trader. (3 marks)

iv. Discuss the difference between cash generated and profit earned over an accounting period. To support your answer, you also need to identify the effect on profit and the effect on cash of the following: (1) receipt and payment of a loan (2) buying inventory for cash and on credit (3) selling goods on cash and credit. (10 marks)