Part A:

 The following are the advantages of a sole trader business:

o Ease of creation - The formation of a sole trader business is simple and cheap. You
do not have to legally register the firm nor inform government or state officials if
you're the founder and in control of activities. Just the payments required to
establish the brand names and get the necessary registrations and permissions are
needed.
o Complete control on firm: Since sole trader business are inherently linked to
an individual personally, they have total influence over the direction the business
takes. Making judgments solely on the desires of investors or even the needs of
business collaborators is not necessary. They  can change their approach when
necessary as well as expand their business in whatever way they see fit.
o Few regulations and laws: There aren't too many laws and guidelines that apply
specifically to business owners. A sole trader is responsible for keeping accurate
data, filing tax returns, as well as paying income tax on both company and
private income. Requirements related to bookkeeping and tax filing are often not
significantly difficult as documenting for personal income tax filing. Owners might
want to spend money on specialist software plus advisers to cut down on the
amount needed on governance considering the time and work involved. Federal
regulations, such as the ones governing disclosure statement, are only applicable to
big organizations including publicly traded corporations thus demand significantly
more administrative work.
o Full rights to the profits: The owner will receive 100% of the revenues because there
isn't any legal distinction between the company and the owner. Even though all
earnings belong to proprietor, tax payments are only due once, and business owners
is responsible for their own tax. Annually, for instance as an element of their yearly
personal income tax filing, owners may pay personal taxes on the revenue.
 The following are disadvantages of sole trader business:
o Complete personal liability: The advantages that is included with owning a
legitimate business corporation are not available to sole traders as they are not
required to sign up as just a business in the state of domicile. In a sole trader
business, you are regarded as self-employed, this implies that you handle all of the
company dealings independently, thus putting all liabilities on the sole trader.
o Difficulty in raising capital: Financial institutions may be reluctant to provide loans
or issue debt under such a business model since a sole trader's unlimited liability
poses a risk. As a single owner, it is even more challenging to win over investment
because the business is not technically acknowledged and isn't set up to have
shares.
 The following are the advantages of a partnership:
o Ease of formation: Establishing a partnership firm is simple. There are less legal
requirements, and the expense is likewise minimal. It also is not necessary to
register the company in order to start a partnership. A contract should instead exist
in between partners.
o More capital: More the partners, more the money accessible to put into the
company from the amalgamated resources, that can boost growth. The combined
purchasing power is also probably higher.
 o Division of work: In partnership, all partners share the duties among themselves
according to respective expertise. It is feasible to divide the work in a partnership.
Because of the split of labour, administration is more effective, and raises
profitability.
o Privacy: A partnership business isn't really obligated to disclose its financial
statements. As an outcome, business-related matters is kept inside the organization.
Additionally, since the associates are indeed the people who make critical business
choices, there isn't risk of company secrets leaking as well as the firm's
confidentiality is upheld.
 The following are the disadvantages of partnership:
o Unlimited liability: Inside a partnership firm, the investors concur to divide up all
benefits and losses. Even if they aren't their own obligations, the partners are
nonetheless required to accept liability for all liabilities. There is no cap on the total
responsibility of the investors. Typically, this puts a strain on the investors' own
assets and financial situation.
o Lack of public trust: Since partnership businesses' yearly statements as well as
finances really aren't publicly disclosed, the general populace have little faith in
them. The populace doesn't really trust its business practices as a result.
o Problems in decision making: While making any decision in a general partnership,
all partners must agree. Every choice, regardless of how big or little, needs to be
approved by all partners. Additionally, decisions about strategy require the consent
of all partners. Because of this, all partners are not able to take hasty or impulsive
choices on the company.

 The five steps to starting a business are:

o Finding business opportunity: Various unmet requirements, incompletely met
demands, and unresolved or partly handled issues are all found in the market. These
kinds of flaws are present in the marketplace, which may present a business
potential for you. You can turn what you perceive into a business proposition if you
can mend, enhance, modify, alter, or recreate it.
o Conducting market research: A market research needs to be done to identify the
potential customers, the expenses, the competitors, the wants in the market and
various other questions that would impact the business.
o Create a business plan: The business model is the final outcome of the planning
phase and will equip you with the particular measures you have to take in order to
seize an opening, track your successes, and then obviously, overcome the whole of
the prior errors.
o Procure first capital for the start-up: The initial capital needs to be raised either
through loans, or from investors as there are a lot of costs involved before a regular
cash flow is set up in the business.
o Start selling what the customers want: After identifying the customers and setting
up the start-up, start selling the things which the customers want and need.
Part B:

1. The journal entries are as following:

o 01/03 - Purchases A/C £60,000
To Y and Co. A/C £60,000
o 02/03 – D and Co A/C £30,000
To Sales A/C £30,000
o 03/03 – Y and Co A/C £58,000
To Bank A/C £58,000
o 04/03 – Bills Receivable A/C £30,000
To D and Co. A/C £30,000
o 05/03 – L A/C £20,000
To Sales A/C £20,000
o 06/03 – M A/C £40,000
To Sales A/C £40,000
o 07/03 – Bank A/C £39,000
To M A/C £39,000
o 08/03 – Y and Co. A/C £2,000
To Purchase returns A/C £2,000
o 09/03 – Cash A/C £18,000
Bad Debts A/C £2,000
To L A/C £20,000
o 10/03 – Sales returns A/C £1,000
To M A/C £1,000
 2. a. ABC
Unadjusted Trial Balance
As of August 31, 2021

Account Debit Credit

Sales 41,700

Purchases 34,680

Receivables 6,790

Payables 5,650

General expense 12,760

Loan 10,000

Plant and Machinery at cost 5,000

Motor van at cost 6,000

Drawings 2,000

Rent and rates 6,700

Insurance 4,000

Bank overdraft 580

Capital 20,000

Total 77,930 77,930

b. Trial balance is a tool utilized by a business organization to summarize the business activities and
it indicates the current financial health of the company. Each financial event would produce two
records that are identical and opposing in nature due to the way the double entry process operates.
As a result, all debit account final numbers and credit account final numbers will be always equal.
The debit sum on the trial balance should equal the credit sum since it includes all the balances as of
a specific timeline. Consequently, a trial balance serves as a gauge of the financial records'
correctness. Trial balance can be considered the summary sheet of all the ledgers and balances. A
summary sheet with all ledges and balances is a trial balance. As a result, it offers an overview of
the organization's financial activities. An organization must be aware of its economic situations
including earnings or losses at year's ending. Therefore, a trial balance is a need for creating
accounting records. All parties involved in a business also require this data. It is the initial stage in
the process of closing the accounts for a specific time period. The final accounts of the year are
prepared only after a trial balance has been prepared.
A trial balance is not correct all the time as it is limited to the information recorded in the journal.
Any missed transactions or wrong amounts reported on both sides cannot be identified using a trial
balance as the final amounts on the credit and debit side will match. A trial balance cannot detect
errors of principle, commission, or omission. Even though trial balance is the first step to preparing
the financial accounts, it cannot be used as the main source due to its inaccuracy to report all the
transactions.