A sole proprietorship is a form of business organisation which is owned, managed and controlled by one person who is the recipient of all profits and bearer of all risks.
The salient features of the sole proprietorship form of organization are as under:

1. Single Ownership - A sole trading concern is owned by one individual. It is run entirely at his risk of loss. The sole trader provides both capital and management to the business.
2. Personal Organization or Common Identity - A sole proprietorship concern has no separate legal entity independent of the owner. The owner and the business concern are one and the same. The owner owns everything the business owns and he owes everything the business owns.
3. Capital - In a sole proprietorship, the capital is employed by the owner himself from his personal resources. He may also borrow money from his friends and relatives if he cannot depend solely on his personal resources.
4. Unlimited Liability - The liability of the proprietor for the debts of the business is unlimited. The creditors have the right to recover their dues even from the personal property of the proprietor in case the business assets are not sufficient to pay their debts.
5. One Man Control - Sole proprietorship is a one-man show. He takes all the decisions, procures material resources, employs persons and directs and controls the affairs of the enterprise. He is not required to consult anyone else in taking any decision.
6. Profits and Losses - The surplus arising in the business of the sole trader entirely belongs to him and similarly, all the business losses and risks are to be borne by him alone.
7. No Special Legislation - Sole proprietorship is not governed by any special legislation.

Interest on drawings will be shown on the credit side of the profit and loss appropriation account. Interest on drawings is the interest charged by the firm on the drawings made by the partners. It is a source of income for the firm and hence, it is to be credited to profit and loss appropriation account.

Mr. M starts business with Rs. 20,000 on 1st April 2012. Of this he pays Rs. 15000 into his bank account. His cash transactions during the week were:
April 1 Purchased stationery for cash Rs. 100
April 2 Purchased goods for cash Rs. 2500
April 2 Cash Sales Rs.1500
April 3 Received from J Brown Cash on account Rs. 1000
April 4 Paid to J. R Cash Rs. 2200
April 5 Paid for Advertisement Rs. 400
April 6 Cash Sales Rs. 1800
April 6  Purchased old machinery Rs. 800
April 6 Purchase from sham on credit Rs. 6000