**Why does a trader prepare his accounts on 31st March every year?**

A trader prepares his accounts on 31st March every year for several reasons. Let's explore these reasons in detail:

**1. Financial Year End:**
- The financial year for most businesses starts on 1st April and ends on 31st March.
- By preparing accounts on 31st March, the trader can ensure that the financial statements represent the entire financial year's transactions.

**2. Compliance with Legal Requirements:**
- In many countries, including India, it is a legal requirement for businesses to prepare their accounts annually.
- By preparing accounts on 31st March, the trader complies with the legal obligations and avoids any penalties or legal issues.

**3. Taxation Purposes:**
- Tax authorities require businesses to report their income, expenses, and profits on an annual basis.
- By preparing accounts on 31st March, the trader can accurately calculate their taxable income, claim deductions, and fulfill their tax obligations.

**4. Assessing Business Performance:**
- Year-end accounts provide important information about the financial performance and position of the business.
- By preparing accounts on 31st March, the trader can analyze the profitability, liquidity, and solvency of the business over the entire financial year.

**5. Decision Making:**
- The accounts prepared on 31st March provide crucial information for making informed business decisions.
- By having accurate and up-to-date financial statements, the trader can evaluate the success of various strategies, identify areas for improvement, and make sound decisions for the future.

**6. External Reporting:**
- Accounts prepared on 31st March serve as a basis for external reporting to various stakeholders, such as shareholders, investors, lenders, and regulatory authorities.
- These stakeholders rely on the financial statements to assess the financial health and performance of the business.

**7. Auditing and Review:**
- Many businesses are required to get their accounts audited by an independent auditor.
- By preparing accounts on 31st March, the trader allows sufficient time for the audit process before the statutory deadlines.

In conclusion, a trader prepares his accounts on 31st March every year to comply with legal requirements, fulfill taxation obligations, assess business performance, make informed decisions, facilitate external reporting, and undergo auditing processes. By doing so, the trader ensures that the financial statements accurately represent the financial position and performance of the business for the entire financial year.