Asked by Kristin Kowing on May 25, 2024
Verified
Which of the following is a false statement regarding a sole proprietorship?
A) A sole proprietorship requires few legal formalities.
B) A sole proprietor has complete control of the management of the business.
C) The sole proprietor keeps all the profits from the business.
D) Profits are taxed as the personal income of the sole proprietor.
E) A sole proprietor is not personally liable for the obligations of the business.
Sole Proprietorship
A business model in which a sole individual is the owner, manager, and bears the entire responsibility for the business’s liabilities and operations.
Legal Formalities
Specific procedures and requirements established by law that must be followed for certain actions or documents to be legally valid or enforceable.
Personal Liability
The legal responsibility of an individual to satisfy debts or obligations incurred through their actions or decisions.
- Absorb the introductory aspects of business ownership and their identifications.
- Understand the fundamental aspects of sole proprietorship, encompassing both its benefits and constraints.
Verified Answer
AW
Angelica WartersMay 25, 2024
Final Answer :
E
Explanation :
A sole proprietor is personally liable for any losses or any obligations associated with the business.
Learning Objectives
- Absorb the introductory aspects of business ownership and their identifications.
- Understand the fundamental aspects of sole proprietorship, encompassing both its benefits and constraints.