Business and Labor Unit Test

Question

2 of 182 of 18 Items
Question
Which of the following statements is true about sole proprietorships?(1 point)
Responses

The owner of the sole proprietorship must report to shareholders.
The owner of the sole proprietorship must report to shareholders.

A sole proprietorship is the simplest form of business organization.
A sole proprietorship is the simplest form of business organization.

The owner of the sole proprietorship has limited liability.
The owner of the sole proprietorship has limited liability.

A sole proprietorship can continue if the owner dies.

Answer 1

The correct statement about sole proprietorships is:

A sole proprietorship is the simplest form of business organization.

Here's a brief overview of the other options:

• The owner of a sole proprietorship does not report to shareholders since there are no shareholders in this type of business.
• The owner of a sole proprietorship has unlimited liability, meaning they are personally responsible for all debts and obligations of the business.
• A sole proprietorship does not continue if the owner dies; it typically ceases to exist unless there are specific provisions made for succession.