A Major Disadvantage of a Proprietorship Is That the

question 61

Multiple Choice

A major disadvantage of a proprietorship is that the

• A) owner's entire wealth is at risk.
• B) profits are taxed twice.
• C) firm has perpetual life.
• D) owner has limited liability.

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Definitions:

Incremental Net

The net change in financial outcomes resulting from a particular decision or action, considering only the relevant costs and benefits.

Useful Life

Useful life is the estimated time period that an asset is expected to be useful for the operations of a business before it is fully depreciated.

Profitability Index

A financial tool used to determine the desirability of an investment or project, calculated as the present value of future cash flows divided by the initial investment.

Present Value

The present value of a future amount of money or series of payments, calculated based on a certain rate of return.