Which of the Following Is a Disadvantage of Sole Proprietorships

question 98

Multiple Choice

Which of the following is a disadvantage of sole proprietorships?

• A)It is difficult to create a sole proprietorship.
• B)There is a lack of flexibility.
• C)They have limited liability for business debts.
• D)They have to pay ordinary income tax on their business profits.
• E)Autonomy comes with limited ownership of the business's finances.

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Definitions:

Endorses

Supports or approves of something or someone.

Financial Records

Documents that contain detailed information about the financial activities and position of an individual or organization.

Monthly Statement

A detailed report sent monthly, summarizing financial transactions, balances, and other relevant information for a specific account.

Reconciliation

A comparison of the office’s financial records with bank records to ensure that they are consistent and accurate; usually done when the monthly checking account statement is received from the bank.