If an Individual Forms a Sole Proprietorship, Which Nontax Factor

question 63

Multiple Choice

If an individual forms a sole proprietorship, which nontax factor will be of greatest benefit to the sole proprietor?

• A) Legal flexibility in defining rights and responsibilities of owners.
• B) Facilitates initial public offerings.
• C) Minimal time and cost to organize.
• D) Liability protection.

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Definitions:

Legally Owns

Possession of property, shares, or assets in accordance with the law, granting the owner the legal rights to use, sell, or modify the owned item.

Lessor

The owner of a property or asset that is leased or rented out to another party, known as the lessee.

Balance Sheet

A financial statement that provides a snapshot of a company's financial position at a specific point in time, outlining assets, liabilities, and shareholders' equity.

Current Asset

An asset that can reasonably be expected to be converted into cash, sold, or consumed within one year or the operating cycle, whichever is longer.