A Sole Proprietorship Is Considered to Be

question 14

Multiple Choice

A sole proprietorship is considered to be

• A) an entity formed to protect the small busi- nessperson from personal liability.
• B) an extension of the individual sole pro- prietor.
• C) any business organization that is owned, managed, and operated by only one individual.
• D) an entity that is easily transferred from one individual to another.

Determine the responsibility for variances in direct material costs.

Apply flexible budget principles to forecast costs and income under varying production levels.

Understand the relationship between fixed costs, variable costs, and production volume in financial planning.

Understand and calculate direct labor efficiency variance.

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Definitions:

Debt-To-Equity Ratio

An indicator of how a company's assets are financed, comparing the use of debt to shareholders' equity.

Total Liabilities

The sum of all financial obligations a company owes to outside parties.

Total Assets

The sum of all current and non-current assets owned by a company, reflecting the company's total resources.

Cash Proceeds

Cash proceeds refer to the amount of money received from a transaction, such as the sale of an asset or product, after deducting any selling costs.