If a Sole Proprietorship Fails, the Owner May Lose Whatever

question 128

True/False

If a sole proprietorship fails, the owner may lose whatever was invested in the business, and the owner's personal assets are also at risk.

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Definitions:

Present Value

Present value is the current worth of a future sum of money or stream of cash flows given a specified rate of return.

Net Cash Flows

The difference between a company's cash inflows and outflows over a specific period.

Accounting Rate

Typically refers to the rate of return or interest rate used in financial calculations, such as net present value or internal rate of return.

Straight-Line Method

A method of calculating depreciation of an asset, which involves evenly spreading the cost of the asset over its useful life.