What Is the Fundamental Difference Between a Sole Proprietorship and a Corporation

question 29

Multiple Choice

What is the fundamental difference between a sole proprietorship and a corporation?

• A) A corporation is larger than a sole proprietorship.
• B) A corporation is a legal entity that is separate from its owners, while in a sole proprietorship, there is no such distinction.
• C) A sole proprietor has unlimited liability, while investors in a corporation have limited liability.
• D) A corporation is more bureaucratic than a sole proprietorship.
• E) There isn't really a fundamental difference between a sole proprietorship and a corporation.

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Definitions:

Percentage-Of-Completion Method

An accounting technique used to recognize revenue and expenses of long-term contracts as a percentage of work completed during the period.

Actual Construction Costs

The total expenses incurred during the construction of a building or infrastructure, including materials, labor, and any other costs.

Expenditures

Money spent or costs incurred in an organization's efforts to generate revenue.

Farmer

An individual engaged in the practice of agriculture, raising living organisms for food or raw materials.