Which of the Following Statements About a Sole Trader Is

question 44

Multiple Choice

Which of the following statements about a sole trader is NOT true?

• A)Most small businesses fail within the first five years of their establishment.
• B)The death of the sole trader usually means the death of the business.
• C)The degree of personal involvement by the sole trader can make the business difficult to sell.
• D)Sole traders have limited liability for the debts of the business.

Perform sensitivity analysis by adjusting project variables to understand range outcomes.

Understand the concept of depreciation and its impact on cash flow and tax liabilities.

Analyze and make decisions based on net present value calculations under various scenarios.

Calculate and interpret contribution margin and its significance in financial analysis.

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Definitions:

Diseconomies of Scale

The phenomenon where production costs per unit increase as a firm or operation grows in scale, opposite of economies of scale.

Returns to Scale

The change in output resulting from a proportionate increase in all inputs; the concept explains how output changes with varying levels of input.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, typically resulting in lower per-unit costs with increased production.

Average Cost Curve

The average cost curve is a graphical representation showing how the average cost per unit of output varies with the level of output, typically U-shaped due to economies and diseconomies of scale.