Which of the Following Is One of the Main Disadvantages

question 141

Multiple Choice

Which of the following is one of the main disadvantages of a sole proprietorship as a form of business organization?  

• A) Sole proprietorships cannot lower the transaction costs associated with contracting with resource owners. 
• B) Sole proprietorships are less efficient than corporations, because they are less specialized in production. 
• C) Owners of sole proprietorships can lose all their personal assets if the business is sued or fails. 
• D) Owners of sole proprietorships generally find it difficult to negotiate separation agreements with the other partners in the firm.

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Definitions:

Accounts Receivable

Funds that customers have yet to pay a company for the products or services they have received.

Contra Account

An account used in the ledger to offset the balance of a related account.

Carrying Amount

The net value of an asset as recorded in the books, which is equal to the asset's original cost minus any accumulated depreciation, amortization, or impairment charges.