A Sole Proprietorship Comes into Existence When a Person

question 3

Multiple Choice

A sole proprietorship comes into existence when a person

• A)registers a business name.
• B)begins to carry on a business.
• C)obtains a licence for a business.
• D)pays the fee for registering a business name.
• E)files articles of incorporation.

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Definitions:

Retained Earnings

The portion of net income that is not distributed to shareholders but instead reinvested in the business or used to pay off debt.

Fixed Assets

Fixed Assets are long-term tangible property that a firm owns and uses in its operations to generate income, such as machinery, buildings, and equipment.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting the decrease in value due to wear and tear, decay, or obsolescence.

Current Asset

An asset that is expected to be converted into cash, sold, or consumed within one year or within the operating cycle of the business.