Which of the Following a Characteristic of a Sole Proprietorship

question 53

Multiple Choice

Which of the following a characteristic of a sole proprietorship?

• A) The owner is personally responsible for the debts of the business even if the debts are more than the owner has invested in the business.
• B) It is a legal entity separate from its owner.
• C) Its income is taxed twice - once on the company's income tax return and again on the owner's individual income tax returns.
• D) It is the only organizational form appropriate for service businesses.

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Definitions:

Direct Material

Raw materials that can be directly attributed to the production of goods.

Finished Products

Goods that have completed the manufacturing process and are ready for sale.

Beginning Inventory

The value of goods available for sale at the start of an accounting period.

Production Planning

The process of determining the production schedule, indicating how, when, and by whom specific products will be produced.