Because of Unlimited Liability, It Is Easy for Sole Proprietors

question 167

True/False

Because of unlimited liability, it is easy for sole proprietors to borrow large sums of money.

---

Definitions:

Accounting Rules

Formal guidelines and procedures that govern the recording, reporting, and analysis of financial transactions and positions.

Liabilities

Financial obligations or debts owed by a company to third parties, which must be settled through the transfer of assets, provision of services, or other economic benefits.

Dividends Payable

A liability recorded on a company's balance sheet for dividends declared by the board of directors but not yet paid out to shareholders.

Measuring

The action or process of quantifying or valuing an entity, activity, or financial transaction using specific units or standards.