Which of the Following Is Typically the Major Factor in Limiting

question 34

Multiple Choice

Which of the following is typically the major factor in limiting the growth of a sole proprietorship?

• A)The organization of such firms tends to become extremely complicated over time.
• B)It is extremely difficult to transfer control of such a firm to a new owner if the present owner dies or wishes to sell the firm.
• C)The amount of money that can be raised by the firm is limited by the fact that the single owner must make good on all debts.
• D)Investors have a great deal of control over the day-to-day running of the firm,leading to confusion when conflicts in direction arise.

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Definitions:

Factored Receivables

Accounts receivable that have been sold to a third party (the factor) for immediate cash, minus a fee.

Cash Collections

The process of gathering all cash payments received from customers for goods or services provided.

Off-Balance Sheet

An accounting practice where a company does not include certain assets or liabilities on its balance sheet, often to keep the item from affecting its financial ratios.

Collateralized Borrowings

Loans for which the borrower has provided a guarantee in the form of assets to secure the repayment of the loan, reducing the risk for the lender.