Which of the Following Is True of Sole Proprietorships and Corporations

question 119

Multiple Choice

Which of the following is true of sole proprietorships and corporations?

• A) It is difficult to transfer ownership of corporations compared to that of sole proprietorships.
• B) Income from both forms of organizations are taxed only at the corporate level.
• C) Both sole proprietorships and corporations are equally scrutinized and regulated by government bodies.
• D) In sole proprietorships, owners have unlimited liability; whereas, in corporations, owners have limited liability.

---

Definitions:

General Partnership

A business arrangement where two or more individuals agree to share in all assets, profits, and financial and legal liabilities of a business.

Limited Liability

Limited liability is a legal structure where a company's owners are not personally liable for the company's debts or liabilities beyond their initial investment.

Debts

Money owed by one party, the borrower, to a second party, the lender; an obligation to pay back a borrowed sum with interest.