What Is the Primary Difference Between a Sole Proprietorship and a Partnership

question 12

Multiple Choice

What is the primary difference between a sole proprietorship and a partnership?

• A)Proprietorships have unlimited liability while partnerships have limited liability.
• B)Partnerships can issue stocks and bonds while proprietorships cannot.
• C)Partnerships have more owners than do proprietorships.
• D)There is no real difference between the two types of firms.

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Definitions:

Preparation

The act or process of making something ready for use or consideration.

Professional

An individual with specialized skills and knowledge in a particular field, typically requiring qualifications and adhering to specific ethical standards.

Expense Recognition Principle

An accounting principle that states expenses should be recognized in the same period as the revenues they helped to generate, to accurately reflect financial performance.

Efforts

Efforts are the physical or mental exertions applied by individuals or groups to achieve specific tasks or goals, often related to work or projects.