Which of the Following Statements Is TRUE of a Sole

question 160

Multiple Choice

Which of the following statements is TRUE of a sole proprietorship?

• A) A sole proprietorship joins two or more individuals as co-owners.
• B) The sole proprietor is personally liable for the liabilities of the business.
• C) A sole proprietorship is taxed separately from the owner.
• D) A sole proprietorship has to pay business income taxes.

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Definitions:

Credit Policy

The guidelines a company follows to determine the amount and terms of credit to extend to customers.

Net Sales

The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods, and discounts.

Accounts Receivable Turnover

A financial ratio that measures how efficiently a company collects its receivables or the speed of debt collection from customers.

Average Account Receivables

The average amount of money owed to a company by its customers for goods or services delivered on credit.