Which of the Following Is Typically the Major Factor in Limiting

question 28

Multiple Choice

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

• A) The organizational structure of such firms tends to become extremely complicated over time.
• B) It is extremely difficult to transfer control of such firms 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 such firms 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 such firms, leading to confusion when conflicts in direction arise.

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Definitions:

Activity Variance

The difference between planned levels of activity and actual levels, often analyzed to improve budgeting and operational efficiency.

Wages And Salaries

Payments made by businesses to their workforce, which may be calculated on an hourly, daily, or yearly basis, encompassing both fixed salaries and variable wages.

Budgeting

The process of preparing detailed financial plans, forecasting revenues and expenditures, and setting financial goals.

Net Operating Income

This metric measures the profitability of a business from its primary operations, excluding expenses from financing and taxes.