Which of the Following Is False Regarding a Sole Proprietorship

question 58

Multiple Choice

Which of the following is false regarding a sole proprietorship?

• A) A sole proprietorship requires few legal formalities.
• B) A sole proprietor has complete control of the management of the business.
• C) The sole proprietor keeps all the profits from the business.
• D) Profits are taxed as the personal income of the sole proprietor.
• E) A sole proprietor is not personally liable for obligations of the business.

---

Definitions:

Intrapreneurs

Employees within a company who are assigned to work on a special idea or project and are given the freedom to develop the project as an entrepreneur would.

R&D Activities

Activities centered around research and the development of new products, services, or processes.

Salaried Employees

Individuals who receive a fixed compensation from their employer regularly, typically on a monthly or annual basis, regardless of the number of hours worked.

Spin-off Firm

A new independent company created by separating parts of an existing company, often to unlock value or focus on a specific area of expertise.