Which of the Following Is Correct with Respect to Sole

question 49

Multiple Choice

Which of the following is correct with respect to sole proprietorships?

• A)The sole proprietorship is a separate legal entity.
• B)A sole proprietorship exists where two or more people carry on business together with a view toward profits.
• C)The sole proprietor has limited liability.
• D)The sole proprietor has unlimited liability.
• E)A sole proprietorship must be incorporated.

---

Definitions:

Allocated Fixed Costs

Fixed costs that are distributed across different departments or products based on predetermined criteria or cost drivers.

Cost Driver

An activity or factor that incurs costs based on its level of usage or volume, playing a critical role in activity-based costing.

Allocated Equally

The process of distributing resources, costs, or assets in equal portions among recipients or activities.

Internal Price Wars

Competitive pricing tactics within an organization or amongst subsidiaries that aggressively lower prices, potentially harming the organization's overall profitability.