Internal Use of Accounting Information

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What is the primary purpose of a business?

To provide goods and services for free

To earn profit and increase the wealth of its owners (correct)

To limit personal liability

To control the affairs of other businesses

What is a 'sole proprietorship' business?

A business that focuses on distributing profits to employees

A business that limits personal assets from being used for debts

A business owned by a single individual (correct)

A business with multiple owners

What distinguishes the owner from an employee in a sole proprietorship?

Both have equal control over the operational aspects

The owner has sole control over operational and monetary aspects (correct)

Employees have more authority over controlling business affairs

Employees are not involved in day-to-day operations

What is a disadvantage of a sole proprietorship?

Unlimited personal liability for the owner Signup and view all the answers

In a sole proprietorship, who may be compelled to use personal assets to pay business debts?

The proprietor Signup and view all the answers

Which legal form of business allows for only one owner with sole control over operations?

Sole proprietorship Signup and view all the answers

What is a benefit of a sole proprietorship in terms of forming the business?

Easy to form with fewer legal requirements Signup and view all the answers

Why might a sole proprietorship face challenges in raising capital?

'Unlimited personal liability' clause in its legal structure Signup and view all the answers

What would be a consequence if a sole proprietorship incurs significant debts?

'Unlimited personal liability' affecting personal assets Signup and view all the answers

'Unlimited personal liability' is a characteristic of which legal form of business?

'Sole proprietorship' Signup and view all the answers

Internal Use of Accounting Information

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Questions and Answers

What is the primary purpose of a business?

What is a 'sole proprietorship' business?

What distinguishes the owner from an employee in a sole proprietorship?

What is a disadvantage of a sole proprietorship?

In a sole proprietorship, who may be compelled to use personal assets to pay business debts?

Which legal form of business allows for only one owner with sole control over operations?

What is a benefit of a sole proprietorship in terms of forming the business?

Why might a sole proprietorship face challenges in raising capital?

What would be a consequence if a sole proprietorship incurs significant debts?

'Unlimited personal liability' is a characteristic of which legal form of business?

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