Sole Proprietorship vs General Partnership Quiz
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Questions and Answers

Which of the following statements is true about a sole proprietorship?

  • It involves two or more individuals who agree to share the profits, losses, and responsibilities of a business.
  • The owner has limited liability for the business's debts and obligations.
  • The owner has unlimited liability for the business's debts and obligations. (correct)
  • It is the most complex form of business entity.

    • What is the main difference between a sole proprietorship and a general partnership?

  • A general partnership is the simplest form of business entity where an individual operates and owns the business.
  • The owners of a sole proprietorship have unlimited liability for the business's debts and obligations, while each partner in a general partnership also has unlimited liability. (correct)
  • A sole proprietorship is a legal entity, while a general partnership is not.
  • A sole proprietorship involves two or more individuals who agree to share the profits, losses, and responsibilities of a business.

    • What is a disadvantage of a sole proprietorship?

  • It involves two or more individuals who agree to share the profits, losses, and responsibilities of a business.
  • The owner has unlimited liability for the business's debts and obligations. (correct)
  • It is the most complex form of business entity.
  • The owner has limited liability for the business's debts and obligations.

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