Podcast
Questions and Answers
Which characteristic of sole proprietorship allows for quick adaptation to market changes?
Which characteristic of sole proprietorship allows for quick adaptation to market changes?
- Direct, undiluted action (correct)
- Minimum regulation and taxation
- All rewards to the owners
- Ease of creation and termination
What is the primary advantage of sole proprietorship concerning profit distribution?
What is the primary advantage of sole proprietorship concerning profit distribution?
- Profits are shared among multiple owners.
- Profits are reinvested into the business by default.
- The owner receives all rewards directly. (correct)
- Profits are subject to corporate tax rates.
Which aspect of a sole proprietorship simplifies its establishment and closure?
Which aspect of a sole proprietorship simplifies its establishment and closure?
- Limited liability
- Ease of creation and termination (correct)
- Complex regulatory oversight
- Requirement for a board of directors
How does minimal external oversight primarily benefit a sole proprietor?
How does minimal external oversight primarily benefit a sole proprietor?
What managerial structure is characteristic of a sole proprietorship?
What managerial structure is characteristic of a sole proprietorship?
Which of the following is a direct result of the flexibility inherent in a sole proprietorship?
Which of the following is a direct result of the flexibility inherent in a sole proprietorship?
What is the impact of 'direct, undiluted action' on the decision-making process within a sole proprietorship?
What is the impact of 'direct, undiluted action' on the decision-making process within a sole proprietorship?
How might minimal regulation affect a sole proprietor's ability to innovate and adapt?
How might minimal regulation affect a sole proprietor's ability to innovate and adapt?
What does the characteristic 'all rewards to owners' imply for the sole proprietor's motivation?
What does the characteristic 'all rewards to owners' imply for the sole proprietor's motivation?
In which scenario would the 'ease of termination' be most advantageous for a sole proprietor?
In which scenario would the 'ease of termination' be most advantageous for a sole proprietor?
Flashcards
Ease of creation/termination
Ease of creation/termination
Simple to start and stop, requiring no complex procedures.
Direct, undiluted control
Direct, undiluted control
The owner has complete authority without needing approval from others.
Owner gets all rewards
Owner gets all rewards
All profits are kept by the owner.
Flexibility of decisions
Flexibility of decisions
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Limited regulation/tax
Limited regulation/tax
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Study Notes
- Sole traders can be easily created and terminated, brought into existence without any formalities and easily terminated.
- The ownership, control and management are vested in one person giving Direct, undiluted action.
- All rewards go to the owners, who work for themselves and determine their own destiny.
- Sole traders have flexibility because the owner is free to adopt changes rapidly.
- Sole traders have minimum regulation and taxation and are generally free from control.
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