Which one of the following statements is correct with respect to sole proprietorships?
A) A sole proprietorship is a separate legal entity with one shareholder.
B) A sole proprietorship involves limited liability.
C) The sole proprietor is a society under the Societies Act.
D) A sole proprietorship involves unlimited liability for the proprietor.
E) The sole proprietor is restricted to service type businesses.

Question

Quizplus · Accepted Answer

A sole proprietorship involves unlimited liability for the proprietor, meaning the owner is personally responsible for all the debts and obligations of the business. This contrasts with corporations, where the liability of shareholders is typically limited to their investment.

Which One of the Following Statements Is Correct with Respect