Which of the following statements is true about a sole proprietorship?
Posted: Sat Aug 07, 2021 7:04 am
A) The owner and the business are separate legal entities but not separate accounting entities.
B) The owner and the business are separate accounting entities but not separate legal entities.
C) The owner and the business are separate legal entities and separate accounting entities.
D) Most large businesses in this country are organized as sole proprietorships.
Answer: B
Explanation: A sole proprietorship is an unincorporated business owned by one person. Legally,
the business and the owner are not separate entities; however, the owner and business are
separate accounting entities.
B) The owner and the business are separate accounting entities but not separate legal entities.
C) The owner and the business are separate legal entities and separate accounting entities.
D) Most large businesses in this country are organized as sole proprietorships.
Answer: B
Explanation: A sole proprietorship is an unincorporated business owned by one person. Legally,
the business and the owner are not separate entities; however, the owner and business are
separate accounting entities.