Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Business Organization

Financial Accounting

1. Introduction to Accounting

Business Organization

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Multiple Choice

Which of the following is a disadvantage of choosing a sole proprietorship business structure?

Double taxation of profits

Unlimited personal liability for business debts

Ability to easily raise large amounts of capital

Complex and costly formation process

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Verified step by step guidance

Understand the concept of a sole proprietorship: A sole proprietorship is a business structure where a single individual owns and operates the business. It is the simplest and most common form of business organization.

Analyze the characteristics of a sole proprietorship: Key features include full control by the owner, simplicity in formation, and direct taxation of profits (no double taxation). However, the owner has unlimited personal liability for business debts.

Evaluate the options provided in the question: Review each option to determine whether it aligns with the characteristics of a sole proprietorship. For example, double taxation of profits does not apply to sole proprietorships, as profits are taxed directly as personal income.

Focus on the disadvantage: The primary disadvantage of a sole proprietorship is unlimited personal liability. This means the owner is personally responsible for all business debts and obligations, which can put personal assets at risk.

Eliminate incorrect options: The ability to easily raise large amounts of capital and complex formation processes are not typically associated with sole proprietorships. Sole proprietorships often face challenges in raising capital and are simple to form.