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 a sole proprietorship?

Double taxation of profits

Unlimited personal liability

Ability to raise large amounts of capital easily

Complex formation procedures

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Understand the concept of a sole proprietorship: A sole proprietorship is a business owned and operated by one individual. It is the simplest and most common form of business structure.

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, it also comes with unlimited personal liability, meaning the owner is personally responsible for all debts and obligations of the business.

Evaluate the options provided in the question: Double taxation of profits is not applicable to sole proprietorships, as profits are taxed directly as part of the owner's personal income. Ability to raise large amounts of capital easily is not a typical feature of sole proprietorships due to limited resources and reliance on personal funds. Complex formation procedures are not a disadvantage, as sole proprietorships are easy to establish.

Focus on the correct answer: Unlimited personal liability is a significant disadvantage of a sole proprietorship. This means the owner's personal assets can be used to settle business debts, which poses a financial risk.

Conclude the reasoning: Based on the analysis, the correct answer is 'Unlimited personal liability,' as it is a defining disadvantage of the sole proprietorship structure.