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 statements is incorrect regarding sole proprietorships?

A sole proprietorship is easy to establish and dissolve.

A sole proprietorship has unlimited liability for its owner.

The owner of a sole proprietorship has complete control over business decisions.

A sole proprietorship is taxed separately from its owner.

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Verified step by step guidance

Understand the concept of a sole proprietorship: A sole proprietorship is a business owned and operated by one individual. It is the simplest form of business structure and does not require formal registration in many jurisdictions.

Review the characteristics of sole proprietorships: Sole proprietorships are easy to establish and dissolve, the owner has unlimited liability, and the owner has complete control over business decisions.

Analyze the taxation aspect: In a sole proprietorship, the business income is not taxed separately. Instead, it is reported on the owner's personal income tax return, meaning the business and the owner are considered the same entity for tax purposes.

Compare the statements provided in the problem: Evaluate each statement against the characteristics of sole proprietorships. Identify the statement that contradicts the known facts about sole proprietorships.

Conclude which statement is incorrect: Based on the analysis, the statement 'A sole proprietorship is taxed separately from its owner' is incorrect because the business income is taxed as part of the owner's personal income.