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

What is the main drawback of a sole proprietorship?

Ownership can be easily transferred to others.

The owner has unlimited personal liability for business debts.

Profits are taxed twice, once at the business level and again at the personal level.

It is difficult to form and requires extensive legal documentation.

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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 ownership.

Analyze the options provided in the question: Each option describes a potential drawback or characteristic of a sole proprietorship. Evaluate each statement to determine its accuracy.

Option 1: 'Ownership can be easily transferred to others.' This is incorrect because transferring ownership in a sole proprietorship is not straightforward; the business is tied to the owner.

Option 2: 'The owner has unlimited personal liability for business debts.' This is correct because in a sole proprietorship, the owner is personally responsible for all debts and liabilities of the business, which is a significant drawback.

Option 3: 'Profits are taxed twice, once at the business level and again at the personal level.' This is incorrect because sole proprietorship profits are only taxed once, as they are reported on the owner's personal income tax return. Option 4: 'It is difficult to form and requires extensive legal documentation.' This is incorrect because sole proprietorships are easy to form and require minimal legal documentation.