Multiple Choice
Which of the following is often a trigger for an organization to rethink its business model?
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Business Organization
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Which of the following is NOT an advantage of a sole proprietorship?
A
Unlimited liability for the owner
B
All profits go directly to the owner
C
Owner has complete control over business decisions
D
Simple to establish and operate
Verified step by step guidance1
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.
Review the advantages of a sole proprietorship: These include all profits going directly to the owner, the owner having complete control over business decisions, and the simplicity of establishment and operation.
Identify the disadvantage mentioned in the problem: Unlimited liability for the owner means that the owner is personally responsible for all debts and obligations of the business, which is a significant risk.
Compare the options provided: Determine which of the listed items does not align with the advantages of a sole proprietorship. Unlimited liability is a disadvantage, not an advantage.
Conclude that the correct answer is the option that represents a disadvantage rather than an advantage of a sole proprietorship.
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