Multiple Choice
Which of the following best describes the process of creating and managing a business to achieve desired objectives?
24
views
1. Introduction to Accounting
Business Organization
Struggling with Financial Accounting?
Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Which of the following is a disadvantage that partnerships share with sole proprietorships?
A
Double taxation of profits
B
Lack of continuity if an owner withdraws or dies
C
Limited liability for all owners
D
Complex regulatory requirements
Verified step by step guidance1
Understand the nature of partnerships and sole proprietorships: Both are forms of business ownership where the owners have direct control and responsibility for the business operations.
Identify the key disadvantages of partnerships and sole proprietorships: These include unlimited liability, lack of continuity, and potential difficulty in raising capital.
Focus on the specific disadvantage mentioned in the problem: Lack of continuity if an owner withdraws or dies. This means the business may cease to exist or face significant operational challenges if one of the owners is no longer involved.
Eliminate the incorrect options: Double taxation of profits applies to corporations, not partnerships or sole proprietorships. Limited liability for all owners is incorrect because partnerships and sole proprietorships typically have unlimited liability. Complex regulatory requirements are more common in corporations than in partnerships or sole proprietorships.
Conclude that the correct disadvantage shared by partnerships and sole proprietorships is the lack of continuity if an owner withdraws or dies, as this is a fundamental characteristic of these business structures.
Related Videos
Related Practice
Business Organization practice set
Problem sets built by lead tutorsExpert video explanations