Any debts or damages incurred by a firm organized as a sole proprietorship are:
A)the sole responsibility of the owner.
B)limited to the amount the owner has invested in the firm.
C)paid for out of a reserve contingency fund that sole proprietors are required by law to set up.
D)normally covered by liability insurance.

Question

Quizplus · Accepted Answer

As a sole proprietorship, the owner is personally liable for all debts and damages incurred by the business. There is no legal distinction between the owner and the business entity, so the owner's personal assets may be at risk to satisfy any outstanding debts or damages.

Any Debts or Damages Incurred by a Firm Organized as a Sole