Which of the following statements is true about a sole proprietorship?

Question

Quizplus · Accepted Answer

In a sole proprietorship, the owner and the business are not separate legal entities. The business is simply an extension of the owner. However, for accounting and tax purposes, the owner and the business are considered separate entities. Therefore, the correct statement is that the owner and the business are separate accounting entities but not separate legal entities. Option A is incorrect because a sole proprietorship does not have a separate legal entity from the owner. Option C is incorrect because the owner and the business are not separate legal entities. Option D is incorrect because most large businesses are not organized as sole proprietorships, as they tend to be smaller in scale.

Which of the Following Statements Is True About a Sole