Any debts or damages incurred by a firm organized as a sole proprietorship are:
A)The 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, there is no legal distinction between the owner and the business, meaning the owner is personally responsible for any debts or damages incurred by the business. There is no legal requirement to set up a reserve contingency fund, and liability insurance is not always available or sufficient to cover all debts or damages.

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