In a sole proprietorship,
A) creditors have first claim against assets
B) there are no employees
C) assets are safe from creditors
D) employees share in the liabilities

Question

Quizplus · Accepted Answer

In a sole proprietorship, creditors have the first claim against assets in the event of business failure or debts. This is because the business and the owner are considered the same legal entity, making the owner's personal assets potentially liable to satisfy business debts. Choices B, C, and D are incorrect as a sole proprietorship can have employees, assets are not protected from creditors, and employees do not share in the liabilities.

In a Sole Proprietorship