Question

Ronald is the sole owner of a fast food store. Over the past six months, his sales have fallen and the store has been running at a loss as a result of a popular fast food chain outlet opening in the area. Friends and relatives who lent Ronald money to open the store want him to sell his personal property in order to repay those loans. What ownership category of business is Ronald in?

Answer 1

Answer:

sole proprietorship

Explanation:

Ronald is the sole proprietorship form of business ownership. As the sole proprietor, Ronald owns and manages the business. He makes all the key business decisions and enjoys all the profits by himself. Should the business make a loss, Ronald will bear it by himself.

Legally, Ronald and the business are considered as one entity. The assets of his business are his personal assets, and so are the debts. In other words, a sole proprietor has unlimited liabilities to the debts of the business. If the business can not pay its debts,  Ronald's personal properties can be sold to pay the creditors.