Question

Which of the following is an advantage of a sole proprietorship form of business?

Answer 1

Option C is the correct answer.

The advantage of a sole proprietorship form of business is that the owner makes all the decisions.

Further Explanation:

Sole Proprietorship:  A sole proprietorship refers to the type of enterprise that is run and owned by one person, and there is no concept of the separate legal entity.  The owner and business are treated as one person. The owner has unlimited liability and assumes unlimited risk.

A.

There’s limited personal risk: This option is incorrect.

The owner has unlimited risk since owner and business are considered as one person. There is no concept of separate legal entity in case of the sole proprietorship.

B.

The business can continue indefinitely: This option is incorrect.

The sole proprietorship does not have perpetual succession means as soon as the owner dies the business comes to an end.

C.

The owner makes all the decision: This option is correct.

In case of a sole proprietorship, the owner takes all the decision regarding the business. There is no board of director to assist him in taking the decision making.

D.

All of the above: This option is incorrect.

The sole proprietorship does not have limited liability; it assumes the limited risk, and continues indefinitely.  

Learn more:

1. Legal liability of the business

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2. The percentage of sales method

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3. The sales budget

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Answer details:

Grade: High School

Subject: Business Studies

Chapter: Organizational structure

Keywords: Sole proprietorship, a limited personal risk, continue indefinitely, makes all the decision, perpetual succession, advantage of sole proprietorship form of business, all the decisions, there’s, unlimited liability, organization structure, business studies, indefinitely, continue, The business can.

Answer 2

An advantage of a sole proprietorship form of business is C. THE OWNER MAKES ALL THE DECISIONS.

Sole proprietorship is business owned by an individual. It is easy to establish because its requirements are simple compared to forming a partnership or corporation.

All the decision-making process are made by the owner. The profits of the business are all for the benefit of the owner. However, once the business is losing, even the personal assets of the owner is affected when he or she tries to maintain the business and stop it from going under.