Asked by
Light Fusion
on Dec 05, 2024Verified
Which of the following is true about a sole proprietorship?
A) The capital account is used to record only the investments of the owner.
B) The drawing account records distribution of assets to the proprietor.
C) A sole proprietorship is a separate legal entity from the owner.
D) A sole proprietorship is subject to a business income tax.
Sole Proprietorship
A business owned and operated by a single individual, with no legal distinction between the owner and the business entity.
Drawing Account
An account used by sole proprietors or partners to record the money withdrawn from the business for personal use.
Capital Account
Refers to a financial statement that shows the changes in a company's equity during a specific period due to transactions with its owners, such as stock issuance and dividend payments.
- Recognize the benefits that various business structures, such as sole proprietorships, partnerships, and corporations, offer.
Verified Answer
TS
Learning Objectives
- Recognize the benefits that various business structures, such as sole proprietorships, partnerships, and corporations, offer.