Which feature most clearly distinguishes a sole proprietorship from a company?
Correct answer: C. The owner has unlimited liability for business debts
- A. The business may sell goods on credit
- B. The business can employ paid workers
- C. The owner has unlimited liability for business debts
- D. The business keeps records of transactions
Explanation
A sole proprietor and the business are legally treated as one person, so the owner bears unlimited liability. Employing workers, selling on credit, and keeping records are not exclusive to companies.
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About Nature and Forms of Business Organisation
Business organisation combines people, capital, materials and entrepreneurship to produce goods or services and earn profit, while also meeting customer and social needs. Coverage includes sole proprietorships, partnerships, companies and cooperatives, with comparisons of ownership, liability, control, profit sharing, continuity and legal status.
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