Choose the correct answer from the below about sole trader

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BlackTom AI · Accepted Answer

Examining the question: 'Choose the correct answer from the below about sole trader.' The four options describe characteristics of a sole trader, focusing on control, entity status, and liability.

Option a: 'A sole trader is an individual who controls and manages a business. This business is not a separate legal entity and the owner is not fully liable for the debts of the business.' This statement correctly notes that a sole trader controls and manages the business and that the business is not a separate legal entity. However, it incorrectly claims that the owner is not fully liable for the debts. In reality, a sole trader has unlimited liability, meaning the owner is personally liable for all the business debts. This makes this option incorrect on the liability part.

Option b: 'A sole trader is an individual who controls and manages a business. This business is not a separate legal entity and the owner is fully liable for the debts of the business.' This statement captures two essential truths about sole traders: (1) the owner controls and manages the business, and (2) the business is not a separate legal entity, which means the owner is personally responsible for debts. The phrase 'fully liable for the debts of the business' reflects the unlimited liability that characterizes sole traders. This aligns with standard definitions in business law and accounting. This option is consistent with the concept of sole traders and is therefore correct.

Option c: 'A sole trader is an individual who controls and manages a business. This business is a separate legal entity and the owner is not fully liable for the debts of the business.' This option asserts that the business is a separate legal entity. That is the key feature distinguishing a corporation (or limited company) from a sole trader. A sole trader's business is not a separate legal entity, so this part is false. Additionally, saying the owner is not fully liable contradicts the unlimited liability principle of sole traders. Hence, this option is incorrect.

Option d: 'A sole trader is an individual who controls and manages a business. This business is a separate legal entity and the owner is not fully liable for the debts of the business.' This combines two incorrect elements: the business is stated as a separate legal entity, which it is not for a sole trader, and the owner is described as not fully liable, which contradicts the unlimited liability principle. Therefore, this option is incorrect.

In summary, option b correctly reflects the defining characteristics of a sole trader: control by the individual, no separate legal entity status for the business, and full (unlimited) personal liability for debts. The other options fail due to incorrect claims about liability or the legal nature of the business entity.

Choose the correct answer from the below about sole trader

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Choose the correct answer from the below about sole trader

查看解析

登录即可查看完整答案

类似问题

Which of the following is an advantage of a sole trader business?

What is a key feature of a sole trader business?

A sole proprietor has Blank ______ personal liability for all business debts and obligations.

Which of the following entities is a “sole trader”?

If Sally owns her own business and pays for its expenses on her credit card, she is most likely a(n) Blank ______ and is Blank ______ for all her credit card charges. BlackTom题目解析

Which of the following is a strength of a sole proprietorship?

更多留学生实用工具

希望你的学习变得更简单

If Sally owns her own business and pays for its expenses on her credit card, she is most likely a(n) Blank and is Blank for all her credit card charges. BlackTom题目解析