Which statement about a sole proprietorship is true?

Which statement about a sole proprietorship is true?

• A. It is owned by two or more people.
• B. It is a legal entity separate from the owner.
• C. It is a business that is completely owned by one person.
• D. It is a government-run organization.

Answer: (C)

A sole proprietorship is a business owned and run by a single person. This setup means one person makes all decisions, keeps all profits, and is personally responsible for all debts and obligations. It is not a separate legal entity from the owner, unlike a corporation, and it isn’t run by the government. So the statement that describes the business as being completely owned by one person best fits a sole proprietorship. The other descriptions refer to partnerships (two or more owners), corporations (a separate legal entity), or government-run organizations (public sector).

A sole proprietorship is a business owned and run by a single person. This setup means one person makes all decisions, keeps all profits, and is personally responsible for all debts and obligations. It is not a separate legal entity from the owner, unlike a corporation, and it isn’t run by the government. So the statement that describes the business as being completely owned by one person best fits a sole proprietorship. The other descriptions refer to partnerships (two or more owners), corporations (a separate legal entity), or government-run organizations (public sector).