Discuss APEGS NPPE Exam Topic 6 Question 9

Which of the following statements about sole proprietorships is true?

AIt has the greatest freedom from regulations when compared with other business structures.

BIt is considered a separate legal entity whereas other business structures are not.

CIt requires a large working capital in order to get the business started.

DThere is no lack in continuity of the business if the owner is absent.

Suggested Answer: A

NPPE materials describe a sole proprietorship as the simplest form of business organization. It is owned and operated by one individual and is not a separate legal entity from the owner. As a result, it is subject to fewer regulatory and administrative requirements than partnerships or corporations.

Option A is correct because sole proprietorships generally have the greatest freedom from regulation, minimal reporting obligations, and ease of formation.

Option B is false because a sole proprietorship is not a separate legal entity. Option C is incorrect because sole proprietorships typically require relatively low start-up capital. Option D is false because the business lacks continuity if the owner is absent, incapacitated, or dies.

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24 comments · newest first

Denny 2 days ago

D is definitely false. If the owner is gone, the business stops.

Roselle 7 days ago

Right, Dacia. Many start with minimal investment.

Dacia 12 days ago

C seems wrong too. You can start small without much capital.

Bette 17 days ago

Exactly, Denny. Sole proprietorships and owners are one.

Denny 23 days ago

B is incorrect. Sole proprietorships are not separate entities.

Milly 28 days ago

I agree, A makes sense. Freedom is key for small businesses.

Antonette 1 month ago

I think A is true. Sole proprietorships have less red tape.

Tish 1 month ago

Yes, continuity is a big issue for sole proprietorships.

Paris 1 month ago

D is definitely false. If the owner is gone, the business stops.

Kris 2 months ago

Right, Herminia. Many start with minimal investment.

Herminia 2 months ago

C seems wrong too. You can start small without much capital.

Cammy 2 months ago

Exactly, Keith. Sole proprietorships and owners are one.

Keith 2 months ago

B is incorrect. Sole proprietorships are not separate entities.

Tonette 2 months ago

I agree, A makes sense. Freedom is key for small businesses.

Sheridan 2 months ago

I think A is true. Sole proprietorships have less red tape.

Rodrigo 3 months ago

D seems off. I don't think the business can just keep going if the owner is out.

Jaleesa 3 months ago

Totally agree with A! It's one of the best parts of being a sole proprietor.

Sarah 3 months ago

Wait, are you serious? I thought they had to have a lot of capital to start!

Julieta 3 months ago

I disagree with B. Sole proprietorships aren't separate legal entities.

Hillary 3 months ago

A is definitely true! Sole proprietorships have way less red tape.

Marshall 4 months ago

D definitely doesn't sound right; I recall that if the owner is absent, the business can face continuity issues.

Dalene 5 months ago

C seems off to me; I thought sole proprietorships could start with minimal capital compared to other structures.

Gearldine 5 months ago

I'm not sure about B; I remember something about sole proprietorships not being separate legal entities, unlike LLCs.

Markus 5 months ago

I think A might be true since sole proprietorships usually have fewer regulations than corporations.

APEGS NPPE Exam - Topic 6 Question 9 Discussion