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WAEC Commerce 1992 Question 4

Question 4

Business Units

Which of the following is not true of sole proprietorship?

  1. A.It has a separate legal entity
  2. B.It has unlimited liability
  3. C.It has slim chances of expansion
  4. D.The capital is small
  5. E.It can convert into a company
Show the answer and explanation

Answer: A (It has a separate legal entity)

Explanation

A sole proprietorship is not a separate legal person; the owner and the business are the same in law.