Which of the following is a false statement regarding a sole proprietorship?
A sole proprietorship requires few legal formalities.
A sole proprietor has complete control of the management of the business.
The sole proprietor keeps all the profits from the business.
Profits are taxed as the personal income of the sole proprietor.
A sole proprietor is not personally liable for the obligations of the business.Question 2
A voluntary association between two or more persons who co-own a business for a profit is a(n) _________________________.
limited liability company
sole proprietorshipQuestion 3
Under which of the following does a principal give an agent broad authority to sign legal documents on behalf of the principal, as opposed to authority for only a specific purpose?
A general power of attorney
A specific power of attorney
A localized power of attorney
A durable power of attorney
An equitable power or attorneyQuestion 4
If an agent makes authorized expenditures in the course of working on behalf of the principal, the principal has a duty to reimburse the agent for the amount of money spent. This is known as the duty of subrogation.