Question

question 23 (2.5 points)
dierdra owns fantasy flowers, a sole proprietorship. dierdras liability is
a) limited to the extent of capital expenditures.
b) limited to the extent of his or her original investment.
c) unlimited.
d) limited by state statute and varies from state to state.
question 24 (2.5 points)
belinda sells belindas beauty shop, a sole proprietorship, to diana. this is
a) a transfer of the ownership of the business.
b) a franchise.
c) not a transfer of ownership—a sole proprietorship cannot be transferred.

Explanation:

• Question 23: In a sole proprietorship, the owner (Dierdra) has unlimited liability. This means that the owner is personally responsible for all the debts and obligations of the business. There is no legal separation between the owner's personal assets and the business's assets. For example, if the business has a debt, creditors can go after the owner's personal savings, property, etc. Options a, b, and d are incorrect as they suggest some form of limitation (either based on capital expenditures, original investment, or state - specific limits) which is not the case for sole proprietorship liability.
• Question 24: When Belinda sells her sole proprietorship (Belinda's Beauty Shop) to Diana, it is a transfer of the ownership of the business. A sole proprietorship is owned by one person, and when that person sells the business (including its assets, customer base, etc.), the ownership changes hands. A franchise (option b) is a different business model where a franchisee operates under the franchisor's brand and business system, which is not the case here. Option c is incorrect because a sole proprietorship can be transferred as it is a business that is owned by an individual who has the right to sell it.

Answer:

• Question 23: C. unlimited.
• Question 24: A. a transfer of the ownership of the business.