Question

2. Which of the following statements is true of a sole proprietorship? A) A sole proprietorship joins two or more individuals as co-owners. B) The sole proprietor is personally liable for the liabilities of the business. C) A sole proprietorship is taxed separately from the owner. D) A sole proprietorship has to pay business income taxes 3. Ten years ago a company purchased a building for $160,000. At that time, the company felt that the building was worth $185.000. The current market value of the building is $460,000. The building has been assessed at $435,000 for property tax purposes. At which amount should the company record the building in its accounting records? A) $160,000 B) $185,000 C) $435.000 D) $460.000 4. As per the the entity will remain in operation for the foreseeable future. A) economic entity concept B) monetary unit assumption C) going concern assumption D)cost principle 5. The equity of Alliance Company is $160,000 and the total liabilities are $50.000. The total assets are A) $320,000 B) $100.000 C) $110.000 D) $210,000 -

Answer 1

Answer 2

Option A: incorrect, as a sole proprietorship is run by only one individual

Option B: Correct, as a sole proprietor is solely liable for all liabilities of business.

Option C: Incorrect, as a sole proprietor is not taxed separately

Option D: Incorrect, as a sole proprietor do not have to pay business income taxes

Answer 3

The amount at which the company should record the building in its accounting records is the amount at which the company purchased the building i.e., at $160,000.

Option A $160,000 is the correct option.

Answer 4

Option C Going Concern Assumption, is the correct option as books are prepared are prepared on the basis of this assumption, that operations of the business will not cease in near future.

Answer 5

Total Assets = Equity + Liabilities

                        = 160,000 + 50,000

                        = $210,000

Option D is the correct option