58. What is a sole proprietorship? What are the advantages/ disadvantages of a s

Question

58. What is a sole proprietorship? What are the advantages/

disadvantages of a sole proprietorship?

59. What are the rights, responsibilities and liabilities of a general

partner? Of a limited partner?

define

Limited Liability Company(LLC).

64. Chapter 39 begins with the sentence “The corporation is a

creature of statute.” What does this sentence mean? What are

some of the changes/reforms brought about by the Revised Model

Business Corporation Act? Note: Washington has adopted the

Revised Model Business Corporation Act.

Explanation / Answer

58. The sole proprietorship is a type of business organization which is owned by a single person. The sole proprietor is the whole and sole of the business. The sole proprietor takes all the decisions of the company. He is also personally liable for the business. This means that the debts of the business will be paid off using his personal assets as well. The advantage is that he doesnot have to discuss with anybody regarding the things that he is going to do in his business. The profits are his own profits. The disadvantage of sole proprietorship is that there is no additional help to the proprietor and the losses of the business have to be incurred by the proprietor only.

59. Partnership is another type of business organization where the owner of the company are two or more people. All these people are known as the partners of the company. There are two types of partners. They are: General partners and Limited partners. General partners are liable for the debts or loans of the business but limited partners are not liable for the debts of the business. The limited liability corporation is a kind of business where the liability of the business is limited. The personal assets of the pattners will not be used to pay off the liabilities of the company.

64. The statement means that a corporation is created by law. In other words, a corporation is a legal entity. It has to follow the rules and lawsof the land.

The Revised Model Business Corporation Act removed the criteria of surplus earnings to identify whether a company is doing well or not. It also modifies the definition of distribution among the shareholders.

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