Question 1 of 5
Which of the following enjoys limited liability?
A
Sole proprietorship
B
General partnership
C
Corporation
D
None of the above
Why: A corporation provides limited liability to its shareholders, protecting their personal assets from business debts and liabilities. Sole proprietorships and general partnerships expose owners to unlimited personal liability. Therefore, option C is correct.
Question 2 of 5
Michael Cohn is a 'member' (a type of owner) of a marine supply business. What type of business entity is this likely to be?
A
Sole proprietorship
B
General partnership
C
Limited liability company (LLC)
D
Corporation
Why: In a Limited Liability Company (LLC), owners are called 'members,' distinguishing it from partnerships (partners) or corporations (shareholders). LLCs combine liability protection with flexible management. Thus, option C is correct.
Question 3 of 5
Distinguish between a sole proprietorship and a partnership in terms of ownership, liability, and taxation.
Why: This answer covers all required aspects with definition, key points, example, and conclusion, meeting 50-80 word minimum for short answer.
Question 4 of 5
Explain the features of different business structures: sole proprietorship, partnership, corporation, and LLC.
Why: Comprehensive coverage with intro, 4 detailed points, examples, and conclusion exceeding 100-150 words for 3-4 marks.
Question 5 of 5
The balance sheet of ABC as on 1st April, 2024 was as follows: (Complete balance sheet details not fully specified in source, but question requires preparation). During 2024-25, his Profit and Loss Account revealed a net profit of ₹ 8,37,500. During the year he introduced further capital of ₹ 3,75,000 into the business. You are required to prepare the balance sheet as at March 31, 2025.
Why: The question tests preparation of **final accounts specifically balance sheet** for sole proprietorship, focusing on capital adjustments. Opening capital is adjusted by adding profit, additional capital, and subtracting drawings. Assets and liabilities are listed at book values with adjustments. This is standard CA Foundation/Commerce exam pattern for sole traders[1].
