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Financial Accounting MCQs

Which of the following statements correctly summarizes the key characteristics of a sole trader’s business?

None of these

All of these

The trader has unlimited liability, takes sole responsibility for management of the business and no audit is needed.

The trader has unlimited liability and must have the business accounts audited.

Liability is limited to the providers of loan finance and only the trader takes an active part in managing the business.

Answer

Correct Answer: The trader has unlimited liability, takes sole responsibility for management of the business and no audit is needed.

Explanation:

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