Future Business Leaders of America (FBLA) Agribusiness Practice Test

Disable ads (and more) with a membership for a one time $4.99 payment

Enhance your FBLA Agribusiness knowledge with our comprehensive test. Dive into flashcards and multiple-choice questions, complete with hints and explanations, to ensure exam success. Prepare confidently for a bright future!

Start Multiple Choice Practice Test
Start Flash Cards

Practice this question and more.

What is a primary disadvantage of forming a sole proprietorship?

  1. The business lacks flexibility

  2. The owner does not keep all profits

  3. All assets of the owner are tied to the business

  4. The structure is overly complex to manage

The correct answer is: All assets of the owner are tied to the business

In a sole proprietorship, a primary disadvantage is that all assets of the owner are tied to the business. This means that the proprietor is personally liable for all debts and obligations incurred by the business. If the business were to face financial difficulty, creditors can pursue the owner's personal assets, such as their home, savings, or other properties, to satisfy business debts. This level of risk can deter some individuals from choosing this type of business structure, as it poses a significant financial vulnerability. Other choices do not reflect the primary disadvantages associated with sole proprietorships. The flexibility of the business operation is typically high, and the owner retains all profits; thus, those options do not highlight the key risks involved with a sole proprietorship's structure.

More Questions Like This