Question

Mehul sent an email to his friend Rahul who resides in US asking for financial help.
Mehul shared with him that due to a prolonged illness, his business suffered a lot. As a
result he was not able to repay the bank loan which he had taken for the expansion of his
business. He also informed him that his warehouse has been confesticated by the bank
authorities to settle his claims. Mehul also reminded Rahul of his good times in business
when he had helped Rahul financially being the sole recipient of all the business profits.
In context of the above case:
1. Identify the related feature and liability of the form of business been described in the
above paragraph.
2. Explain in brief any two merits of this form of business which have not been
mentioned in the paragraph.​

Answer 1

Answer:

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Answer 2

Answer:

A. Following are the features of Sole proprietorship business:

1. No legal formalities while forming or closing the business.

2. Own takes all the decision regarding business.

Following are the liability of sole proprietorship business:

1. Lack of managerial skill

2. Risk of taking the wrong decision.

B. Following are a merit for the sole proprietorship:

1. Fewer government rules and regulation and ease in formation and closer.

2. Direct recipient of profit and revenue from the business.

3. Confidentiality is maintained related to the financial statement of business because sole proprietors are not bound to publish there statement to the public.