Future Business Leaders of America (FBLA) Accounting Practice Test

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Prepare for the FBLA Accounting Test with practice quizzes and comprehensive questions. Each question is designed to help deepen your understanding and enhance your readiness for the exam. Are you ready to excel?

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What is the definition of a business owned by one person?

Partnership
Sole Proprietorship
Corporation
Limited Liability Company

The correct answer is: Sole Proprietorship

A business owned by one person is defined as a sole proprietorship. This type of business structure is straightforward, where an individual operates the business independently and retains full control over its operations, decisions, and profits. The sole proprietor is personally responsible for all debts and liabilities incurred by the business, which means that there is no legal distinction between the owner and the business itself. In a sole proprietorship, the owner can easily establish and dissolve the business without formalities, making it a popular choice for small businesses and freelancers. The simplicity in setup and management is advantageous, although it poses a greater personal financial risk since the owner is liable for all business-related obligations. Other business structures, such as partnerships, corporations, and limited liability companies, involve multiple owners or provide different levels of liability protection, which distinguishes them from the sole proprietorship model.