Examkin

Question

Difficulty: MediumSole Proprietorship: Features, Capital Sources, Merits, and Demerits

A sole proprietor is legally required under commercial law to audit and publicly disclose annual financial accounts to the Corporate Affairs Commission.

Answer: Answer

Answer

The statement is False. Sole proprietors are not legally mandated to audit or publicly publish their annual financial accounts.
The statement is false because one of the key merits of a sole proprietorship is business secrecy. Sole traders are not required by law or regulatory bodies like the Corporate Affairs Commission to audit or publish their financial accounts to the public.

Step-by-Step Solution

1
Examine the legal requirements regarding financial disclosure for business entities
Only incorporated companies (such as public limited companies) are required to publish audited financial records for public view.
Statutory disclosure requirements depend on the legal structure of the business organization.
2
Assess the feature of business privacy in sole proprietorship
The absence of statutory audit and publishing requirements allows the sole trader to maintain confidentiality over affairs and profit figures.
Business secrecy and privacy are prominent merits of operating as a sole proprietor.

Key Concept

Business Privacy and Statutory Financial Disclosure in Sole Proprietorship
Rate this question

Topics

Sole Proprietorship: Features, Capital Sources, Merits, and Demerits

More questions from this topic