Match each sole proprietorship concept on the left with its correct economic feature or operational implication on the right.
- Ploughed-back ProfitInternal source of business capital derived from retained past trading surpluses
- Unlimited LiabilityLegal condition where the proprietor's personal assets may be seized to settle business debts
- Sole Decision-MakingOperational merit enabling prompt managerial action and high operational flexibility
- Lack of Perpetual SuccessionStructural demerit leading to business termination upon the death or incapacitation of the owner
Answer
Ploughed-back Profit matches internal capital from retained surpluses; Unlimited Liability matches personal assets being liable for debts; Sole Decision-Making matches operational merit of prompt action; Lack of Perpetual Succession matches business termination upon the owner's death.
Each sole proprietorship concept aligns directly with its legal or operational definition: ploughed-back profit is an internal capital source; unlimited liability exposes personal assets to creditors; sole decision-making provides quick managerial action; and lack of perpetual succession risks business continuity upon the owner's demise.
Step-by-Step Solution
Key Concept
Features, capital sources, merits, and demerits of a Sole Proprietorship