Future Business Leaders of America (FBLA) Business Management Practice Test

Which of the following is NOT a characteristic of a sole proprietorship?

1. Owned by one person

2. Personal liability

3. Limited operational hours

4. Simplicity in decision-making

The correct answer is: Limited operational hours

A sole proprietorship is characterized by ownership that is completely vested in one individual, which supports the notion of personal liability, as the owner is personally responsible for all debts and obligations of the business. The simplicity in decision-making is also a salient feature of a sole proprietorship, as decisions can be made quickly without the need for input from partners or shareholders. Operating hours for a sole proprietorship are not inherently limited and can vary widely depending on the nature of the business and the owner's preferences. Therefore, the idea of limited operational hours does not accurately reflect a characteristic of sole proprietorships, making it the correct answer. In fact, many sole proprietorships can operate during flexible hours, making this aspect more dependent on the owner's choices rather than a defining trait of the structure itself.