Which of the following is a source of capital to a sole proprietorship?
COMMERCE
WAEC 2009
Which of the following is a source of capital to a sole proprietorship?
- A. Loans from friends
- B. Admission of new member
- C. Issue of shares
- D. Issue of debentures
Correct Answer: A. Loans from friends
Explanation
One of the sources of funds for sole traders is the loans they get from family and friends. While it takes little or no legal documentation to establish a sole proprietorship, getting funds to finance the business has always posed a constraint to its growth. Hence the business owner is left with sourcing funds from either friends and families, grants, or plough-back profits.
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