College Accounting, Chapters 1-27
College Accounting, Chapters 1-27
23rd Edition
ISBN: 9781337794756
Author: HEINTZ, James A.
Publisher: Cengage Learning,
Question
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Chapter 19, Problem 1TF
To determine

State whether the given statement is true or false.

Expert Solution & Answer
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Answer to Problem 1TF

The given statement “When two or more individuals engage in an enterprise as co-owners, the organization is known as a proprietorship” is false.

Explanation of Solution

Partnership:

A partnership is an unincorporated form of business which is formed by an agreement, owned and managed mutually by two or more individuals, who invest their assets in the business and share the liabilities and profits among themselves.

“When two or more individuals engage in an enterprise as co-owners, the organization is known as a partnership”. It is a form of organization which is common to all types of enterprises. However, this form of organization is prevalent in personal service enterprises rather than merchandising businesses.

Therefore, from the above explanation, the given statement “When two or more individuals engage in an enterprise as co-owners, the organization is known as a proprietorship” is false.

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