Martha started a flower shop as a sole proprietor. After one year, she was forced to close the
shop because business was so bad. At that time, the business assets totaled $50,000, but the
business liabilities totaled $125,000.
Which of the following statements is true?
A) Martha's business creditors can collect only the $50,000 now, but if Martha ever goes into
business again, they can get the assets of the new business.
B) Martha's business creditors can collect only the $50,000 of business assets.
C) Once Martha terminates the sole proprietorship, the business creditors cannot get even
the $50,000.
D) Martha is personally liable for the additional $75,000.
D
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