Which of the following is a source of capital to a sole proprietorship?
Loans from friends
Admission of new member
Issue of shares
Issue of debentures
Correct answer is A
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.