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2. A disadvantage to the sole proprietor form of business is a. Unlimited personal liability. b. Dual taxation. c. Unlimited life. d. Complex management structure. 4. The purchase of inventory on credit results in a journal entry that a. Debits cash. b. Credits accounts payable C. Debits accounts receivable d. Credits cash. 3. The account that a firm would not close at the end of an accounting period is a. Service revenues. b. Cost of goods sold. c. Accumulated depreciation. d. Interest expense (on borrowed funds). 5. One way of measuring profitability is through the return on equity ratio. Return on equity measures a. The percentage of operating income earned for each dollar invested in an entity's resources. b. An entity's earnings on the capital invested by common shareholders. c. Useless financial information. d. The average number of times a company sells its inventory during a reporting period. 6. The primary components of capital structure are a. Accounts receivable, short-term investments, inventory and prepaid assets. b. Cash, property, plant, vehicles and equipment. c. Bonds payable, long-term notes payable, preferred stock, common stock, and retained earnings. d. Accounts payable, wages payable, short-term notes payable