Which of the following is a source of capital to a sole proprietorship?

A sole proprietorship is owned and run by one person, so it cannot raise capital by bringing in outside owners or issuing securities to the public in the way a company can. One realistic way a sole trader can raise extra capital is by taking loans from friends, since this simply adds borrowed funds to the business without changing who owns it.

The other options are not available to a sole proprietorship. Issuing debentures and issuing shares are both methods used by registered companies to raise capital from the investing public, and a sole proprietorship has no share capital or company structure to issue these against. Admission of a new member would turn the business into a partnership, which changes its legal form entirely and means it is no longer a sole proprietorship.

Examination reminder: whenever a question asks about raising capital for a sole proprietorship, rule out any option that involves shares, debentures, or bringing in new owners, since these require a different, more formal business structure.