Question 1

The essential elements of a partnership do not include

Accepted Answer

A)   a sharing of profits and losses.
B)   a joint ownership of the business.
C)   an equal right in the management of the business.
D)   good faith.E) None of the above
F) B) and D)

Question 2

Stefani and Tyler agree in an exchange of e-mail to form a partnership to buy and sell real property. Their partnership agreement is legally binding

Accepted Answer

A)   only if a copy of the agreement is filed in the appropriate state office.
B)   only if the agreement is printed in hard copy and signed by the parties.
C)   only if the parties exchange valid consideration.
D)   without more.E) A) and D)
F) A) and B)

Question 3

Kim and Lyle are partners in K&L Sales, which exports technical equipment. If Congress declares that the equipment can no longer be exported, K&L

Accepted Answer

A)   can continue its business for one twelve-month period.
B)   can continue its business indefinitely.
C)   dissolves immediately unless the partners change its business.
D)   is immediately subject to criminal prosecution and penalties.E) B) and C)
F) B) and D) C

Question 4

Jess and Keri are members of Livewire LLC, a limited liability company. In most situations, with respect to Livewire's debts, Jess and Keri are shielded from

Accepted Answer

A)   all liability.
B)   no liability.
C)   personal liability.
D)   joint and several liability.E) A) and B)
F) A) and C)

Question 5

Generally, the law recognizes a partnership as an independent entity .

Accepted Answer

A) True 
 B)False

Question 6

Deb and Erv are partners in Framing & Foundations, a construction outfit. Deb manages the business. For this service, she is

Accepted Answer

A)   entitled to pay in proportion to her effect on the business if the partners agree.
B)   entitled to pay in proportion to her effort by default.
C)   entitled to pay in proportion to her capital contribution.
D)   not entitled to pay.E) None of the above
F) C) and D)

Question 7

Brad and Carol are partners in Doctors for Children, a medical clinic. Brad's dissociation from the firm results in

Accepted Answer

A)   the automatic termination of the firm's legal existence.
B)   the partner to have his or her interest purchased by the partnership.
C)   the immediate maturity of all partnership debts.
D)   the temporary suspension of the partnership's business.E) C) and D)
F) None of the above

Question 8

Global Investments is a foreign investor. With respect to the operations of a limited liability company in the United States, Global can

Accepted Answer

A)   become a member , but cannot otherwise participate.
B)   become a member and participate.
C)   not become a member, but can participate.
D)   not become a member or participate.E) B) and C)
F) A) and D)

Question 9

Ford is the sole proprietor of Go, an app service. As a sole proprietor, on the business's profits, Ford pays

Accepted Answer

A)   no income taxes.
B)   only personal income taxes.
C)   only business income taxes.
D)   both personal and business income taxes.E) A) and B)
F) C) and D)

Question 10

In many instances, agency law governs the relationships among partners.

Accepted Answer

A) True 
 B)False

Question 11

Every act of a partner concerning partnership business binds the firm.

Accepted Answer

A) True 
 B)False

Question 12

Bayard organized, and owns and operates, Cypress Tours in the simplest form of business organization. This is

Accepted Answer

A)   a limited liability company.
B)   a limited partnership.
C)   a general partnership.
D)   a sole proprietorship.E) B) and D)
F) A) and B)

Question 13

Owen plans to open Owen's Pets Store, a pet sales and pet supplies outlet, and to hire Quimby and Ruth. Owen will invest only his own money. He does not expect to make any profit for at least two years and to make almost no profit for the first three years, but he hopes to expand eventually. Which form of business organization would be most appropriate? What are the chief characteristics, advantages, and disadvantages of this form of business organization? If Owen wants to obtain additional capital to expand the business, but does not want to lose control of the firm, what is his best option?

Accepted Answer

When a business is relatively small and is not diversified, employs relatively few people, has modest profits, and is not likely to expand significantly or require extensive financing in the immediate future, the most appropriate form for doing business may be a sole proprietorship. A sole proprietorship is easier and less costly to start than other forms of business, because few legal forms are involved. The owner is free to make business decisions without consulting others. Taxes are paid on the business's in-come as the owner's personal income. 
In a sole proprietorship, the owner and the business are the same. Anyone who creates a business without designating a specific form for its organization is doing business as a sole proprietorship. An advantage of the sole proprietorship is its greater organizational flexibility over other forms of business organization. The owner can operate the enterprise without any formalities. A significant disadvantage of this form of organization, however, is that unlike most other forms of business organization, there are no limits on the liability of the owner for the debts and obligations of the firm. Another dis-advantage of the sole proprietorship form can be the ability of a sole proprietor to raise capital while maintaining control and retaining the same form. This course may be limited chiefly to borrowing funds. Bringing in partners would convert the business to a partnership. Issuing stock would require incorporating or establishing another form of business. Selling the business would sacrifice all control. The only way to obtain additional business capital without accumulating it through business profit is by borrowing funds.

Question 14

To form a limited liability company, articles of organization must be filed with a central state agency.

Accepted Answer

A) True 
 B)False

Question 15

In a sole proprietorship, the owner is not the business.

Accepted Answer

A) True 
 B)False

Question 16

Unanimous consent of the partners is required to make basic changes in the nature of the business or the partnership agreement.

Accepted Answer

A) True 
 B)False

Question 17

In Ohio, Paving LLC is a foreign limited liability company. In dealing with Paving, Ohio will apply the law of the state where the firm

Accepted Answer

A)   was formed.
B)   is headquartered.
C)   does business.
D)   will receive consistent treatment.E) A) and C)
F) None of the above

Question 18

In a sole proprietorship, the proprietor receives all the profits.

Accepted Answer

A) True 
 B)False  True

Question 19

Without creating a separate business organization, Roy starts up Street Cruisers, a new, pre-owned auto sales enterprise. Roy is

Accepted Answer

A)   a general partner.
B)   a member.
C)   a limited partner.
D)   a sole proprietor.E) B) and C)
F) A) and D)

Question 20

A partnership arises from an agreement between two or more parties to carry on a business for profit.

Accepted Answer

A) True 
 B)False

Exam 28: Types of Business Organizations

The essential elements of a partnership do not include

Correct Answer
verified

Stefani and Tyler agree in an exchange of e-mail to form a partnership to buy and sell real property. Their partnership agreement is legally binding

Correct Answer
verified

Kim and Lyle are partners in K&L Sales, which exports technical equipment. If Congress declares that the equipment can no longer be exported, K&L

Correct Answer
verified
C

Jess and Keri are members of Livewire LLC, a limited liability company. In most situations, with respect to Livewire's debts, Jess and Keri are shielded from

Correct Answer
verified

Generally, the law recognizes a partnership as an independent entity .

Correct Answer
verified

Deb and Erv are partners in Framing & Foundations, a construction outfit. Deb manages the business. For this service, she is

Correct Answer
verified

Brad and Carol are partners in Doctors for Children, a medical clinic. Brad's dissociation from the firm results in

Correct Answer
verified

Global Investments is a foreign investor. With respect to the operations of a limited liability company in the United States, Global can

Correct Answer
verified

Ford is the sole proprietor of Go, an app service. As a sole proprietor, on the business's profits, Ford pays

Correct Answer
verified

In many instances, agency law governs the relationships among partners.

Correct Answer
verified

Every act of a partner concerning partnership business binds the firm.

Correct Answer
verified

Bayard organized, and owns and operates, Cypress Tours in the simplest form of business organization. This is

Correct Answer
verified

To form a limited liability company, articles of organization must be filed with a central state agency.

Correct Answer
verified

In a sole proprietorship, the owner is not the business.

Correct Answer
verified

Unanimous consent of the partners is required to make basic changes in the nature of the business or the partnership agreement.

Correct Answer
verified

In Ohio, Paving LLC is a foreign limited liability company. In dealing with Paving, Ohio will apply the law of the state where the firm

Correct Answer
verified

In a sole proprietorship, the proprietor receives all the profits.

Correct Answer
verified
True

Without creating a separate business organization, Roy starts up Street Cruisers, a new, pre-owned auto sales enterprise. Roy is

Correct Answer
verified

A partnership arises from an agreement between two or more parties to carry on a business for profit.

Correct Answer
verified

Exam 28: Types of Business Organizations

The essential elements of a partnership do not include

Correct AnswerverifiedShow Answer

Stefani and Tyler agree in an exchange of e-mail to form a partnership to buy and sell real property. Their partnership agreement is legally binding

Correct AnswerverifiedShow Answer

Kim and Lyle are partners in K&L Sales, which exports technical equipment. If Congress declares that the equipment can no longer be exported, K&L

Correct AnswerverifiedC

Jess and Keri are members of Livewire LLC, a limited liability company. In most situations, with respect to Livewire's debts, Jess and Keri are shielded from

Correct AnswerverifiedShow Answer

Generally, the law recognizes a partnership as an independent entity .

Correct AnswerverifiedShow Answer

Deb and Erv are partners in Framing & Foundations, a construction outfit. Deb manages the business. For this service, she is

Correct AnswerverifiedShow Answer

Brad and Carol are partners in Doctors for Children, a medical clinic. Brad's dissociation from the firm results in

Correct AnswerverifiedShow Answer

Global Investments is a foreign investor. With respect to the operations of a limited liability company in the United States, Global can

Correct AnswerverifiedShow Answer

Ford is the sole proprietor of Go, an app service. As a sole proprietor, on the business's profits, Ford pays

Correct AnswerverifiedShow Answer

In many instances, agency law governs the relationships among partners.

Correct AnswerverifiedShow Answer

Every act of a partner concerning partnership business binds the firm.

Correct AnswerverifiedShow Answer

Bayard organized, and owns and operates, Cypress Tours in the simplest form of business organization. This is

Correct AnswerverifiedShow Answer

To form a limited liability company, articles of organization must be filed with a central state agency.

Correct AnswerverifiedShow Answer

In a sole proprietorship, the owner is not the business.

Correct AnswerverifiedShow Answer

Unanimous consent of the partners is required to make basic changes in the nature of the business or the partnership agreement.

Correct AnswerverifiedShow Answer

In Ohio, Paving LLC is a foreign limited liability company. In dealing with Paving, Ohio will apply the law of the state where the firm

Correct AnswerverifiedShow Answer

In a sole proprietorship, the proprietor receives all the profits.

Correct AnswerverifiedTrue

Without creating a separate business organization, Roy starts up Street Cruisers, a new, pre-owned auto sales enterprise. Roy is

Correct AnswerverifiedShow Answer

A partnership arises from an agreement between two or more parties to carry on a business for profit.

Correct AnswerverifiedShow Answer

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C

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True

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