chapter 26 business law and ethics

dissolution

Change in partnership due to the actions of one or more partners, by law or by court decree

false

Corporations are the most numerous legal form of business organization.

true

Corporations usually have greater financial strength than do other forms of business organizations.

yes

Is a unanimous agreement among all partners necessary to make any change in the written partnership agreement?

corporations can be shareholders

LLC

formed by filing articles of organization

LLC

the owners are called members

LLC

no limitations on the number of owners

LLC, and Corporation

true

The privately held real and personal property as well as the business property of a sole proprietor may be used to satisfy the debts of her or his business.

true

The sole proprietor owns all the assets and has full personal liability for all the debts of his or her sole proprietorship.

each partner has the ______ to carry on the business

authority

partners in trading partnerships have the power to _________ money

borrow

termination

business stops and is no more

a partner cannot usually conduct a business that would __________ with the partnership

compete

excellent ability to attract professional managers

corporation

most difficult business to form

corporation

directors set policy and appoint officers

corporation, s- corp

must have a charter

corporation, s-corp

party the partnership owes money to

creditor

A step in the termination of a partnership that precedes the winding-up process

dissolution

partners usually have ___________ shares in the profits

equal

A minor entering into a partnership agreement does not retain all the rights and privileges of a minor. a. True b. False

false

A partner with a large amount of outside income may assume all of the losses of a partnership for tax purposes

false

A person who invests in a corporation runs the risk of losing all of his or her personal worth due to liability issues.

false

Partnership is the form of business organization that is used most often.

false

the ULPA and RULPA statutes govern the formation of general partnerships.

false

No filing but should have Partnership Agreement to avoid problems

general partnership

moderately hard to form

general partnership, llc, llp, limited partnership

In tenancy in partnership, each partner is a co-owner of the entire partnership property yet

is not the sole owner of any specific piece.

Partners who are liable only to the extent of their involvement

limited partners

owners share profits and losses in whatever proportions they agree upon

limited partnership, general partnership, LLP

partners usually share profits and ______ equally

losses

partner that is liable for both existing and new debts

new

Terms and conditions that partners agree on to guide them in managing the partnership

partnership agreement

non-resident aliens cannot be shareholders

s-corp

the limit on stockholders is 100

s-corp

business form that does NOT have to end with the death of its owners

s-corp, corp

business is a separate entity from the owners

s-corp, corporation

shareholders have limited liability

s-corp, corporation

most common form of business

sole

The ___________________ owns all the assets and has full personal responsibility for all the debts of his or her company.

sole proprietor

easiest business to form

sole proprietorship

owner has full managerial control

sole proprietorship

owned by one person

sole proprietorship and llc

The three principal forms of business organization are the

sole proprietorship, the partnership, and the corporation

no legal requirements for organizing

sole, general partnership

owner or owners have full personal liability

sole, general partnership

terminates upon owners death

sole, llc, llp, limited partnership, general partnership

A general partner is personally liable for the loss caused by another partner's errors in judgment.

true

The privately held real and personal property as well as the business property of a sole proprietor may be used to satisfy the debts of her or his business.

true

_____________ agreement of the partners is required before a written partnership agreement can be changed

unanimous

a partner who ___________ is still liable for the firm;s debts

withdraws

true

A corporation can have a perpetual existence.

false

A corporation is an association of two or more persons to carry on a business for profit.

nominal partner

A partner who holds him or herself out as a partner but is not actually a partner

dormant partner

A partner who is neither known to the public as a partner nor active in management

secret partner

A partner who is not known to the public as a partner yet participates in management

silent partner

A partner who may be known to the public as a partner but takes no active part in management

true

A partnership ends if one partner withdraws or dies.

partnership at will

A partnership in which a partner may normally withdraw at any time without liability to associates

general partnership

A partnership in which all partners assume unlimited personal liability for debts of the firm

joint venture

A partnership in which two or more persons or firms combine their resources to complete one complex project

trading partnership

A partnership that buys and sells goods and services commercially

limited partnership

A partnership that has at least one general partner with unlimited liability and at least one partner with limited liability

special partnership

A partnership that is formed for a single transaction

non-trading partnership

A partnership that provides professional and noncommercial assistance

false

A person who invests in a corporation runs the risk of losing all of his or her personal worth. a. True b. False

yes

Can a partner who withdraws from a partnership immediately begin to compete with the firm unless restricted by the partnership agreement?

winding-up period

A time during which all partnership business in process at the time of dissolution is concluded

yes

Can a partner with a large amount of outside income ever take all the losses of a partnership for tax purposes?

no

Can a partner retain any profit or benefit without informing the other partners?

yes

Do all partners have the right to inspect the partnership books at any reasonable time unless otherwise agreed?

no

Do partners in a non-trading partnership usually have the power to borrow money for partnership purposes?

yes

Does a partner have a fiduciary duty to the other partners?

Being moderately hard to form is a business characteristic of a

General partnership

yes

Is a general partner personally liable for the loss caused by another partner's errors in judgement?

incorporation outside the US is prohibited (forbidden)

S-corp

false

The owner of a sole proprietorship must obtain a charter from the state.

no

Under the UPA, do partners that contribute more capital to the business have a right to cast more than one vote?

true

Under the provisions of the UPA, if utilized, general partners will share all profits and losses equally.

winding-up period

after dissolution All business in progress is completed Creditors paid, if possible Each partner's share of debts accounted for OR Each partner's share of remaining money

each partner acts as a(n) ________ for the firm

agent