Buis CHapter 19

A partnership where all owners share in operating the business and in assuming unlimited liability for the business's debts is a

general partnership

An advantage of the corporate form of business is that limited liability allows it to

limit individual responsibility for losses

Stockholders' liability for losses only up to the amount they invest is called

limited liability

When there is one or more general partners and one or more limited partners, the firm is a(n)

limited partnership

Termination of a partnership is difficult without a(n) ______ agreement.

partnership

What two items are delineated in a franchise agreement?

the right to use a specific business' name the right to sell a business' products in a given territory

In a franchise, having management support from the franchisor is a(n) ... whereas the coattail effect is considered a ...

1.) advantage 2.) disadvantage

If you are your own boss, you are responsible for paying your own wages/salary and for your own

1.) fringe 2.) benefits

In terms of operating flexibility, what are three things that LLCs are not required to do?

1.) hold annual meetings 2.) file written resolutions 3.) keep minutes

The attributes of a conventional corporation include that:

1.) it is state chartered 2.) it is a legal entity 3.) corporate liability is separate from owners

True or false: Partnerships are less likely to survive than sole proprietorships.

False

What can be said about the survival rate of partnerships as compared to sole proprietorships?

Partnerships are more likely to succeed.

What are two of the disadvantages of a corporation?

1.) Double taxation 2.) Cost of forming a corporation

Select all attributes that make the initial cost of incorporating a disadvantage.

1.) High start-up costs associated with documentation 2.) The high cost of hiring lawyers and accountants for the complex filings needed

What are the advantages of the LLC form of organization?

1.) Limited liability 2.) Flexible ownership rules 3.) Choice of taxation

How are LLCs taxed?

Either as a partnership or as a corporation

A company similar to an S corporation but without the special eligibility requirements is an

LLC

Which of following are true about the advantages and disadvantages of being a franchise owner

While the upfront costs of a franchise may be steep, a franchise has a better chance of succeeding than starting a business from scratch Having a nationally recognized name for your business in a franchise can help with marketing and awareness

An advantage of the separation of ownership from management in corporations is that the company can raise money from investors but the investors

are not involved in daily operations

A corporation is formally formed with

articles of incorporation and bylaws

Which of the following are true regarding the process of forming a corporation?

1.) The bylaws of the corporation describe how the firm is to be operated 2.) The articles of incorporation are usually filed in the state in which the company will be incorporated

Because of the difficulty in ending a partnership, decisions regarding which two areas should be spelled out in a partnership agreement?

1.) When a partner can retire 2.) How to distribute assets

A state-chartered legal entity with authority to act and have liability separate from its owners is a

corporation

An S corporation has the liability protections of a corporation but is taxed

like a partnership or sole proprietorship

True or false: In a limited partnership, the liability of the limited partners is unlimited and personal assets are at risk.

False