BUL 3130 Business Organization Quiz

Agents of an LLC are not permitted to enter into contracts on behalf of the LLC.

False

In a sole proprietorship, the business is considered a separate legal entity from the proprietor.

False

Limited liability companies are created by federal law.

False

Limited partners have unlimited personal liability for the debts and obligations of the limited partnership

False

A member is the owner of an LLC.

True

To form a corporation, articles of incorporation must be filed with the secretary of state of the state of incorporation.

True

Which of the following is true of general partnership? A business should make a profit in order to qualify as a general partnership. The general partners need not be the co-owners of the business. General partnerships can be either formally documented or implied from the conduct of the parties. Charity organizations and schools are mostly formed from general partnerships.

General partnerships can be either formally documented or implied from the conduct of the parties.

Which of the following is true of creating a sole proprietorship? No state government approval is required. Federal taxation is levied upon sole proprietorship No licenses are required to do business within a city or state Special permission must be obtained to receive a sole proprietorship status. None of the above

No state government approval is required.

Which of the following is true of LLC taxation? An LLC is taxed as a corporation in all general cases. Income or losses of an LLC do not flow through to the members' individual income tax returns. Members of an LLC are subject to double taxation. An LLC is not taxed at the entity level. but income and losses flow through member's individual returns. An LLC pays both entity level and personal level taxes.

An LLC is not taxed at the entity level. but income and losses flow through member's individual returns.

Which of the following is true of an LLC? An LLC is a creature of federal law. An LLC is regarded a separate legal entity from its members. An LLC cannot hold title to property. The owners of an LLC are called general partners or specific partners. All of the above.

An LLC is regarded a separate legal entity from its members.

___________________ refer to the formal documents that must be filed at the secretary of state's office of the state of organization of an LLC to form the LLC. Operating Agreements Certificates of interest Articles of Organization Articles of amendment By laws

Articles of Organization

A sole proprietor has limited personal liability.

False

A sole proprietor must go through many levels of approval before selling his or her business.

False

Shareholders have unlimited liability for the debt and obligations of a corporation.

False

Shareholders of a corporation act as agents of the corporation.

False

The dissolution of a general partnership discharges the liability of an outgoing partner for existing partnership debts and obligations.

False

Which of the following must be included in the articles of incorporation? The minutes of the first organizational meeting of the board of directors. The number of shares the corporation is authorized to issue. The dissolution terms of the corporation. The corporate seal must be used in the articles of incorporation. The value of preferred stock.

The number of shares the corporation is authorized to issue.

A sole proprietorship does not does not pay taxes at the business level.

True

General partnerships do not pay federal income taxes

True

Generally, the liability of LLC members for debts of the LLC is limited to the extent of their capital contribution and therefore they are not personally liable for the LLC's debts, obligations, and liabilities beyond their contribution.

True

Receipt of a share of business profits is prima facie evidence of a general partnership.

True

The designation of d.b.a. refers to the description for a business that is operating under a trade name.

True

The income or losses of an LLC "flow through" to the members' individual income tax returns which avoids double taxation.

True

Upon dissolution, profits are paid out to partners only after creditors and capital contributions have been satisfied

True

The earnings and losses from a sole proprietorship are reported on ________. the federal income tax filing document for the business the business license that is renewed each year the proprietor's personal income tax filing the state income tax filing document Federal estate and gift taxation form

the proprietor's personal income tax filing