BUS 101 - Chapter 4 Questions

Select all advantages of the partnership form of business.

A. More financial resources B. Longer survival C. Pooled skills

What two features characterize a general partnership?

A. all partners share the responsibility for operating the business B. all partners assume liability for the business's debts

Among the reasons that disagreements can ruin a partnership are

A. disagreement over workload B. opposing management styles C. arguments over dividing profits

The attributes of a conventional corporation include that:

A. it is a legal entity B. it is state chartered C. corporate liability is separate from owners

A sole proprietorship has a limited life span unless:

A. it is sold to someone else B. it is taken over by an heir

It is easy to start and end a sole proprietorship because:

A. only one person is involved in the decision to dissolve the business B. it may only require a simple permit or license to start

Select those items considered fringe benefits that people working for a company are likely to receive, but a sole proprietor has to develop on his own:

A. paid sick or vacation leave time B. a pension plan C. paid health insurance

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

A. when a partner can retire B. how to distribute assets

If you and a friend start a business together, you have started a sole proprietorship.

False

Partnerships are less likely to survive than sole proprietorships.

False

Which is an advantage of the corporate form of business ownership?

Limited liability

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

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

A disadvantage of a sole proprietorship is limited financial resources.

True

The main advantage of a sole proprietorship is ease of start up.

True

The owner of a sole proprietorship is responsible for developing any fringe benefits they have.

True

To end a sole proprietorship, you simply stop operations.

True

Many people do not like working for someone, so being your own ____ is an advantage of sole proprietorships.

boss, employer, or manager

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

corporation

Partnerships have the advantage over sole proprietorships of pooled knowledge and ____ resources.

financial

Sole proprietors can leave their business to their heirs. This is called:

leaving a legacy

Leaving a ____ means owners can leave an ongoing business for future generations.

legacy

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

limited partnership

The limited partners' risk of losing their personal assets in an LLP is:

limited to the outcomes of their own acts and omissions

Studies have indicated that partnerships are four times more likely to succeed than:

sole proprietorships

The responsibility of the owner of a sole proprietorship for all of the debts of the business is ____ liability.

unlimited

When any debts or damages incurred by the business are your debts or damages it is called ____ liability.

unlimited

If you are your own boss, you are responsible for paying your own wages/salary and for your own __1__ __2__ .

1. fringe 2. benefits

Selling shares of stock to anyone allows a _________ to raise more money to grow.

corporation

Taryn and Eilysh have decided to form a partnership. Taryn will not have management responsibility, but will invest money in the business. Taryn will be considered a(n) partner.

limited

The responsibility for a loss only up to the amount invested is ____ liability.

limited

The form of partnership that limits liability to the limited partner's own acts or those of the people they supervise is a:

limited liability partnership

When the continued operation of the business is dependent on the life of the business owner, it is referred to as:

limited life span

The various responsibilities of each partner, especially any issues involving ____ , should be agreed to in discussions and put in writing before agreeing to a partnership.

money

One of the most important advantages of the sole proprietor form of ownership is that a business owner:

finds it easier to start and end the business

Mark, Cal and Aidan have decided to form a business where all owners will share in operating the business and in assuming liability for the business debts. They are most likely forming a(n) _____ partnership.

general

One advantage of a partnership is that:

it is easier to raise money

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

A legal form of business with two or more owners is a(n):

partnership

In a sole proprietorship, any debts or damages incurred by the business are your personal debts and you must pay them. This disadvantage is known as:

unlimited liability

If your company's debts or damages are solely your responsibility you could be experiencing the disadvantage associated with owning a sole proprietorship called

unlimited liability.