Chapter 13. Choice of Business Entity, Sole Proprietorships, and Partnerships
True or false: A partnership may not sell ownership rights through the public markets.
true
The RUPA provides for expulsion of a partner from a partnership by the what kind of vote of the other partners.
unanimous
Which of the following is a correct statement regarding general partner liability under general partnership law?
A partner's personal assets are subject to partnership debt.
Which of the following does not require any formal documents to be filed with the government in order to legally exist?
General partnership
Which of the following is not a source of funding for partnerships?
Selling ownership rights through the public markets
Which of the following is not a way in which a limited partnership can be funded?
Selling ownership rights through the public markets
When a principal wishes to leave a partnership, the RUPA defines this act of separation as which of the following:
dissociation
The extent to which principals are personally responsible for the debts of the business is which of the following factors?
liability
A(n) partnership has at least one general partner and at least one limited partner.
limited
In a limited partnership, the partner's liability is limited to what he or she contributed to the business.
limited
In a limited partnership, the limited partner's liability is
limited to the extent of the limited partner's contribution in the business.
Which of the following may a limited partner perform for a limited partnership?
Contribute expertise
Which of the following typically follows the business name to signify that it operates as a general partnership?
GP
Which of the following are typically used to denote a limited partnership?
LP
Which of the following is the simplest multiple-person business entity?
Partnership
In the absence of an agreement, which of the following are used as default provisions for a limited partnership?
Revised Uniform Limited Partnership Act
A(n) is the easiest single-person ownership entity to form and maintain.
Sole proprietorship
Which choice of business entity is the top choice for a start-up business with low annual revenues and expenses?
Sole proprietorship
Which of the following is true of limited partners in a partnership?.
They remain primarily investors.
States that have not adopted the RUPA follow the provisions found in the
Uniform Partnership Act
When forming a limited partnership, name, address, and partner capital contribution are typically items found in the
certificate of limited partnership
The RUPA provides that partners have the power to bind the partnership to obligations regardless of the knowledge of the other partners.
contractual
Voluntary separation, expulsion, and a partner's incapacity are recognized events under RUPA that are considered to be events of
dissociation
Which of the following is a partnership where the principals agree to an ongoing business relationship.
express
True or false: A written partnership agreement is required for an entity to be able to exist as a partnership.
false
Duties requiring partners to act in the best interest of the partnership are known as duties
fiduciary
Loyalty, care, and good faith are
fiduciary duties owed by partners
An arrangement of a continuing commercial relationship for the right to operate a business pursuant to the franchisor's trade name or to sell the seller's branded goods is a(n):
franchise
Two or more people operating as co-owners of a business for profit is called a:
general partnership
Parties who may not intend to become partners can still have liability as partners through a theory of partnership
implied
In a limited partnership, tax is paid based on the
individual partner's tax rate.
If a limited partner engages in activities reserved for general partners, the limited partner may
jeopardize the limited partnership status.
Unless the parties otherwise agree, the RUPA states that partners providing labor to the partnership are:
not entitled to any compensation other than a share of profits
In the context of business organizations, the principals of the business are the
owners
A general is where two or more principals have demonstrated an intent to carry on as co-owners of a business for profit.
partnership
Approximately forty states have adopted all or substantial portions of the Revised Uniform Act
partnership
Limited and general are the two traditional subcategories of which of the following business entities?
partnerships
Limited partnerships are entities for tax purposes, meaning the entity itself does not pay taxes.
pass - through
Which of the following is the term used to describe an entity that, for tax purposes, means that the partnership entity pays no level of corporate tax.
pass through
In a limited partnership, the general partner is
personally liable for the debts of the partnership.
A partnership is taxed like a sole which means the partnership itself does not pay taxes, but rather taxes are accounted for on individual partner tax returns.
proprietorship
When a limited partnership interest is sold to the public, the transaction is subject to federal and state laws
security
When it comes to liability, general partners are personally exposed to liability similar to
sole proprietors