Chapter 34 Quiz

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According to the​ UPA, the​ _____ of a partnership is​ "the change in the relation of the partners caused by any partner ceasing to be associated in the carrying on of the​ business." A. expatriation B. winding down C. winding up D. dissolution E. expropriation

D

Heidi, Sergei,​ Shou-Ju, and Jesus form a general partnership to operate a sporting equipment store. After their first store is​ successful, they expand until the partnership owns 100 stores. At that​ time, Heidi dies. Which of the following is​ true? A. ​Heidi's heirs now have the right to receive​ Heidi's one-quarter of the​ partnership's profits and other partnership distributions. B. All of the partnership assets transfer to​ Heidi's heirs. C. ​Heidi's share of profits is split among the remaining 3 partners. D. ​Heidi's heirs receive nothing. E. One quarter of the partnership assets transfer to​ Heidi's heirs.

A

The income or loss from the sole proprietorship is reported on​ _____, which must be attached to the​ taxpayer's Form 1040 U.S. Individual Income Tax Return. A. Schedule C B. Schedule S C. Form 2664 D. Schedule EZ E. Form 2553

A

Which of the following is NOT a duty of general​ partners? A. duty of divergent purpose B. duty of care C. duty of obedience D. duty of loyalty E. duty to inform

A

Which of the following is an INCORRECT statement regarding formation of a general​ partnership? A. Stock of the​ partnership, representing​ ownership, must be publicly traded on a​ well-known stock exchange​ (for example,​ NASDAQ). B. All partners must agree to the participation of each​ co-partner. C. A general partnership may be formed with little or no formality. D. A person cannot be forced to accept another person as a partner. E. A person cannot be forced to be a partner.

A

According to the​ UPA, a general partner is entitled to​ _____ for expenses reasonably incurred in the ordinary and proper conduct of the business. A. ratification B. indemnification C. exemplification D. subrogation E. certification

B

Aisha, Carlo, and Chantel form a general partnership. While on partnership​ business, Carlo causes an automobile accident that injures​ Catherine, a pedestrian. Catherine suffers​ $100,000 in injuries.​ Catherine, at her​ option, can sue​ _______. A. the partnership only. B. ​Aisha, Carlo, or Chantel​ separately, or any two of​ them, or all of them. C. Carlo only. D. Aisha or Carlo only. E. Carlo and the partnership only.

B

Which of the following is NOT a major form for conducting businesses and​ professions? A. limited liability partnership B. sole partnership C. sole proprietorship D. limited liability company E. corporation

B

Which of the following is NOT an advantage of a sole​ proprietorship? A. The owner has the right to make all management decisions concerning the​ business, including those involving hiring and firing employees. B. The sole proprietorship​ "veil" shields the sole proprietor from personal liability for business debts. C. A sole proprietorship can be easily transferred or sold if and when the owner desires to do​ so; no other approval is necessary. D. Forming a sole proprietorship is easy and does not cost a lot. E. The sole proprietor owns all of the business and has the right to receive all of the​ business's profits.

B

​Teena, Isaiah, and Bart form a general partnership to sell automobiles.​ Teena, who is responsible for ordering​ inventory, orders large​ sport-utility vehicles​ (SUVs) that use great quantities of gasoline. A war breaks out unexpectedly in the Middle East that interrupts the supply of oil to the United States. The demand for large SUVs drops​ substantially, and the partnership cannot sell its inventory. Which of the following statements is​ true? A. Teena is liable under the business judgment rule. B. Teena is not liable because the duty of care was not breached. C. Teena has violated her duty to inform. D. Teena has violated her duty of care. E. Teena must repay the partnership for the lost profits.

B

A sole proprietor has​ _____ personal liability. Question content area bottom Part 1 A. qualified B. conditional C. unlimited D. secondary E. limited

C

Maude, Diego,​ Tisa, and Shen form a general partnership. Capital is contributed to the partnership in the following​ amounts: Maude, 30​ percent; Diego, 5​ percent; Tisa, 50​ percent; and​ Shen, 15 percent. The partnership makes​ $100,000 profit for the year. Absent an agreement to the​ contrary, _______. A. Maude receives​ $30,000, Diego receives​ $5,000, Tisa receives​ $50,000, and Shen receives​ $15,000 B. no one can take a profit until the capital contributions have been paid back C. each partner receives​ $25,000 D. Tisa receives the​ $100,000. E. Maude receives​ $3,000, Diego receives​ $500, Tisa receives​ $5,000, and Shen receives​ $1,500

C

The income or loss from the sole proprietorship is reported on​ _____, which must be attached to the​ taxpayer's Form 1040 U.S. Individual Income Tax Return. A. Schedule S B. Form 2664 C. Schedule C Your answer is correct. D. Form 2553 E. Schedule EZ

C

Which of the following is an INCORRECT statement regarding formation of a general​ partnership? A. According to the​ UPA, a limited partnership can be a person who may be a general partner. B. The organization or venture must have a profit motive in order to qualify as a partnership. C. The organization or venture must actually make a profit in order to qualify as a partnership. D. According to the​ UPA, a corporation can be a person who may be a general partner. E. ​Co-ownership of a business is essential to create a partnership.

C

Which of the following is an INCORRECT statement regarding the Uniform Partnership Act​ (UPA)? A. The UPA covers most problems that arise in the​ formation, operation, and dissolution of general partnerships. B. The UPA is a model act that codifies general partnership law. C. The UPA has been adopted in whole or in part by a minority of states. D. A Revised Uniform Partnership Act​ (RUPA) has been issued by the National Conference of Commissioners on Uniform State Laws. E. The goal of the UPA was to establish consistent partnership law that was uniform throughout the United States.

C

​_____ are personally liable for the debts and obligations of the partnership. A. Limited partners B. A​ partnership's board of directors C. General partners D. Partnership employees E. Partnership shareholders

C

Nathan opens a clothing store called​ "The Clothing​ Store" and operates it as a sole proprietorship. Nathan files the proper statement and publishes the necessary notice of the use of the trade name. Nathan contributes​ $25,000 of his personal funds to the business and borrows​ $100,000 from a bank in the name of the business. After several​ months, Nathan closes the business because it is unsuccessful. At the time it is​ closed, the business has no​ assets, owes the bank​ $100,000, and owes other debts of​ $25,000. Which of the following is a correct statement regarding​ Nathan's personal risk exposure for his unsuccessful​ business? A. Nathan is entitled to recover his​ $25,000 capital​ contribution, and he is not responsible for the​ $100,000 debt owed to the bank and the​ $25,000 owed to​ others, since those debts were undertaken for the benefit of the business. B. Nathan loses his​ $25,000 capital​ contribution, and he is responsible for the​ $100,000 debt owed to the​ bank, but not the​ $25,000 debt owed to others. C. Nathan loses his​ $25,000 capital​ contribution, and he is responsible for the​ $25,000 debt owed to​ others, but not the​ $100,000 debt owed to the bank since that debt was undertaken for the benefit of the business. D. Nathan loses his​ $25,000 capital​ contribution, and he is responsible for the​ $100,000 debt owed to the bank and the​ $25,000 debt owed to others. D E. Nathan loses his​ $25,000 capital​ contribution, but he is not responsible for the​ $100,000 debt owed to the bank and the​ $25,000 owed to​ others, since those debts were undertaken for the benefit of the business.

D

Nathan opens a clothing store called​ "The Clothing​ Store" and operates it as a sole proprietorship. Nathan files the proper statement and publishes the necessary notice of the use of the trade name. Nathan contributes​ $25,000 of his personal funds to the business and borrows​ $100,000 from a bank in the name of the business. After several​ months, Nathan closes the business because it is unsuccessful. At the time it is​ closed, the business has no​ assets, owes the bank​ $100,000, and owes other debts of​ $25,000. Which of the following is a correct statement regarding​ Nathan's personal risk exposure for his unsuccessful​ business? A. Nathan loses his​ $25,000 capital​ contribution, and he is responsible for the​ $100,000 debt owed to the​ bank, but not the​ $25,000 debt owed to others. B. Nathan loses his​ $25,000 capital​ contribution, but he is not responsible for the​ $100,000 debt owed to the bank and the​ $25,000 owed to​ others, since those debts were undertaken for the benefit of the business. C. Nathan is entitled to recover his​ $25,000 capital​ contribution, and he is not responsible for the​ $100,000 debt owed to the bank and the​ $25,000 owed to​ others, since those debts were undertaken for the benefit of the business. D. Nathan loses his​ $25,000 capital​ contribution, and he is responsible for the​ $100,000 debt owed to the bank and the​ $25,000 debt owed to others. E. Nathan loses his​ $25,000 capital​ contribution, and he is responsible for the​ $25,000 debt owed to​ others, but not the​ $100,000 debt owed to the bank since that debt was undertaken for the benefit of the business.

D

Which of the following is NOT a basic form of breach of a general​ partner's duty of loyalty to other partners and the​ partnership? A. competing with the partnership B. making secret profits C. usurping a partnership opportunity D. keeping partnership information confidential E. ​self-dealing

D

Which of the following is NOT a duty of general​ partners? A. duty of obedience B. duty to inform C. duty of care D. duty of divergent purpose E. duty of loyalty

D

Which of the following is NOT a major legal form in which to conduct a​ business? A. limited liability partnership B. sole proprietorship C. limited partnership D. limited sole proprietorship E. general partnership

D

Which of the following is an INCORRECT statement regarding the creation of a sole​ proprietorship? A. Creating a sole proprietorship is easy. B. There are no formalities required for the creation of a sole proprietorship. C. If no other form of business organization is​ chosen, the business is by default a sole proprietorship. D. Creation of a sole proprietorship utilizes the same procedure for the creation of a corporation. E. No federal or state government approval is required for the creation of a sole proprietorship.

D

A sole proprietor has​ _____ personal liability. A. secondary B. qualified C. conditional D. limited E. unlimited

E

Aisha and Chantel form a general partnership. On March 1st​, Carlo is admitted as a new partner and makes a capital contribution of​ $100,000. As of March 1st the partnership had​ $100,000 in debt. On May 1st​, the partnership takes out a loan for​ $500,000. Which of the following statements is​ true? A. Carlo is not liable for the​ $100,000 debt, but would be personally liable for the​ $500,000 loan. B. ​Carlo's capital contribution will go to paying the​ $100,000 debt, but Carlo is not personally liable for the​ $500,000 loan. C. Carlo can get out of paying the​ $500,000 loan by withdrawing from the partnership by June 1st. D. Carlo is not liable for neither the​ $100,000 debt nor the​ $500,000 loan. E. ​Carlo's capital contribution will go to paying the​ $100,000 debt and Carlo will become personally liable for the​ $500,000 loan.

E

General partners do not pay federal income taxes.​ Instead, the income and losses of partnership have to be reported on the individual​ partners' personal income tax returns. This is called​ _____. A. double taxation B. de facto corporate taxation C. taxation without representation D. ​add-on taxation E. ​flow-through taxation

E

The process of​ _____ consists of the liquidation​ (sale) of partnership assets and the distribution of the proceeds to satisfy claims against the partnership. A. winding down B. expropriation C. dissolution D. expatriation E. winding up

E

Under the Uniform Partnership​ Act, general partners have​ _____ liability for torts and breaches of trust committed by a partner or an employee of the general partnership while acting on partnership business. A. ​individual, but not collective B. ​collective, but not individual C. neither joint nor several D. ​joint, but not several E. joint and several

E

Which of the following is NOT a basic form of breach of a general​ partner's duty of loyalty to other partners and the​ partnership? Question content area bottom Part 1 A. making secret profits B. competing with the partnership C. usurping a partnership opportunity D. ​self-dealing E. keeping partnership information confidential

E

Which of the following is NOT a criterion to qualify as a general partnership under the​ UPA? A. as​ co-owners B. an association of two or more persons C. carrying on a business D. for profit E. the issuance of​ publicly-traded stock

E

Which of the following is an INCORRECT statement regarding the name of a general​ partnership? A. A general partnership must file a fictitious business name statement—d.b.a. ​(doing business ​as)—with the appropriate government agency to operate under a trade name. B. The name selected for the partnership cannot be similar to the name used by any existing business entity. C. A general partnership can operate under the names of any one or more of the partners. D. A general partnership can operate under a fictitious business name. E. The name selected by the partnership can indicate that it is a corporation.

E


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