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