Business Law 30

d. limited partnership Correct. A limited partnership is an unincorporated business association consisting of at least one general partner and at least one limited partner. See "Forms of Business Associations 30-2."

A __________ is an unincorporated business association consisting of at least one general partner and at least one limited partner. a. joint venture b. limited liability company c. limited liability partnership d. limited partnership

a. corporation. Correct. A corporation is a legal entity separate and distinct from its owners referred to as shareholders, and formed by filing articles of incorporation. See "Forms of Business Associations 30-2."

A legal entity separate and distinct from its owners referred to as shareholders, and formed by filing articles of incorporation is a: a. corporation. b. limited liability company. c. limited partnership. d. general partnership.

d. duty of control. Correct. There is no such thing as duty of control. See "Duties Among Partners 30-5."

A partner owes all of the following duties to the partnership except: a. duty of loyalty. b. duty of obedience. c. duty of care. d. duty of control.

a. limited partner. Correct. A partner who has no right to participate in control of the business and who has limited liability is called a limited partner. See "Forms of Business Associations 30-2."

A partner who has no right to participate in control of the business and who has limited liability is called a: a. limited partner. b. nominal partner. c. secret partner. d. general partner.

c. changing order. Correct. A partner's interest is subject to the claims of that partner's creditors who may obtain a judicial lien known as a(n) changing order against the partner's transferable interest.

A partner's interest is subject to the claims of that partner's creditors who may obtain a judicial lien known as a(n) __________ against the partner's transferable interest. a. assignability b. distribution c. changing order. d. indemnification

c. The agreement for dividing tax liability of the partnership. Correct. Tax liability of the partnership is not included in the partnership agreement.

A partnership agreement should include all but which one of the following? a. The duties of the partners. b. The capital contribution of the partners. c. The agreement for dividing tax liability of the partnership. d. The division of profits and losses.

b. the general partnership. Correct. Andre, Erik and Louis formed an association to carry on as co-owners of a business for profit, and the property would be owned by the partnership.

Andre invested $100,000 in a partnership with Erik and Louis for the purchase of an apartment complex, with each owner sharing equally in the profits and losses. The property is owned by: a. Andre, Erik, and Louis as co-tenants. b. the general partnership. c. the joint venture. d. Andre, Erik, and Louis as shareholders.

a. A partnership. Correct. A partnership is an association of two or more persons to carry on as co-owners of a business.

Arthur, Betty, and Clara each inherit an undivided one-third interest in an apartment complex. Instead of selling it, they decide to continue to operate it for the next few years as a sideline to their other occupations just to see if they can earn some extra money. What are they? a. A partnership. b. Co-owners only. c. A corporation. d. Creditors of the apartment complex.

d. general partnership. Correct. If ease of formation is the primary concern a general partnership should be selected. See "Forms of Business Associations 30-2."

In choosing the form in which to conduct business, if ease of formation is the primary concern, the owners would choose a: a. corporation. b. limited liability partnership. c. limited partnership. d. general partnership.

c. unless the partners have otherwise agreed, Luke is not entitled to payment for his work for the partnership, even if it is disproportionate to his partner's work. Correct. Luke is not entitled for extra payment for his work because in the absence of an agreement, the partners would divide any profits equally.

Luke typically spends 50-55 hours per week working in the real estate partnership he co-owns with Spencer. Spencer only spends about 30 hours a week on partnership business. Under the RUPA: a. Luke would be entitled to payment from the partnership for the extra 20-25 hours per week he spends on partnership business unless a partnership agreement denies this right. b. the partners cannot agree to deny extra payment for extra work by a partner. c. unless the partners have otherwise agreed, Luke is not entitled to payment for his work for the partnership, even if it is disproportionate to his partner's work. d. Luke would be entitled to payment from the partnership only if the amount of time and effort he expends on partnership business is grossly disproportionate to that spent by his partner.

a. Yes, since they are associating to carry on a for-profit business that they co-own. Correct. Marilyn, George, and Christine are associating to carry on a for-profit business which they co-own.

Marilyn, George, and Christine pool their money to buy land to operate a vegetable farm from which they plan to sell the produce and share the profits or losses. Are they partners? a. Yes, since they are associating to carry on a for-profit business that they co-own. b. No, because they each control the use of the land. c. Yes, because if there is a loss in the land's value, they will all share that loss. d. No, they are merely joint venturers.

a. limited partner. Correct. A partner who has no right to participate in control of the business and who has limited liability is called a limited partner.

Martha is a partner with JOA Partnership, but Martha has no right to participate in the control of the partnership's business and has limited liability. Which best describes Martha's role in the partnership? a. limited partner. b. nominal partner. c. silent partner. d. general partner.

a. Fiduciary duty. Correct. The fiduciary duty in a partnership is the duty of utmost loyalty, fairness and good faith owed by the partners to each other and the partnership, including a duty not to compete.

Mike and Tom are partners who started a car dealership. Mike, however, secretly started a car dealership on the other side of town without consulting the partnership. What duty did Mike violate? a. Fiduciary duty. b. Duty of the partnership track. c. Duty to contract d. None of these answers are correct.

b. the business is a corporation and he is a shareholder. Correct. A shareholder in a corporation is not personally liable for the debts of the corporation.

Mount Pleasant Tires does not have sufficient funds to pay damages for a tort that arose out of the operation of the business. Jess, a business owner, is not personally liable if: a. he is a sole proprietor of the business. b. the business is a corporation and he is a shareholder. c. he committed the tort. d. he is a general partner of the business.

d. limited partnership Correct. A limited partnership is an unincorporated business association consisting of at least one general partner and at least one limited partner.

Peter is a general partner to an unincorporated business association, and Diane is a limited partner to this business association. Which best describes Peter and Diane's business formation? a. joint venture b. limited liability company c. limited liability partnership d. limited partnership

c. Mary must receive the consent of all of the partners. Correct. Under RUPA, all partners must consent to a person becoming a partner.

Sam, John, Richard, and Fred are partners. Mary is interested in becoming a new partner with the partnership. Under RUPA, in order for Mary to properly become a partner, which of the following is true? a. Mary must receive the consent of only a majority of the existing partners. b. Mary must receive the consent of only one of the existing partners. c. Mary must receive the consent of all of the partners. d. Mary must receive the consent of two-thirds of the partners.

d. No, because there is no business for profit. Correct. A partnership is an association of two or more persons to carry on as co-owners of a business, and this is a charitable organization.

Sue, Barb, and Carlotta agree to put in $1,000 each to set up a shelter for lost animals. They each work two days a week. Donations fund the day-to-day operations. Do they have a partnership? a. Yes, since each has control of the operation. b. Yes, because they are all co-equals in ownership of the shelter. c. No, because they have made no formal agreement. d. No, because there is no business for profit.

d. All of these are correct. Correct. General partnerships, limited partnerships, and limited liability companies can all elect that only the partnerships/members are taxed. See "Formation of a Partnership 30-4."

Which of the following forms of business association may elect that only the partners/members are taxed? a. General partnerships. b. Limited partnership. c. Limited liability company. d. All of these are correct.

c. Two or more persons carry on a business for profit, but they have no formal agreement. Correct. The most convincing evidence of a partnership agreement is two or more persons carry on a business for profit, even if they have no formal agreement. See "Forms of Business Associations 30-2."

Which of the following is the most convincing evidence of a partnership arrangement? a. Two or more persons are co-owners of property used in a business. b. Two or more persons have a written agreement regarding a fundraiser for charity. c. Two or more persons carry on a business for profit, but they have no formal agreement. d. Two persons share a joint savings account in which they deposit money and share the interest.

b. An adjudicated incompetent. Correct. An adjudicated incompetent lacks the capacity to become a partner. See "Formation of a Partnership 30-4."

Which of the following would lack the capacity to become a partner? a. A trust. b. An adjudicated incompetent. c. A corporation. d. All of these are correct.