Chapter 13: Choice of Business Entity
Which of the following is not a way in which a limited partnership can be funded
Selling ownership rights through the public markets
A(n) ______ partner is also referred to as an investing principal
limited
A limited partner may not withdraw from a partnership before: A. The agreed-upon termination time occurs B. Substantially all of the partnership debt is paid C. All partners agree upon the withdraw of the limited partner
A
A partnership where there is not predetermined time or event that dissolves the partnership is known as a partnership at: A. Will B. Whimsy C. Large D. Convenience
A
In a limited partnership, partners share: A. Profit equally, but all of the losses are divided between the general partners B. Losses equally, but limited partners receive the majority of the profit C. Profit and loss equally D. Profit and loss in proportion to their contributions
D
A joint venture is typically governed by the same legal principals as a A. Sole proprietorship B. Limited partnership C. Corporation D. General Partnership
D
In a limited partnership, tax is paid based on the: A. Tax rate of the partner with the most income B. Corporate tax rate schedule C. Federal tax table for limited partnership D. Individual partner's tax rate
D
In the context of business organizations, the principals of the business are the: A. Stakeholders B. Suppliers C. Customers D. Owners
D
The RUPA provides that partners have the power to bind the partnership to ______ obligations regardless of the knowledge of the other partners
contractual
A(n) ________ ________ ________ is where the partners have not agreed on a definite duration of the partnership
partnership at will
Limited partnerships are ________-_________ entities for tax purposes, meaning the entity itself does not pay taxes
pass-through
________ ________ is triggered when the principals wish to dissolve the partnership after dissociation
winding up
If a limited partner commits an illegal or negligent act on behalf of the limited partnership, the limited partner A. Is personally liable to pay damages to the injured party B. Will equally share personal liability with the other general and limited partners C. Is personally able to pay damages to the injured party, but only up to $10,000 D. Is only liable to the third party to the extent of the limited partner's contribution
A
In a limited partnership, what type of partner is typically responsible for filing the information return with taxing authorities? A. General B. Main C. Limited D. Silent
A
In the context of business organizations, the principals of the business are the: A. Owners B. Customers C. Suppliers D. Stakeholders
A
The _______ is given the right to operate the business and use the business's trade secrets and products A. Franchisee B. Silent partner C. Franchisor D. General Partner
A
The extent to which principals are personally responsible for the debts of the business is which of the following factors? A. Liability B. Taxes C. Management D. Formation
A
Voluntary separation, expulsion, and a partner's incapacity are recognized events under RUPA that are considered to be events of: A. Dissociation B. Conclusion C. Nullification D. Deformation
A
Which of the following have most states adopted to provide default provisions for partnerships where the principals have not expressly agreed otherwise? A. Revised Uniform Partnership Act B. Uniform Partnership Reform Act C. Uniform Commercial Code D. Partnership Agreement Act
A
Which of the following is a partnership where the principals agree to an ongoing business relationship? A. Express B. Formal C. Specific D. Implied
A
Which of the following is the simplest multiple-person business entity? A. Partnership B. Limited partnership C. Limited liability partnership D. Corporation
A
Which of the following may a limited partner perform for a limited partnership? A. Contribute expertise B. Supervise employees C. Bind the partnership D. Make day to day management decisions
A
Which of the following requires no annual filing? A. Sole proprietorship B. Limited liability company C. Corporation D. Limited liability partnership
A
______ of a general partnership can occur by court order or by the unanimous consent of the general partners A. Dissolution B. Absolution C. Devolution D. Convolution
A
A partner withdrawing that violates the partnership agreement or if a partner withdraws before the agreed-upon expiration are examples of A. Winding up B. Wrongful dissociation C. Illegal termination D. Unfair activity
B
If a limited partner engages in activities reserved for general partners, the limited partner may A. Be criminally prosecuted B. Jeopardize the limited partnership status C. Forfeit their capital contribution to the business D. Cause the limited partnership to be taxed like a corporation
B
Limited and general are the two traditional subcategories of which of the following business entities? A. Sole proprietorships B. Partnerships C. Limited liability companies D. Corporations
B
Owners of a business are also called: ______ A. Consumers B. Principals C. Sellers D. Merchants
B
Unanimous consent of all general partners and consent of any limited partner owning a majority of the rights to receive a distribution as a limited partner are sufficient requirements to dissolve a: A. Sole proprietorship B. Limited partnership C. General partnership D. Limited liability company
B
What type of partner is also referred to as a managing principal A. Limited B. General C. Controlling D. Main
B
When a principal desires to leave a limited partnership, the RULPA defines this act of separation as which of the following: A. Termination B. Withdrawal C. Dissolution D. Dissociation
B
Which of the following does not require a form to be filed with a government agency? A. Corporation B. General Partnership C. Limited liability company D. Limited liability partnership
B
Which of the following is typically filed with the secretary of state's office when forming a limited partnership? A. Certificate of partnership B. Certificate of limited partnership C. Articles of incorporation D. Articles of organization
B
Who operates the business and how the business is operated is a function of A. Taxes B. Management and operation C. Operation and liability D. Capitalization
B
Death or personal bankruptcy of the owner are examples of how a sole proprietorship is terminated by: A. Implied act B. Express Act C. Operation of law D. Court Order
C
Discharging partnership liabilities and settling a partnership's business are examples of activities that occur during A. Dissociation B. Termination C. Windup D. Spring Training
C
In a limited partnership, the general partner is A. Not responsible for any debts of the partnership B. Personally liable for only half of the debts of the partnership C. Personally liable for the debts of the partnership D. Personally liable for the debts of the partnership to extent of his or her contribution in the partnership
C
In a limited partnership, the limited partner's liability is: A. That the limited partner is personally liable for debts of the partnership B. Limited to 25% of the partnership debt C. Limited to the extent of the limited partner's contribution in the business D. Shared equally among all limited and general partners
C
In choosing a business entity, principals should consider at least the following: A. Products to sell B. Location C. Liability
C
Time limit, franchisee fees, and royalties are common items governed by a(n): A. Partnership agreement B. Article of incorporation C. Franchise agreement D. Article of organization
C
Under RUPA, unless the parties otherwise agree, all partners receive how much of a share of the profits and losses? A. 50% B. 33% C. Equal D. 25%
C
When a judgment is executed, which of the following takes steps to collect money owed by the defendant A. Defendant B. Judge C. Plaintiff D. Creditor
C
When it comes to liability, general partners are personally exposed to liability similar to A. LLP Partners B. LLC members C. Sole proprietors D. Shareholders
C
Which of the following is a limited partner entitled to perform? A. Supervise employees B. Participate in the day to day management of the business C. Inspect financial records of the business D. Participate in the day to day operations of the business
C
Sole proprietorships are typically funded through A. Issuing stock B. Issuing bonds C. Partner resources D. Owner's resources
D
The RUPA provides for expulsion of a partner from a partnership by the what kind of vote of the other partners A. Majority B. Minority C. Anonymous D. Unanimous
D
Unless the parties otherwise agree, the RUPA states that partners providing labor to the partnership are: A. Entitled to greater than the fair market value of the services provided B. Entitled to a fair wage for the services provided C. Entitled to a wage, but less than the fair market value of such services D. Not entitled to any compensation other than a share of profits
D
When a principal wishes to leave a partnership, the RUPA defines this act of separation as which of the following: A. Termination B. Dissolution C. Manipulation D. Dissociation
D
When it comes to partnership debt and liability, all partners in a general partnership are: A. Not responsible for paying the partnership debts B. Are jointly liable, but not severally liable for the debt C. Are severally liable, but not jointly liable for the debt D. Jointly and severally liable for the debt
D
Which of the following does not require any formal documents to be filed with the government in order to legally exist? A. Corporation B. Limited partnership C. Limited liability company D. General partnership
D
Which of the following is considered the main disadvantaged of the sole proprietorship business formation? A. Capitalization B. Formation C. Tax Consequences D. Owner Liability
D
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 A. Pass by B. Non taxed C. Catch through D. Pass through
D
Which of the following is true of limited partners in a partnership? A. They are permitted to bind the partnership B. They manage day-to-day operations of the business C. They engage in the supervision of employees D. They remain primarily investors
D
Which of the following typically follows the business name to signify that it operates as a general partnership? A. PP B. LLC C. LP D. GP
D
True or False: A written partnership agreement is required for an entity to be able to exist as a partnership
False
True or False: To form a general partnership, a formal document must be filed with the government
False
The ________ ________ _______ (FTC) tries to promote the full disclosure of all information relating to a franchise company prior to the franchisee's investment
Federal Trade Commission
Which of the following are typically used to denote a limited partnership?
LP
Approximately forty states have adopted all or substantial portions of the Revised Uniform ______ Act
Partnership
True or False: A partnership may not sell ownership rights through the public markets
True
A limited partnership ________ may expand the role of the limited partner, but not to the point of constituting day to day involvement of the business
agreement
Under the RULPA, a general partner may withdraw from a limited partnership so long as all partners agree in writing to continue the partnership and
at least one general partner remains
How a business entity funds its operations is referred to as ______
capitalization
If a wrongful dissociation occurs, the wrongfully dissociated partner is liable for ______ caused by the dissociation
damages
Generally speaking, a general partner may withdraw from a limited partnership at any time without causing ______ of the partnership
dissolution
The good _______ standard requires partners to exercise appropriate care when conducting partnership business
faith
A(n) _________ limited partnership is primarily designed for wealthy families to manage estate planning
family
Duties requiring partners to act in the best interest of the partnership are known as _______ duties
fiduciary
The franchisor and the franchisee are typically governed by the ______ agreement
franchise
A business entity with a proven track record of success who sells to another party the right to operate the business and use the business's trade secrets, trademarks, products, and so on is called a ______
franchisor
A(n) ______ partnership is typically defined as an association of two or more people or entities who are co-owners and co-managers of a business and share in the profits of an ongoing business operation
general
A limited partner will lose his or her limited liability protection for engaging in a negligent or _______ act while acting within the scope of partnership duties
illegal
A sole proprietor's ownership _______ in a sole proprietorship cannot pass on to heirs
interest
A(n) _______ venture is a limited-in-time business relationship typically governed by the same legal principals as a general partnership
joint
A plaintiff taking steps to collect money owed from a defendant pursuant to a court order is known as executing the _________
judgment
In a limited partnership, _______ partners are subject to restrictions on withdrawal
limited
In a limited partnership, the ______ partner's liability is limited to what he or she contributed to the business
limited
A general _______ is where two or more principals have demonstrated an intent to carry on as co-owners of a business for profit
partnership
Principal funding and commercial lenders are viable funding options for a general __________
partnership
The ______ is responsible for the unpaid debts of the sole proprietorship.
principal
The _____ is responsible for the unpaid debts of the sole proprietorship
principals
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
A state regulatory agencies typically require _____ statements to be filed with the state governing body when a franchise agreement is reached
registration
State Regulatory agencies typically require ______ statements to be filed with the state governing body when a franchise agreement is reached
registration
When a limited partnership interest is sold to the public, the transaction is subject to federal and state ______ laws
security
A(n) ____ proprietorship accounts for income taxes through the individual owner's personal return
sole
A(n) ______ _______ is the easiest single-person ownership entity to form and maintain
sole proprietorship
