Deck 26: Small Business, Entrepreneurship, and Partnerships

Question 1

The purpose of a fictitious business name statement is to reduce a proprietor's personal liability for debts and other legal obligations incurred by the business.

Answer 1

False

Question 2

A sole proprietorship is the most complex form of business organization.

Answer 2

False

Question 3

A sole proprietorship can be easily transferred or sold if and when the owner desires to do so; no other approval (such as from partners or shareholders)is necessary.

Answer 3

True

Question 4

Most businesses started by entrepreneurs are small.

Question 5

The major forms for conducting businesses and professions are: (1)sole proprietorship; (2)general partnership; (3)limited partnership; (4)limited liability partnership; (5)limited liability company; and (6)corporation.

Question 6

Earnings and losses from a sole proprietorship are reported on the sole proprietor's personal income tax filing.

Question 7

An intrapreneur is a person who forms and operates a business.

Question 8

A fictitious business name statement is optional in the states that recognize them.

Question 9

A sole proprietorship is a separate legal entity,so it pays taxes at the business level.

Question 10

Forming a sole proprietorship is easy and does not cost a lot of money.

Question 11

Other than a business license,if required in the state,there are no other filings,fees or other requirements necessary to begin a sole proprietorship.

Question 12

A sole proprietor bears the risk of loss of the business.

Question 13

Entrepreneurs can either start a business by themselves,or they can pool their resources with others in order to start a business.

Question 14

Creditors may recover claims against the sole proprietorship from the sole proprietor's personal assets.

Question 15

The sole proprietor owns all of the business and has the right to receive all of the business's profits.

Question 16

A sole proprietor's liability for business debts is limited to the value and assets of the sole proprietorship.

Question 17

One disadvantage of a sole proprietorship is that the sole proprietor is legally responsible for torts his or her employees commit in the course of employment.

Question 18

When a business has only one owner,and that owner takes no action in connection with choosing the form of business under which to operate,the business is a sole proprietorship.

Question 19

After owning and operating a business for eight years,Bud recently sold it to Lou.Since Lou is a recent graduate,and this is his first business venture,Lou would be considered an entrepreneur.

Question 20

A sole proprietor has the right to make all management decisions concerning the business,including those involving hiring and firing employees.

Question 21

An inference of the existence of a general partnership is drawn if profits are received in payment of wages owed to an employee.

Question 22

Co-ownership of a business is essential to create a partnership,and the most important factor in determining co-ownership is whether the parties share the business's profits and management responsibility.

Question 23

The goal of the UPA was to establish consistent partnership law throughout the United States.

Question 24

For federal income tax purposes,a sole proprietor must prepare a personal income tax Form 1040 U.S.Individual Income Tax Return and report the income or loss from the sole proprietorship on his or her personal income tax form.

Question 25

A person cannot be forced to be a partner; however,a partner can be forced by the partnership to accept another person as a partner.

Question 26

No inference of the existence of a general partnership is drawn if profits are received in payment of interest owed on a loan.

Question 27

General partners are personally liable for the debts and obligations of the partnership.

Question 28

No inference of the existence of a general partnership is drawn if profits are received in payment of a debt owed to a creditor in installments or otherwise.

Question 29

An inference of the existence of a general partnership is drawn if profits are received in payment of an annuity owed to a widow,widower,or representative of a deceased partner.

Question 30

Receipt of a share of business profits is prima facie evidence of a general partnership.

Question 31

The UPA's definition of "person" who may be a general partner does not include a corporation.

Question 32

A general partnership may be formed with little or no formality.

Question 33

An inference of the existence of a general partnership is drawn if profits are received in payment of consideration for the sale or goodwill of a business.

Question 34

A general partnership is a voluntary association of one (1)or more persons for carrying on a business for profit.

Question 35

The right to participate in the management of a business is conclusive evidence for determining the existence of a general partnership.

Question 36

An agreement to share losses of a business is strong evidence of a general partnership.

Question 37

Every state has adopted the Uniform Partnership Act.

Question 38

A general partnership is also known as a limited partnership.

Question 39

The Uniform Partnership Act codifies general partnership law.

Question 40

No inference of the existence of a general partnership is drawn if profits are received in payment of rent owed to a landlord.

Question 41

A partner who is made to pay more than his or her proportionate share of contract liability may seek indemnification from the partnership and from those partners who have not paid their share of the loss.

Question 42

The Uniform Partnership Act provides "gap-fillers" for partnership contract terms,should a partnership agreement fail to address a crucial issue.

Question 43

General partnerships have been recognized in this country only since the end of the Civil War.

Question 44

A partnership that operates under a fictitious name has no obligation to report the fictitious name to any governmental entity.

Question 45

All states have enacted statutes that provide for the creation of limited partnerships.

Question 46

If a partner must pay a third party who was injured due to a tort committed by another party,the partner who had to pay can seek recovery for the full amount from the partner who committed the tort.

Question 47

The Uniform Partnership Act treats partnerships as separate legal entities.

Question 48

Unless the partnership agreement authorizes it,partners are not entitled to receive a salary for service rendered on behalf of the partnership.

Question 49

The number of votes that a partner has on partnership issues is directly proportional to the percentage of the partner's capital contribution.

Question 50

Partners are jointly and severally liable for the contracts and debts of the partnership.

Question 51

General partners are personally liable for partnership debts in a limited partnership.

Question 52

Whenever a person participates in the management of a business,that person will be treated as a general partner.

Question 53

A partnership agreement provision that differs from the provisions of the Uniform Partnership Act is automatically void.

Question 54

When a new partner joins an existing partnership,the new partner has only limited liability for the obligations of the partnership in existence at the time he or she became a partner.

Question 55

Partnerships can be formed without any formalities,and the presence of the required elements of a partnership can be based on the conduct of those in the business.

Question 56

Distribution of profits for any purpose is considered to be evidence that a partnership exists.

Question 57

If a partnership agreement specifies how losses are to be divided,but is silent with respect to the division of profits,the profits are to be divided in the same manner as losses.

Question 58

A partner who supplies sixty percent of the partnership's operating capital is automatically entitled to sixty percent of the partnership's profits,if there is no agreement to the contrary.

Question 59

In the absence of an agreement to the contrary,partners have equal rights to manage a partnership,regardless of the size of their capital investment.

Question 60

Partners are jointly and severally liable for the torts and/or breaches of trust of the partnership.

Question 61

Limited partners invest capital,manage the business,and are personally liable for partnership debts.

Question 62

If a limited partner personally guarantees the repayment of a loan to a limited partnership,the creditor may enforce the personal guarantee and recover payment from the limited partner who personally guaranteed the repayment of the debt.

Question 63

Where there is no agreement as to the sharing of profits and losses in a limited partnership,the profits and losses are shared equally among all partners,limited or general.

Question 64

Under the Revised Uniform Limited Partnership Act,as a matter of law,defective formation of a limited partnership would not affect the liability of a limited partner.

Question 65

Limited partnerships may only be formed through a formal written document filed with the Secretary of State of the appropriate state.

Question 66

A person may be both a general partner and a limited partner.

Question 67

There are no upper limits on the number of general or limited partners allowed in a limited partnership.

Question 68

A limited partnership has two (2)types of partners: 1)general partners; and 2)limited partners.

Question 69

"Certificate of limited partnership" and "articles of limited partnership" are synonymous terms referring to the same document.

Question 70

The Uniform Partnership Act is the controlling law for both general and limited partnerships.

Question 71

Limited partnerships are used for such business ventures as investing in real estate,drilling oil and gas wells,and investing in movie productions.

Question 72

A limited partnership must have one or more general partners and one or more limited partners.

Question 73

In a limited partnership,a general or limited partner's capital contribution can be in the form of services rendered.

Question 74

A limited partner does not have any liability in connection with the partnership.

Question 75

As part of the filing requirements,a limited partnership must have a written agreement specifying how profits and losses are to be divided.

Question 76

In a limited partnership,the partners can agree that all partners have limited liability.

Question 77

Any person,including natural persons,partnerships,limited partnerships,trusts,estates,associations,and corporations,may be a general or limited partner.

Question 78

Limited partners are liable only for the debts and obligations of the limited partnership up to their capital contributions,and they are not personally liable for the debts and obligations of the limited partnership.

Question 79

A corporation can operate as the only general partner in a limited partnership.

Question 80

Another terms for limited partnership is limited liability company (LLC).