Deck 29: Introduction to Business Organizations

Question 1

All partners of a limited partnership have limited liability.

Answer 1

False

Question 2

The partners in a nontrading partnership have the same apparent authority as partners in a trading partnership.

Answer 2

False

Question 3

Zen Corp, an Australian company, and Pluto Inc, an American company, entered into a one-time contract to build an elevated expressway in Florida. The contract was for a period of five years and both companies were equally liable under their agreement. This type of business enterprise is known as a .

A)joint-stock company
B)limited liability company
C)partnership
D)joint venture

Answer 3

D

Question 4

An LLC can be dissolved with the written consent of all members.

Question 5

The owners or investors of a limited liability company are called members.

Question 6

Which of the following is true of silent partners?

A)They are not required to invest capital in the business.
B)They take no part in the management of the business.
C)They are responsible for the day to day upkeep of the business.
D)They take the same risk of losses as the other partners.

Question 7

Which of the following best describes sole proprietorship? ​

A)It is a business owned by two people with limited liability.
B)It is a business owned by two people and operated by one.
C)It is a business owned by one person with limited liability.
D)It is a business owned and carried on by one person.

Question 8

An individual need only begin doing business to start a sole proprietorship.

Question 9

A partnership is one engaged in buying and selling merchandise.

A)trading
B)limited
C)nontrading
D)nominal

Question 10

An individual who is not a partner but is held out as a partner is a partner.

A)limited
B)secret
C)nominal
D)dormant

Question 11

Which of the following is true of a sole proprietorship?

A)A sole proprietor has limited flexibility in managing the business.
B)A sole proprietor has unlimited liability and high financial risk.
C)A sole proprietorship operated under the proprietor's name must be registered.
D)A sole proprietorship is a complex business to organize.

Question 12

Which of the following is true of limited liability companies?

A)An LLC can be sued by third-parties as a separate entity.
B)An LLC cannot enter into contracts under its own name.
C)An LLC is a legal entity indistinct from its members.
D)An LLC cannot be a manager-managed business entity.

Question 13

A general partner has limited liability with respect to the partnership debts.

Question 14

A sole proprietor has ultimate responsibility for all business decisions. ​

Question 15

The default tax classification of a limited liability company having two or more members, is that of a sole proprietorship.

Question 16

A sole proprietor has very limited flexibility in managing the business.

Question 17

A dormant partner is usually known to the public as a partner.

Question 18

Which of the following is true of limited liability partnerships?

A)This type of partnership can operate under the Uniform Partnership Act.
B)This type of partnership can be formed without a specific state statute prescribing the conditions under which it can operate.
C)This type of partnership cannot operate under the common law.
D)This type of partnership cannot be formed in most states.

Question 19

What are the important features of a limited liability company? Explain. ​

Question 20

Unlimited personal liability of each general partner for partnership debts is a disadvantage of the partnership form of business.