Deck 5: Legal Considerations: The Parameters

Question 1

A Sole proprietorship typically terminates on death or withdrawal of the sole proprietor.

Answer 1

True

Question 2

A partner may sue his or her partners during the operation of the partnership.

Answer 2

True

Question 3

A partner's ownership interest in a partnership is freely transferable.

Answer 3

False

Question 4

As a limited partner, one is empowered to act in the name of the firm.

Question 5

General partners, as agents, are fiduciaries of the business.

Question 6

In contrast to proprietorships and partnerships, it is necessary to get permission from the state to create a corporation.

Question 7

Most states require at least five incor?porators, each of whom must be an adult, and the payment of the necessary fees at filing time.

Question 8

A corporation is a person under the Constitution of the United States.

Question 9

A corporation pays federal income taxes on its income. Shareholders have personal income from the corporation only when the corporation makes a distribution of its income to them.

Question 10

The Limited Liability Company (LLC) is a hybrid form of business enterprise that offers the limited liability of the corporation but the disadvantages of a partnership

Question 11

Owners interest is freely transferable in what form of business?

A) Limited Partnership
B) Corporation
C) Partnership
D) Sole Proprietorship

Question 12

Which of the following is not one of the disadvantages of a sole proprietorship?

A) Unlimited liability
B) Limited size
C) Limited life
D) Lack of restrictions

Question 13

A sole proprietorship would not be an adequate form of business for what type of operation?

A) Painting contractor
B) Manufacturing business
C) Garden Store
D) Landscaping business

Question 14

Individuals who want to invest in a partnership but who do not want to risk all of their assets can do so as:

A) Silent Partners
B) General Partners
C) Limited Partners
D) Dormant Partners

Question 15

A __________ is not known as a partner by the general public and does not play an active role in the operation of the business.

A) Nominal Partner
B) Dormant Partner
C) Silent Partner
D) Limited Partner

Question 16

A __________ is one who is known as a partner by the general public but who does not play an active role in the operation of the business.

A) Nominal Partner
B) Dormant Partner
C) Silent Partner
D) Limited Partner

Question 17

A famous celebrity or business mogul granting use of their name for a business without investing money into the business would be an example of:

A) Nominal Partner
B) Dormant Partner
C) Silent Partner
D) Limited Partner

Question 18

The limited liability partnership (LLP) offers the following benefits:

A) Tax benefits of a partnership without personal liabil?ity for the malpractice of other partners
B) Tax benefits of a sole proprietorship without personal liabil?ity for the malpractice of other partners
C) Tax benefits of a partnership with the liability structure of a corporation
D) Tax benefits of a corporation with the liability structure of a partnership

Question 19

Which of the following is not an advantage of the corporate form of ownership?

A) Limited liability
B) Indefinite life
C) Growth potential
D) Limited Taxation

Question 20

Which is not one of the disadvantages associated with the corporate form of ownership?

A) High organizing expenses
B) Government restrictions
C) Lack of secrecy
D) Transfer of ownership

Question 21

What aspect of the tax structure for corporations is commonly referred to as double taxation?

A) The fact that the corporation pays both federal and state taxes
B) The requirement of shareholders to personal income tax on dividends after the corporation pays corporate income tax on the same money
C) The fact that both partners of the business are taxed
D) The concept of both Shareholders and Directors being taxed on the business

Question 22

A LLC refers to a…

A) Limited Liability Corporation
B) Limited Liability Company
C) Limited Liability Conglomerate
D) Lifetime Liability Corporation

Question 23

An L3C is typically used for what type of ventures?

A) Startup Corporations before they start making profit
B) Public organizations such as high schools
C) Socially beneficial, for-profit ventures
D) Non-profit organizations

Question 24

Which type of business receives the most profits within the United States

A) Corporation
B) Sole Proprietorship
C) LLC
D) Partnership

Question 25

Under a General Partnership, who has first priority in the event of liquidation of assets?

A) Partner creditors
B) Partners, according to profits
C) Partners, according to capital contributions
D) Outside Creditors

Question 26

What makes a S Corporation different from a C Corporation? Describe four of the ways that an S Corp can lead to the drawbacks of an S Corporation.

Question 27

Explain what a Partnership is as defined by the Revised Uniform Partnership Act (RUPA).

Question 28

Describe the different types of partners in a partnership.