Question 1

By operating as a partnership instead of a proprietorship, the ratio of expenses per dollar of business tends to increase.

Accepted Answer

Operating as a partnership can lead to shared expenses and responsibilities, potentially reducing the ratio of expenses per dollar of business compared to a sole proprietorship where one person bears all costs.

Question 2

Which of the following is true of nominal partners?
A) They are held liable as full partners in some cases.
B) They have an equal say in the management of the business.
C) They are responsible for the day to day upkeep of the business.
D) They contribute financially to the partnership.

Accepted Answer

Nominal partners do not contribute capital or participate in management, but they may be held liable as full partners if their association with the business misleads third parties.

Question 3

In a sole proprietorship, the proprietor has ultimate responsibility for business decisions.

Accepted Answer

In a sole proprietorship, the business is owned and operated by one individual, who has complete control and responsibility for all business decisions and obligations.

Question 4

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

Accepted Answer

The answer of What are the important features of a...

Question 5

In a sole proprietorship, the proprietor has significant flexibility in managing the business.

Accepted Answer

A sole proprietorship is owned and operated by one individual, allowing them to make decisions and manage the business without needing approval from partners or a board.

Question 6

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

Accepted Answer

The dissolution of an LLC typically requires the agreement of all its members, often documented in writing, as per the operating agreement or state laws.

Question 7

A _____ partnership is one devoted to providing services, such as accounting, medicine, law, and, similar professional services.
A) trading
B) limited
C) nontrading
D) nominal

Accepted Answer

A nontrading partnership is typically formed for the purpose of providing professional services rather than engaging in commercial trade or business.

Question 8

Which of the following best describes sole proprietorship?
A) It is a business owned and operated by the public.
B) It is a business owned by two people and operated by one.
C) It is a business owned and carried on by one person.
D) It is a business owned by two people but with limited liability.

Accepted Answer

A sole proprietorship is a business that is owned and operated by one individual, making them solely responsible for all aspects of the business.

Question 9

An active partner who attempts to conceal that fact from the public is a _____ partner.
A) limited
B) secret
C) nominal
D) dormant

Accepted Answer

A secret partner is actively involved in the business but tries to hide their involvement from the public.

Question 10

Which of the following is true of a sole proprietorship business?
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 that is operated under the proprietor's name must be registered.
D) A sole proprietorship is a complex business to organize.

Accepted Answer

A sole proprietor has unlimited liability, meaning they are personally responsible for all debts and obligations of the business, which entails high financial risk.

Question 11

A sole proprietor is not liable for crimes committed by the business.

Accepted Answer

A sole proprietor is personally liable for all debts and legal actions against the business, including crimes committed by the business.

Question 12

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

Accepted Answer

A general partner has unlimited liability, meaning they are personally responsible for the partnership's debts.

Question 13

For a limited liability company  with two or more members, the default tax classification is that of a sole proprietorship.

Accepted Answer

The default tax classification for a multi-member LLC is a partnership, not a sole proprietorship.

Question 14

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.

Accepted Answer

An LLC (Limited Liability Company) can be sued by third-parties as a separate entity because it is a distinct legal entity from its owners (members). This separation provides the members with limited liability protection.

Question 15

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

Accepted Answer

Members are the owners or investors of a limited liability company.

Question 16

A trading partnership is one engaged in buying and selling merchandise.

Accepted Answer

A trading partnership involves partners who engage in the buying and selling of goods or merchandise as part of their business activities.

Question 17

While registering a fictitious name, a business need not disclose the names and addresses of the owners.

Accepted Answer

In most jurisdictions, businesses registering a fictitious name (also known as a "doing business as" or DBA) are required to disclose the names and addresses of the owners to ensure transparency and accountability.

Question 18

A silent partner is one who takes no active part in the business.

Accepted Answer

A silent partner is an investor in a business who does not participate in the day-to-day operations or management, but still shares in the profits and losses.

Question 19

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 held equally liable under the contract. This type of business venture is known  as a _____.
A) joint-stock company
B) limited liability company
C) partnership
D) joint venture

Accepted Answer

A joint venture is a business arrangement where two or more parties collaborate on a specific project or business activity, sharing both the risks and rewards. In this case, Zen Corp and Pluto Inc entered into a one-time contract to build an expressway, which is characteristic of a joint venture.

Question 20

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 a majority of the states.

Accepted Answer

The answer of Which of the following is true of...

Quiz 31: Introduction to Business Organization

By operating as a partnership instead of a proprietorship, the ratio of expenses per dollar of business tends to increase.

Which of the following is true of nominal partners?

In a sole proprietorship, the proprietor has ultimate responsibility for business decisions.

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

In a sole proprietorship, the proprietor has significant flexibility in managing the business.

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

A _____ partnership is one devoted to providing services, such as accounting, medicine, law, and, similar professional services.

Which of the following best describes sole proprietorship?

An active partner who attempts to conceal that fact from the public is a _____ partner.

Which of the following is true of a sole proprietorship business?

A sole proprietor is not liable for crimes committed by the business.

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

For a limited liability company with two or more members, the default tax classification is that of a sole proprietorship.

Which of the following is true of limited liability companies?

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

A trading partnership is one engaged in buying and selling merchandise.

While registering a fictitious name, a business need not disclose the names and addresses of the owners.

A silent partner is one who takes no active part in the business.

Which of the following is true of limited liability partnerships?