Deck 34: Small Business, entrepreneurship, and General Partnerships

Question 1

Why does a sole proprietorship not pay taxes at the business level?

A)It is not a separate legal entity from the owner.
B)It is a small business that is exempted from taxation.
C)It is a not-for-profit organization.
D)It is generally an institution with no business dealings.

Answer 1

A

Question 2

A trade name statement refers to a document that is filed with the state that designates a trade name of a business,the name and address of the applicant,and the address of the business.

Answer 2

False

Question 3

The designation of ________ is used for businesses that are operating under a trade name.

A)w.e.f.
B)p.f.a.
C)d.b.a.
D)l.o.p.

Answer 3

C

Question 4

A ________ is a document that is filed with the state that designates a trade name of a business.

A)proprietorship statement
B)partnership agreement
C)fictitious business name statement
D)nomenclature affidavit

Question 5

Which of the following is true of a sole proprietorship?

A)A business operated under sole proprietorship cannot be transferred.
B)Large businesses cannot be operated under sole proprietorship.
C)A business operated under sole proprietorship should be owned by one or more people of the same family.
D)Creditors can recover claims against the business from the sole proprietor's personal assets.

Question 6

Which of the following is a major form of conducting a business?

A)institution
B)charity
C)corporation
D)trust

Question 7

The income or loss from a sole proprietorship is reported on ________ which must be attached to the owner's Form 1040.

A)Schedule B
B)Schedule C
C)Form 14
D)Form 8

Question 8

The sole proprietor has ________ liability.

A)zero personal
B)limited organizational
C)complete organizational
D)unlimited personal

Question 9

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

A)No government approval is required.
B)Federal taxation is levied upon sole proprietorship.
C)No licenses are required to do business within a city or state.
D)Special permission must be obtained to receive a sole proprietorship status.

Question 10

Orlando opened a hot dog stand in Brooklyn which unfortunately did not earn him a profit.He had borrowed $5,000 from the bank to set it up,which had to be repaid to the bank in two days.However,Orlando's friend Bob agreed to partner with him starting the subsequent month.From which of the following sources can the bank recover its $5,000 with interest?

A)Orlando's secondary financer
B)Orlando's savings account
C)Orlando's family
D)Bob, Orlando's prospective business partner

Question 11

Jonathan Lopez wants to be his own boss and ventures into retailing fruit in the neighborhood after borrowing some money from his mother.While obtaining a license to carry out business in his city,Jonathan mentions the money he borrowed but forgets to specify what type of business undertaking his store will be.Under which of the following major forms of business is Jonathan's store listed by default?

A)a general partnership
B)a sole proprietorship
C)a limited partnership
D)a limited liability corporation

Question 12

In a sole proprietorship,the business is considered a separate legal entity from the owner.

Question 13

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

A)It is not considered a separate legal entity from the owner.
B)It cannot be sold when the owner decides to do so.
C)It requires governmental approval when being transferred.
D)It has access to unrestricted capital by means of investments.

Question 14

A sole proprietorship cannot be easily transferred when the owner desires to do so.

Question 15

________ are the most common form of business organization in the United States.

A)General partnerships
B)Sole proprietorships
C)Limited liability companies
D)Limited partnerships

Question 16

Which of the following best describes an entrepreneur?

A)a person who forms and operates a business
B)a person who invests in an existing business
C)a person who lends capital to a new business
D)a person who derives a profit from a new or an existing business

Question 17

The designation of d.b.a.(doing business as)refers to the description for a business that is operating under a trade name.

Question 18

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

Question 19

A sole proprietor is legally responsible for the business's contracts.

Question 20

The earnings and losses from a sole proprietorship are reported on ________.

A)the federal income tax filing document
B)the business license that is renewed each year
C)the proprietor's personal income tax filing
D)the state income tax filing document

Question 21

Which of the following is true in the creation of a general partnership?

A)The business name has to have the names of all the partners.
B)The business name cannot be a fictitious name.
C)The business name selected by the partnership cannot indicate that it is a corporation.
D)The business cannot operate under a trade name.

Question 22

A(n)________ is the obligation partners owe to use the same level of care and skill that a reasonable person in the same position would use in the same circumstances.

A)duty to perform
B)duty of care
C)duty to inform
D)duty of obedience

Question 23

Which of the following is true of general partnership?

A)A business should make a profit in order to qualify as a general partnership.
B)The general partners need not be the co-owners of the business.
C)General partnerships can be oral or implied from the conduct of the parties.
D)Charity organizations and schools are mostly formed from general partnerships.

Question 24

An ordinary partnership is also known as a ________.

A)sole proprietorship
B)general partnership
C)limited partnership
D)limited liability company

Question 25

Which of the following is true of profits and losses in a general partnership?

A)The proportion of profit shared is equal to the general partner's initial investment.
B)Losses are shared equally by all general partners.
C)The general partner who proposed the idea of the business gets most profit.
D)The proportion of investment governs only the proportion of loss shared and not profit obtained.

Question 26

Which of the following is true of the management of a general partnership?

A)The number of votes a general partner has depends on the proportion of his or her capital investment.
B)Partnership matters are decided by unanimous agreement only.
C)Only general partners in the board of directors have the authority to participate in the management.
D)If the vote is tied, the action being voted on is considered to be defeated.

Question 27

Explain how a sole proprietorship is taxed.

Question 28

If no other form of business organization is chosen in a business operated by only one person,the business is by default a sole proprietorship.

Question 29

A sole proprietorship does not pay taxes at the business level.

Question 30

________ refers to the right of a partner to be reimbursed for expenditures incurred on behalf of the partnership.

A)Indemnification
B)Proliferation
C)Lucubration
D)Fenestration

Question 31

List and briefly explain the advantages and disadvantages of a sole proprietorship.

Question 32

The ________ is a model act that codifies general partnership law.

A)Uniform Partnership Act (UPA)
B)Fair Employment Partnership Act (FEPA)
C)Americans with Disabilities Act (ADA)
D)Age Discrimination in Employment Act (AEDA)

Question 33

General partnerships that exist for more than ________ must have their general partnership agreement in writing under the Statute of Frauds in order to deal in real estate.

A)six months
B)180 days
C)five years
D)one year

Question 34

Which of the following must be in writing even if it is below the time stipulation of the Statute of Frauds?

A)businesses that have more than one commercial venture
B)partnerships authorized to deal real estate
C)businesses that are authorized to lend money
D)enterprises which deal with health and medicine

Question 35

Inference of the existence of a general partnership is drawn only if profits are received as ________.

A)share in a partnership
B)payment of wages
C)interest owed on a loan
D)a debt owed to a creditor

Question 36

No federal or state government approval is required for creating a sole proprietorship.

Question 37

A sole proprietor has limited personal liability.

Question 38

Which of the following is a right to which every general partner is entitled under the Uniform Partnership Act?

A)right to remuneration
B)right to free and open speech
C)right to return of capital
D)right to legal action

Question 39

Which of the following serves as a motive for an organization or venture to qualify as a partnership?

A)The organization seeks to increase its stake in the percentage of profits made by the business.
B)The organization seeks to avoid personal liability.
C)The organization wants to make a profit.
D)The organization wants to reduce the number of approvals it seeks before taking decisions.

Question 40

An association of two or more persons to carry on as co-owners of a business for profit is known as a(n)________.

A)limited partnership
B)sole proprietorship
C)corporation
D)general partnership

Question 41

A general partnership agreement must always be in writing to be considered legal.

Question 42

The Uniform Partnership Act (UPA)provides that all general partners are entitled to remuneration for their performance in the partnership's business.

Question 43

A general partnership is valid only if it is carried out for profit.

Question 44

Instead of suing the partnerships or other partners at law,general partners are given the right to bring a(n)________ against other partners.

A)claim for damages
B)tort action
C)call for action
D)action for an accounting

Question 45

Self-dealing-although fully disclosed-is not permitted in a general partnership.

Question 46

The Uniform Partnership Act's definition of a general partner includes other limited partnerships.

Question 47

Flow-through taxation is the federal income tax imposed on general partnerships.

Question 48

The name selected by a general partnership cannot indicate that it is a corporation.

Question 49

General partnerships do not pay federal income taxes.

Question 50

The Revised Uniform Partnership Act is a federal statute that holds in all states.

Question 51

The ________ requires general partners to adhere to the provisions of the partnership agreement and the decisions of the partnership.

A)duty to inform
B)duty of loyalty
C)duty of care
D)duty of obedience

Question 52

A general partnership cannot operate under the name of any one of the partners; the name has to represent all the partners if a fictitious name is not being adopted.

Question 53

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

Question 54

Competing with the partnership without the permission of other partners violates a general partner's ________.

A)duty to inform
B)duty of loyalty
C)duty of care
D)duty of obedience

Question 55

The General Partnership Act (GPA)is a model act that codifies sole proprietorship law.

Question 56

All general partners have an equal right to participate in the management of the general partnership business unless otherwise specified in the general partnership agreement.

Question 57

The term indemnification refers to the right of a partner to be reimbursed for expenditures incurred on behalf of the partnership.

Question 58

A general partnership is an association of two or more persons to carry on as co-owners of a business for profit.

Question 59

The right to share in the profits of the partnership is the right to share in the earnings from the investment of capital.

Question 60

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

Question 61

The dissolution of a general partnership discharges the liability of an outgoing partner for existing partnership debts and obligations.

Question 62

No monetary damages can be claimed between partners for breach of duty of obedience in a general partnership.

Question 63

General partners owe a duty to inform their partners of all information they possess that is relevant to the affairs of the partnership.

Question 64

A third party who sues to recover on a partnership contract need not name all the general partners in the lawsuit.

Question 65

A(n)________ is a partnership created with no fixed duration.

A)partnership for a term
B)partnership at will
C)ordinary partnership
D)limited partnership

Question 66

The change in the relationship of partners in a partnership caused by any partner ceasing to be associated in the carrying on of the business is known as ________.

A)action for an accounting
B)indemnification
C)winding up
D)dissolution

Question 67

A breach of the duty of care by a partner does not constitute negligence.

Question 68

________ is a situation in which a partner withdraws from a partnership without having the right to do so at that time.

A)Winding up
B)Indemnification
C)Wrongful dissolution
D)Proliferation

Question 69

Which of the following is true of the liability of an incoming partner?

A)An incoming partner is liable for the previous debts of the partnership.
B)An incoming partner is equally liable for all existing debts of the partnership.
C)An incoming partner is liable for the debts of the partnership only to the extent of his or her capital contribution.
D)An incoming partner is not liable for the future debts of the partnership.

Question 70

A(n)________ is a partnership created for a fixed duration.

A)partnership for a term
B)partnership at will
C)ordinary partnership
D)limited partnership

Question 71

A plaintiff must name the partnership and all of the partners as defendants in a lawsuit in order to pursue a claim for ________.

A)multiple liability
B)joint liability
C)limited liability
D)unlimited personal liability

Question 72

How are assets distributed after the dissolution of a general partnership?

Question 73

General partners have ________ for the debts and obligations of the partnership.

A)limited exemption
B)conditional exemption
C)limited organizational liability
D)unlimited personal liability

Question 74

The process of liquidating a partnership's assets and distributing the proceeds to satisfy claims against the partnership is known as winding up.

Question 75

Briefly explain the formation of a general partnership.

Question 76

General partners are permitted to sue other partners for an accounting of the partnership.

Question 77

Which of the following is true of tort liability of a general partnership?

A)Only the partner who committed the tort is liable.
B)Partners who have not committed the tort but had to pay liability cannot indemnify from the partner that committed the tort.
C)A partner can be sued even if he or she did not participate in the commission of the tort.
D)If one of the partners in the partnership is released, the other partners are discharged of liability.

Question 78

General partners have unlimited personal liability for the debts and obligations of the partnership.

Question 79

Explain,with an example,the duty of care owed by a general partner.