Question 1

The sole proprietorship is the simplest and least expensive form of ownership to begin.

Accepted Answer

A) True 
 B)False

Question 2

Closely held corporations have shares that are controlled by a relatively small number of people,often family members,relatives,or friends.

Accepted Answer

A) True 
 B)False

Question 3

Unlike a limited partnership,which prohibits limited partners from participating in day-to-day management of the business,an LLC does not restrict its members' ability to become involved in managing the company.

Accepted Answer

A) True 
 B)False

Question 4

It is relatively easy and inexpensive to convert existing businesses into LLCs.

Accepted Answer

A) True 
 B)False

Question 5

In a closely held corporation,one of the steps that should be taken to avoid legal difficulties is:

Accepted Answer

A)  hold annual meetings to elect officers and directors.
B)  make sure that the stockholders make all the major decisions.
C)  mingle corporate assets and the personal assets.
D)  None of the aboveE) None of the above
F) A) and B)

Question 6

A "limited liability company" is legally treated just like a limited partnership.

Accepted Answer

A) True 
 B)False

Question 7

The ________ is a document that states in writing all of the terms of operating a business among the partners.

Accepted Answer

A)  Sole Proprietorship Agreement
B)  Articles of Corporations
C)  Partnership Agreement
D)  Limited Liability Corporation AgreementE) A) and D)
F) B) and D)

Question 8

If a partnership is formed without an agreement,the partnership is automatically subject to the:

Accepted Answer

A)  Certification of Incorporation laws.
B)  Uniform Partnership Act.
C)  Limited Liability Company Act.
D)  Revised Uniform Limited Partnership Act.E) A) and C)
F) C) and D)

Question 9

Which form of ownership is the least costly to form?

Accepted Answer

A)  Sole proprietorship
B)  Corporation
C)  Partnership
D)  Limited liability corporationE) A) and D)
F) All of the above

Question 10

One of the advantages of a sole proprietorship is that skills and capabilities are unlimited because you,as sole proprietor,are able to assume all of these responsibilities.

Accepted Answer

A) True 
 B)False

Question 11

The ________ is a separate legal entity apart from its owners and may engage in business,make contracts,sue and be sued,and pay taxes.

Accepted Answer

A)  sole proprietorship
B)  corporation
C)  partnership
D)  joint ventureE) None of the above
F) C) and D)

Question 12

The most popular form of business ownership is the:

Accepted Answer

A)  sole proprietorship.
B)  partnership.
C)  corporation.
D)  S-corporation.E) C) and D)
F) A) and B)

Question 13

The Supreme Court has defined a partnership as "an artificial being,invisible,intangible,and existing only in contemplation of the law."

Accepted Answer

A) True 
 B)False

Question 14

Antonio is a limited partner and is neither active nor generally openly associated with the firm.He is the ________ partner.

Accepted Answer

A)  limited
B)  secret
C)  honorary
D)  dormantE) B) and C)
F) A) and B)

Question 15

While there are many forms of ownership,the three major forms are: proprietorship,partnership,and S-corporation.

Accepted Answer

A) True 
 B)False

Question 16

Juan is starting a software writing company.He is the owner and has only 3 employees.He wants a simple inexpensive form of ownership that leaves him in control and that he can quickly dissolve if he decides to change to another business.His best choice of form of ownership would be:

Accepted Answer

A)  S-corporation.
B)  partnership.
C)  corporation.
D)  sole proprietorship.E) A) and D)
F) B) and C)

Question 17

Which of the following is true about the content of a standard partnership agreement?

Accepted Answer

A)  It does not specify how profits and losses will be distributed.
B)  It includes the Certificate of Incorporation.
C)  It specifies how the partnership may be dissolved and assets divided.
D)  While it specifies the location of the business and its purpose,it does not name the partners or their legal addresses in order to maintain privacy for the partners.E) C) and D)
F) B) and C)

Question 18

In a limited partnership,the limited partners are treated like ________ by the law.

Accepted Answer

A)  investors
B)  general partners
C)  sole proprietors
D)  honorary partnersE) A) and B)
F) C) and D)

Question 19

A partnership is:

Accepted Answer

A)  taxed like a corporation.
B)  not subject to the double taxation of some other forms of business.
C)  taxed at the lowest rate for an individual.
D)  taxed under capital gains laws as all profits are considered to come from appreciated assets.E) A) and B)
F) All of the above

Question 20

A limited liability company is formed under:

Accepted Answer

A)  a Certificate of Incorporation.
B)  a Partnership Agreement.
C)  Articles of Organization.
D)  the Revised Uniform Partnership Act.E) A) and D)
F) C) and D)

Exam 5: Choosing a Form of Ownership

In a limited partnership,the limited partners are treated like ________ by the law.

Correct AnswerverifiedShow Answer

Closely held corporations have shares that are controlled by a relatively small number of people,often family members,relatives,or friends.

Correct AnswerverifiedShow Answer

While there are many forms of ownership,the three major forms are: proprietorship,partnership,and S-corporation.

Correct AnswerverifiedShow Answer

Unlike a limited partnership,which prohibits limited partners from participating in day-to-day management of the business,an LLC does not restrict its members' ability to become involved in managing the company.

Correct AnswerverifiedShow Answer

Which form of ownership is the least costly to form?

Correct AnswerverifiedShow Answer

Antonio is a limited partner and is neither active nor generally openly associated with the firm.He is the ________ partner.

Correct AnswerverifiedShow Answer

Juan is starting a software writing company.He is the owner and has only 3 employees.He wants a simple inexpensive form of ownership that leaves him in control and that he can quickly dissolve if he decides to change to another business.His best choice of form of ownership would be:

Correct AnswerverifiedShow Answer

Which of the following is true about the content of a standard partnership agreement?

Correct AnswerverifiedShow Answer

A "limited liability company" is legally treated just like a limited partnership.

Correct AnswerverifiedShow Answer

The sole proprietorship is the simplest and least expensive form of ownership to begin.

Correct AnswerverifiedShow Answer

It is relatively easy and inexpensive to convert existing businesses into LLCs.

Correct AnswerverifiedShow Answer

One of the advantages of a sole proprietorship is that skills and capabilities are unlimited because you,as sole proprietor,are able to assume all of these responsibilities.

Correct AnswerverifiedShow Answer

A partnership is:

Correct AnswerverifiedShow Answer

The ________ is a separate legal entity apart from its owners and may engage in business,make contracts,sue and be sued,and pay taxes.

Correct AnswerverifiedShow Answer

The Supreme Court has defined a partnership as "an artificial being,invisible,intangible,and existing only in contemplation of the law."

Correct AnswerverifiedShow Answer

The ________ is a document that states in writing all of the terms of operating a business among the partners.

Correct AnswerverifiedShow Answer

The most popular form of business ownership is the:

Correct AnswerverifiedShow Answer

If a partnership is formed without an agreement,the partnership is automatically subject to the:

Correct AnswerverifiedShow Answer

A limited liability company is formed under:

Correct AnswerverifiedShow Answer

In a closely held corporation,one of the steps that should be taken to avoid legal difficulties is:

Correct AnswerverifiedShow Answer

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