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Exam 28: Types of Business Organizations

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Question 31

True/False

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When the owner of a sole proprietorship dies, the business does not dissolve-it is automatically transferred to family members or other heirs.

A) True
B) False

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Question 32

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It is often more difficult and costly to start a sole proprietorship because so many legal forms are involved.

A) True
B) False

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Question 33

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Omar is a partner in Party Caterers. Omar's death will

Len is a member of Maintenance Service, a limited liability company. The firm's profits are "passed through" to Len and the other members who pay

One of the essential elements of a general partnership is a joint ownership of the business.

The proprietor of a sole proprietorship does not bear the burden of all liabilities incurred by the business.

Cathy, Don, and Ethel do business as Fertile Farm. Cathy gives notice to quit the firm, which otherwise continues to do business. This is

Anyone who does business without creating a separate business organization has a partnership.

Chase, the owner of Data Master, a sole proprietorship, wants to obtain additional business capital. This opportunity is most likely limited to

Kay and Linda decide to do business as Marketing & Promotion. To be a partnership, this association can result from an agreement that is

Able Accounting, LLC, is a limited liability company. With respect to the firm's management, Able's members can

Fact Pattern 28-2 Kristin and Lindsey are partners in Mobile Devise, a marketing firm. Refer to Fact Pattern 28-2. Kristin signs a contract with Nature's Chocolate, a candy maker, apparently on Mobile's behalf. The contract is binding on

The proprietor pays only personal income taxes on a sole proprietorship's profits.

Rita and Sal do business as Tech Security, a partnership. In most states, for the purposes of collecting judgments and having accounting performed, this firm would be treated as

Selections, a general partnership, operates a gift shop. Selections has five partners. Tony has a one-third interest in the partnership. Each of the other partners has a one-sixth interest. With respect to management decisions

Generally, in dealing with a limited liability company (LLC) formed in another state, a state will apply the law of the state where the LLC was formed.

Dana is a member of Earthground Coffee, LLC, a limited liability company. Dana is liable for Earthground's debts

The liability of the members of a limited liability company for the firms' debts and obligations is unlimited.

Housing Development, LP, is a limited partnership that invests in residential real estate projects. Its limited partners include more than 150 sophisticated investors and investment professionals. A limited partner risks losing his or her limited liability if he or she

The proprietor's opportunity to raise capital for a sole proprietorship is limited.