BLAW EXAM 3 Questions and Answers graded A+
All of the following are methods that a sole proprietorship can raise money except
Sell ownership in the business
Which of the following is true about a sole proprietorship?
The owner reports income and expenses on the owner's own tax return
...
All of the following are methods that a sole proprietorship can raise money except -
answer Sell ownership in the business
Which of the following is true about a sole proprietorship? - answer The owner
reports income and expenses on the owner's own tax return
The person who is entitled to the profits of a business based on the percentage of
ownerships is - answer Principal
Reid Sterling owns a sole proprietorship called Dunkle Distributing. Dunkle Distributing
is a - answer Trade Name
Which statement below is correct about a sole proprietorship? - answer It has low
start-up costs and minimal filing
Gwendolyn Melvin wishes to start a children's sports store called, "Just Let 'Em Play!"
as a sole proprietor. What form must she file so that she can use another name than her
own? - answer DBA Certificate
Josh is a sole proprietor of an ice cream shop. Regina, a customer, slips and fall on
some melted mint chocolate chip ice cream on the floor and breaks her leg. Regina files
suit and wins a judgment of $50,000. Josh does not have any insurance and the total
value of the assets of the ice cream shop is $10,000. Which statement below is correct?
- answer Josh will have to use his own personal assets to pay the remainder of the
judgment
Cyndy is a sole proprietor of a day care. She wishes to build a new playground and also
purchase new toys. She plans on doing this in stages and therefore wants a loan where
she can draw against a predetermined amount as she needs it rather than getting a
lump sum loan. Which type of loan would you recommend for Cyndy? - answer Line
of Credit
Raul wants a simple method to start-up a small marketing company. The marketing firm
has relatively low revenue and expenses. Which type of business entity would you
suggest? - answer Sole proprietorship
Stefan has opened a sole proprietorship bicycle shop. The business shows a net
income of $100,000. Stefan took a salary of $40,000. The remaining money is left in the
bank - answer At tax time, Stefan pays taxes on $140,000
, A limited partnership requires - answer at least one general and one limited partner
limited partnerships are required to file a(n)________ return with the IRS each year -
answer information
Frank wants to leave his partnership and wants to stop being a principal. What is this
process called? - answer Dissociation
The duty of a partner to act in the best interests of the partnership is called _______
duty - answer Fiduciary
Boris, Carina, and Theo have decided to go into business as a limited partnership
importing and selling exotic spices. Boris and Carina will manage the business, and
Theo will have no role in the day-to-day operations. Boris and Carina have each
invested $500,000, and Theo has contributed the building and land that the business
will be operated from. Alina, a customer, contracts a rare disease from a contaminated
spice sold by the company and sues. Alina is awarded a judgment for $5 million. After
she exhausts the assets of the partnership, having the property and building sold, and
seizing all other property, $3 million remains unpaid. - answer Boris and Carina each
owe $3million jointly and severally, so Alina may sue one or both of them; Theo has no
additional liability
Franco and Jesse are operating as a general partnership. A question has arisen that is
not covered under their partnership agreement nor addressed by the Revised Uniform
Partnership Act. What will the courts do to resolve the situation? - answer Look to
common law
Redrock GP has decided to go out of the business. Selling the partnership assets and
making payments to creditors will occur during the _________ phase of the closing of
partnership - answer winding-up
Regarding limited partners, - answer they may not withdraw before the time that the
partners have agreed the partnership will terminate
In a general partnership - answer profits and losses may be unequally split based on
the partnership agreement
With regard to taxation of partnerships - answer a partnership must file an
information return
LLCs are frequently governed by an agreement of the parties called an LLC agreement
or - answer Operating agreement
LLCs were originally created by the - answer Wyoming legislature
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