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MIE 305 EXAM 1 QUESTIONS AND ANSWERS 2024
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MIE 305 EXAM 1 QUESTIONS AND ANSWERS 2024
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MIE 305 EXAM 1What are the presumptions about ownership interests and liability interests at
common law in the absence of a more detailed partnership agreement? -
ANSWERS-They are considered a general partnership- Byker v Mannes
Speaking of those, what IS a partnership agreement, why should it be written, and
what are some of the biggest of the "six things" that the Small Business
Administration recommends in all such agreements? - ANSWERS-1. Percentage of
Ownership
2. Allocations of profits/losses & draws
3. Binding the partnership
4. Decision making
5. Dispute resolution
6. Death, dissociation, or removal of a partner
Limited liability - ANSWERS-
Sole Proprietorship - ANSWERS-Advantages:
- There is only one owner
- No formal registration
- Complete control over business decisions
- Not a taxable organization; incurs tax on a personal level
- Easiest to start
,- No fiduciary duties
Disadvantages:
- 100 percent liable for debts
- Most likely to be audited
- Lacks continuity upon death
Pass-through taxation - ANSWERS-Profits or losses from the business entity "pass
through" the entity untaxed (in turn, meaning that the organization is not
required to file a formal tax return, or may need to file only an informational
return such as an IRS Form) and directly to the owners to be taxed as personal
income
Franchise - ANSWERS-A business model under which one party grants, for a fee,
the right to sell or distribute another party's product, service, or technology
Franchisee - ANSWERS-The one who purchases and operates a franchise
Franchisor - ANSWERS-Seller of a franchise
Franchise Rule - ANSWERS-The standard of disclosure of information about
franchisee results and expectations from the franchisor under the rule is a
"reasonable basis" which is to say that franchisors must not inflate percentages or
numbers when answering prospective franchisee questions about requirements
,How do you start (and end) a general partnership? - ANSWERS-
Partnership - ANSWERS-Advantages:
- Maybe at will or fixed term
- Easily formed
- Minimal costs to form
- Pass-through taxation to partners on profits
- Each owner has an equal voice
- May operate in more than one state
- Fewer regulations and less governmental supervision
Disadvantages:
- New partners require approval in writing from all existing partners (unless
agreement states otherwise)
- Joint and Several Liability
- Dissolution
- Unlimited liability
Joint & Several Liability - ANSWERS-Partners will certainly be liable for their own
civil wrongs within a partnership but a plantiff may also hold them responsible for
the civil wrongs of other partners or from the partnership generally
, Uniform Partnership Act (UPA) - ANSWERS-- Require partnership to go to through
dissolution and winding up whenever a partner leaves the partnership (good or
bad)
- If the remaining partners wished to create a new partnership, they could do so,
but not before winding up the existing one and dissolving the old one in its
entirety
Dissolution - ANSWERS-Complete destruction ("to dissolve") of the legal
relationship between all partners, and the ending of the formal partnership
relationship.
Winding up - ANSWERS-Reducing all partnership assets to liquid (cash) form,
paying off all partnership creditors, and distributing the balance of partnership
assets (or appropriating losses) among the partners
What is the importance of a Business Law course in a business/management
curriculum, and/or the importance of knowing something about it to a
businessperson? - ANSWERS-- The law is important to modern business
- The history of business reveals the prominence of law
- Educators today emphasize the role of law in preparing tomorrow's business
leaders
How can businesspeople use the law to a strategic advantage? - ANSWERS--
Knowing the legal rights and duties enhances one's ability to identify legal risks
and effectively reduce or eliminate resulting liability
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