Exam (elaborations)
BMAL 590 Legal Environment of Business Exam with correct Answers
- Module
- Institution
BMAL 590 Legal Environment of Business Exam with correct Answers
[Show more]
Seller
Follow
millyphilip
Reviews received
Content preview
BMAL 590 Legal Environment ofBusiness Exam with correct Answers
Business organizations: - Answers -Sole trader
Partnership
Company
Franchise
Sole trader - Answers -Ownership and control of business: by one owner
Partnership - Answers -Ownership: by partners
Control of business: by partners although senior partners may have more decision
making power
Company - Answers -Ownership: shareholders
Control of business: by directors and paid managers. Some will have more control.
Franchise - Answers -Ownership: franchisee holds license but only for a given period
Control of business: franchisee but must operate in framework set out by franchisor.
Sole Proprietorship - Answers -This is the simplest and also the most prevalent form of
business in the United States.
As the name implies, in a sole proprietorship, one individual owns all the assets and is
responsible for all liabilities - debt, contracts, and tort liabilities.
The proprietor is the business. The business is not different from the proprietor.
If the business has to be conducted in a name other than that of the proprietor, the
name must be registered with the appropriate state authority.
A sole proprietorship ceases to exist when the proprietor decides to wind up the
business, or on the death of the proprietor, whichever is earlier.
Advantages of Sole Proprietorship - Answers -Easy and simple to set up.
One person is in control.
Only one level of income tax - proprietor reports income and loss on personal returns.
Proprietor receives all the profits and other benefits.
limitations of sole proprietorship - Answers -Proprietor is personally liable for business
obligations. The risk is high.
, Difficult to raise capital. Can borrow from relatives and friends and from institutions as
an individual.
General Proprietorship - Answers -Two or more persons agree to invest their money,
time, and skills in a business, and to share the profits/losses. Essentially, a GP is sole
proprietorship with multiple proprietors. Thus, the partners are personally liable for all
partnership obligations.
The partnership agreement may be explicit or implied, but sharing of profit/loss must be
real. In other words, partners cannot merely receive wages or salaries.
Unless specified otherwise, each partner has some authority and a corresponding
responsibility.
A partnership exists as an entity by itself and separate from its partners. It can acquire
property.
Advantages of General Proprietorship - Answers -Allows for a range of possibilities in
ownership and sharing.
One partner may invest money, another may provide space, and a third may provide
expertise. Yet, they may be equal partners.
Subject to only one level of tax - that of the individuals who are partners.
From a tax perspective, a partnership is a pass-through entity.
Does not necessarily terminate on the death, resignation, and even bankruptcy of a
partner. Other partners can decide to continue.
Limitations of General Proprietorship - Answers -Individual partners are personally
liable, just as in a proprietorship.
When the partnership cannot repay its debts, honor its contracts, or fulfill its tort
liabilities, aggrieved parties can proceed against the partners in their individual capacity.
A partnership too faces difficulty in raising capital.
Thus, the opportunities for growth may be limited by the ability of the partners to invest.
Joint Venture - Answers -A one-time partnership between two or more persons for a
specific purpose.
The parties to the joint venture should have a common interest, have the right to
govern, share in the venture's profits/losses, and be willing to contribute money, time,
and/or skill for the success of the venture.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller millyphilip. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £9.73. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
75759 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy revision notes and other study material for 14 years now