Exam 5: How to Form a Business

According to the Uniform Partnership Act, the three key elements of any general partnership are

The stockholders of large, publicly traded corporations have a daily pulse on the operation of the business.

Farm cooperatives were originally established to help farmers increase their economic power by acting as a group rather than as individuals.

Huong is opening an international food store. Though her products will span the globe, she wants to focus on items from the Middle East. She wants to be the firm's only general partner, but she is trying to get several friends to participate as limited partners. It's apparent Huong wants to

Which of the following statements is the most accurate?

Penny Pebble and Stuart Stone formed a partnership in a landscape business. Under their arrangement, Penny actively manages the company and assumes unlimited liability for its debts. Stuart has invested several thousand dollars of his money with plans to share in the profits, but does not actively make management decisions, nor will he assume liability beyond his initial investment. Penny and Stuart are in a limited partnership.

When a sole proprietor dies

When entering into a new partnership, a good strategy is to

In a general partnership, all partners are entitled to an equal share of the firm's profits.

One reason franchises have become so popular is that this arrangement provides the franchisee with

Rowan and Vanessa plan to pool their money and talents to form a general partnership and start a music school. One of the first things Rowan and Vanessa should do is

In a leveraged buyout, the managers of a firm, its employees, or other investors

In a cooperative, members/customers

Ramses owns a roofing business. He enjoys being his own boss, but it comes at a price. Often, his days are filled with organizing the activities of the employees and seeking out new customers. He often misses events with friends and family because of the obligations of running his own business. He also knows that he has unlimited personal liability for any of his firm's debts. Ramses's business is organized as a(n)

Compared to the C corporation, the limited liability company is an attractive form of business ownership because

A ________ merger unites firms at different stages of related businesses.

Stockholders in a corporation accept unlimited liability for the corporation's debts.

One of the major disadvantages of a partnership is that profits must be divided equally.

A franchise may be organized as a sole proprietorship, partnership, or corporation.

The ownership of Dogs of Denver, a small company that designs and manufactures coats, sweaters, jackets, and rainwear for dogs, wants to organize as an LLC. All the owners are under forty and two are expecting children by the end of the year. This is good strategy because each member can choose to commit to limited or unlimited liability.