Question 1

Which of the following is an advantage of a limited partnership?

Accepted Answer

A)  It has the ability to attract large amounts of capital. 
B)  It is a non-tax paying entity. 
C)  It can be created by default. 
D)  It cannot be transferred to another person. 
A)  It has the ability to attract large amounts of capital. 
B)  It is a non-tax paying entity. 
C)  It can be created by default. 
D)  It cannot be transferred to another person. A

Question 2

Which of the following is not essential to the formation of a mining partnership?

Accepted Answer

A)  Joint operation of property 
B)  Joint ownership of a mineral interest 
C)  Active physical participation in operations 
D)  Sharing of profits and losses 
A)  Joint operation of property 
B)  Joint ownership of a mineral interest 
C)  Active physical participation in operations 
D)  Sharing of profits and losses C

Question 3

In a limited partnership, limited partners:

Accepted Answer

A)  play an active role in the management of the firm. 
B)  do not pay federal income tax on their share of the profits. 
C)  are passive investors. 
D)  have unlimited liability for the firm's debts. 
A)  play an active role in the management of the firm. 
B)  do not pay federal income tax on their share of the profits. 
C)  are passive investors. 
D)  have unlimited liability for the firm's debts. C

Question 4

A loan made by a partner to partnership business is:

Accepted Answer

A)  a part of partnership capital. 
B)  a part of the partnership's assets. 
C)  a liability of the partnership business. 
D)  a partner's contribution to the partnership business. 
A)  a part of partnership capital. 
B)  a part of the partnership's assets. 
C)  a liability of the partnership business. 
D)  a partner's contribution to the partnership business.

Question 5

A joint venture is a(n):

Accepted Answer

A)  association limited to no more than two persons in business for profit. 
B)  enterprise of numerous co-owners in a nonprofit undertaking. 
C)  corporate enterprise for undertaking multiple projects of various durations. 
D) . association of persons engaged as co-owners in a single undertaking for profit. 
A)  association limited to no more than two persons in business for profit. 
B)  enterprise of numerous co-owners in a nonprofit undertaking. 
C)  corporate enterprise for undertaking multiple projects of various durations. 
D) . association of persons engaged as co-owners in a single undertaking for profit.

Question 6

The shareholders of a corporation that has elected S Corporation status may report the income and losses of the business on their individual federal income tax returns.

Accepted Answer

A) True 
 B)False

Question 7

Sue has transferred her transferable interest of the partnership business to her creditor to discharge her debt. However, Sue is an efficient manager and she still manages the business, even after the transfer. Is she still a partner?

Accepted Answer

Yes. By itself a partner's transfer of h

Question 8

In a limited partnership, general partners:

Accepted Answer

A)  have the right to manage the business. 
B)  are not liable for the firm's debts. 
C)  are nonparticipating investors. 
D)  cannot transfer their ownership interest. 
A)  have the right to manage the business. 
B)  are not liable for the firm's debts. 
C)  are nonparticipating investors. 
D)  cannot transfer their ownership interest.

Question 9

The law governing general partnerships is primarily found in the Revised Uniform Partnership Act (RUPA).

Accepted Answer

A) True 
 B)False

Question 10

A(n) _____ is a limited partnership whose partners have elected limited liability status for all the partners.

Accepted Answer

A)  corporation 
B)  LLLP 
C)  S Corporation 
D)  LLP 
A)  corporation 
B)  LLLP 
C)  S Corporation 
D)  LLP

Question 11

Babs, Mindy, and Eric decide to leave a large accounting firm and start their own accounting business. What form of business should they elect?

Accepted Answer

Babs, Mindy, and Eric should choose eith

Question 12

No formalities are required in order to establish a partnership.

Accepted Answer

A) True 
 B)False

Question 13

As an association, a partnership is a voluntary and consensual relationship.

Accepted Answer

A) True 
 B)False

Question 14

A written agreement to the effect that the parties do not intend to form a partnership is not conclusive if their actions provide evidence of their intent to form a relationship that meets the RUPA partnership test.

Accepted Answer

A) True 
 B)False

Question 15

Which legal form of business has the ability to attract the greatest amount of capital from investors?

Accepted Answer

A)  A limited liability company 
B)  A partnership 
C)  A corporation 
D)  A sole proprietorship 
A)  A limited liability company 
B)  A partnership 
C)  A corporation 
D)  A sole proprietorship

Question 16

Partners of a partnership:

Accepted Answer

A)  are not liable for all the obligations of their partnership. 
B)  are entitled to income of the partnership, which must be reported on their individual federal income tax returns. 
C)  are not permitted to deduct partnership losses on their individual federal income tax returns. 
D)  can create a partnership only by complying with a statute. 
A)  are not liable for all the obligations of their partnership. 
B)  are entitled to income of the partnership, which must be reported on their individual federal income tax returns. 
C)  are not permitted to deduct partnership losses on their individual federal income tax returns. 
D)  can create a partnership only by complying with a statute.

Question 17

Which of the following is NOT an essential characteristic of a limited liability company (LLC)?

Accepted Answer

A)  The LLC can elect to be taxed as a partnership or a corporation. 
B)  Members' ownership interest is completely and freely transferable. 
C)  Members have limited liability for the obligations of the LLC. 
D)  The bankruptcy of one member does not dissolve the LLC. 
A)  The LLC can elect to be taxed as a partnership or a corporation. 
B)  Members' ownership interest is completely and freely transferable. 
C)  Members have limited liability for the obligations of the LLC. 
D)  The bankruptcy of one member does not dissolve the LLC.

Question 18

A _____ is owned by shareholders who elect a board of directors to manage the business.

Accepted Answer

A)  limited liability company 
B)  corporation 
C)  partnership 
D)  sole proprietorship 
A)  limited liability company 
B)  corporation 
C)  partnership 
D)  sole proprietorship

Question 19

A _____ is found when an arrangement is made not to establish an ongoing business involving many transactions, but is limited to a single project.

Accepted Answer

A)  corporation 
B)  limited liability company 
C)  partnership 
D)  joint venture 
A)  corporation 
B)  limited liability company 
C)  partnership 
D)  joint venture

Question 20

Selena joins Kona's management consulting business. They do not indicate whether Selena is Kona's partner, but Selena receives 34 percent of the profits of the business and makes decisions regarding which clients the business should accept. Two years later, Selena leaves the business to start a singing career. Selena claims she owns a portion of the value of the business. Is Selena correct?

Accepted Answer

Yes. Selena and Kona are partners becaus

Exam 37: Introduction to Forms of Business Andformation of Partnerships

Which of the following is an advantage of a limited partnership?

Which of the following is not essential to the formation of a mining partnership?

In a limited partnership, limited partners:

A loan made by a partner to partnership business is:

A joint venture is a(n):

The shareholders of a corporation that has elected S Corporation status may report the income and losses of the business on their individual federal income tax returns.

Sue has transferred her transferable interest of the partnership business to her creditor to discharge her debt. However, Sue is an efficient manager and she still manages the business, even after the transfer. Is she still a partner?

In a limited partnership, general partners:

The law governing general partnerships is primarily found in the Revised Uniform Partnership Act (RUPA).

A(n) _____ is a limited partnership whose partners have elected limited liability status for all the partners.

Babs, Mindy, and Eric decide to leave a large accounting firm and start their own accounting business. What form of business should they elect?

No formalities are required in order to establish a partnership.

As an association, a partnership is a voluntary and consensual relationship.

A written agreement to the effect that the parties do not intend to form a partnership is not conclusive if their actions provide evidence of their intent to form a relationship that meets the RUPA partnership test.

Which legal form of business has the ability to attract the greatest amount of capital from investors?

Partners of a partnership:

Which of the following is NOT an essential characteristic of a limited liability company (LLC)?

A _____ is owned by shareholders who elect a board of directors to manage the business.

A _____ is found when an arrangement is made not to establish an ongoing business involving many transactions, but is limited to a single project.

The Nature of Law

The Resolution of Private Disputes

Business and the Constitution

Business Ethics, Corporate Social Responsibility, Corporate Governance, and Critical Thinking

Crimes

Intentional Torts

Negligence and Strict Liability

Intellectual Property and Unfair Competition

Introduction to Contracts

The Agreement: Offer

The Agreement: Acceptance

Consideration

Reality of Consent

Capacity to Contract

Illegality

Writing

Rights of Third Parties

Performance and Remedies

Formation and Terms of Sales Contracts

Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contracts

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance Law

Introduction to Credit and Secured Transactions

Security Interests in Personal Property

Bankruptcy

Negotiable Instruments

Negotiation and Holder in Due Course

Liability of Parties

Checks and Electronic Transfers

The Agency Relationship

Third-Party Relations of the Principal and the Agent

Operation of Partnerships and Related Forms

Partners Dissociation and Partnerships Dissolution and Winding up

Limited Liability Companies, Limited Partnerships, and Limited Liability Limited Partnerships

History and Nature of Corporations

Organization and Financial Structure of Corporations

Management of Corporations

Shareholders Rights and Liabilities

Securities Regulation

Legal and Professional Responsibilities of Auditors, Consultants, and Securities Professionals

Administrative Agencies

The Federal Trade Commission Act and Consumer Protection Laws

Antitrust: the Sherman Act

The Clayton Act, the Robinsonpatman Act, and Antitrust Exemptions and Immunities

Employment Law

Environmental Regulation

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