Exam 5: Forms of Business Ownership

Which of the following is not true of a limited liability partnership?

A limited partner is personally liable only for the amount of money she has invested in the partnership.

One disadvantage of an S corporation is that the cost of many benefits-insurance, meals, lodging, and others-that are paid to shareholders with 2 percent or more of stock-cannot be deducted as business expenses for tax purposes and are considered taxable income.

Marco is opening a new computer repair shop. He is owner and sole employee. He has paid the appropriate fees and licensing costs and begun his business. This is an example of a(n):

What is an S corporation? Explain the advantages and the disadvantages of an S corporation.

Probably the most important reason to have a partnership agreement is that:

A special type of limited partnership in which all partners who, in many states must be considered to be professionals, are limited partners.

A common denominator in many partnership disputes is the lack of a written agreement clearly spelling out the roles, rights, and responsibilities of each partner.

An S corporation form of ownership overcomes which disadvantage of the regular or C corporation form of ownership?

Income from a joint venture is taxed as the income from a(n):

In a professional corporation, all shares of stock must be owned and held by individuals licensed in the profession of the corporation.

Corporations must obtain a federal charter before they can conduct any business.

An S corporation maintains the advantages of the corporate form of ownership while having the ability to be taxed as a partnership.

Like an S corporation, a limited liability company does not pay income taxes; its income flows through to its owners, who pay taxes on their shares of the limited liability company's net income.

Which of the following is not true regarding the limitations of professional corporations?

Which of the following documents must an entrepreneur file to create a limited liability company?

A disadvantage of the corporate form of ownership is when profits are taxed at the corporate rate and at the individual rate and this is referred to as:

Some forms of ownership are much more costly and involved to create.

What is a partnership? Explain the advantages and the disadvantages of a partnership.

A joint venture is different from a partnership in that the joint venture: