Deck 31: Introduction to Business Organization

Question 1

By operating as a partnership instead of a proprietorship, the ratio of expenses per dollar of business tends to increase.

Answer 1

False

Question 2

Which of the following is true of nominal partners?

A) They are held liable as full partners in some cases.
B) They have an equal say in the management of the business.
C) They are responsible for the day to day upkeep of the business.
D) They contribute financially to the partnership.

Answer 2

A

Question 3

In a sole proprietorship, the proprietor has ultimate responsibility for business decisions.

Answer 3

True

Question 4

What are the important features of a limited liability company? Explain.

Question 5

In a sole proprietorship, the proprietor has significant flexibility in managing the business.

Question 6

The LLC can be dissolved with the written consent of all members.

Question 7

A _____ partnership is one devoted to providing services, such as accounting, medicine, law, and, similar professional services.

A) trading
B) limited
C) nontrading
D) nominal

Question 8

Which of the following best describes sole proprietorship?

A) It is a business owned and operated by the public.
B) It is a business owned by two people and operated by one.
C) It is a business owned and carried on by one person.
D) It is a business owned by two people but with limited liability.

Question 9

An active partner who attempts to conceal that fact from the public is a _____ partner.

A) limited
B) secret
C) nominal
D) dormant

Question 10

Which of the following is true of a sole proprietorship business?

A) A sole proprietor has limited flexibility in managing the business.
B) A sole proprietor has unlimited liability and high financial risk.
C) A sole proprietorship that is operated under the proprietor's name must be registered.
D) A sole proprietorship is a complex business to organize.

Question 11

A sole proprietor is not liable for crimes committed by the business.

Question 12

A general partner has limited liability in respect to the partnership debts.

Question 13

For a limited liability company  with two or more members, the default tax classification is that of a sole proprietorship.

Question 14

Which of the following is true of limited liability companies?

A) An LLC can be sued by third-parties as a separate entity.
B) An LLC cannot enter into contracts under its own name.
C) An LLC is a legal entity indistinct from its members.
D) An LLC cannot be a manager-managed business entity.

Question 15

The owners or investors of a limited liability company are called members.

Question 16

A trading partnership is one engaged in buying and selling merchandise.

Question 17

While registering a fictitious name, a business need not disclose the names and addresses of the owners.

Question 18

A silent partner is one who takes no active part in the business.

Question 19

Zen Corp, an Australian company, and Pluto Inc, an American company, entered into a one-time contract to build an elevated expressway in Florida. The contract was for a period of five years and both companies were held equally liable under the contract. This type of business venture is known  as a _____.

A) joint-stock company
B) limited liability company
C) partnership
D) joint venture

Question 20

Which of the following is true of limited liability partnerships?

A) This type of partnership can operate under the Uniform Partnership Act.
B) This type of partnership can be formed without a specific state statute prescribing the conditions under which it can operate.
C) This type of partnership cannot operate under the common law.
D) This type of partnership cannot be formed in a majority of the states.