GBL 385 Exam 3 [MSU-Prof. Ross], gbl exam 3.
Debra wanted to form a partnership with Lawrence. He agreed and they became co-owners in an equal partnership. This year, after expenses, the partnership had a profit of $200,000. How will the taxation of this profit be handled?
A. Since the partners...
GBL 385 Exam 3 [MSU-Prof. Ross], gbl exam 3.
Debra wanted to form a partnership with Lawrence. He agreed and they became co-owners in an
equal partnership. This year, after expenses, the partnership had a profit of $200,000. How will the
taxation of this profit be handled?
A. Since the partnership was Debra's idea, she will pay income tax on the profit on her personal tax
return.
B. The business will pay half of the tax liability and Debra and Lawrence will pay the other half.
C. Debra and Lawrence must both pay tax on the business's profit.
D. The business itself will pay the taxes on the business's profit.
C. Debra and Lawrence must both pay tax on the business's profit
An agency relationship can be created
A. by the conduct of the parties.
B. only by the meeting of all the standards of contract law.
C. only by a written agreement.
D. only if the agent is paid.
A. by the conduct of the parties
A partnership in which management responsibilities and profits are divided usually equally among the
partners, and all partners have unlimited personal liability for the partnership's debts is called as a(n.
________.
A. nominal partnership
B. active partnership
C. general partnership
D. equal partnership
C. general partnership
The advantage of a corporation over a partnership is:
a. shares are easily transferable to another person.
,b. perpetual existence.
c. it is easier to raise funds.
d. All the above.
D. all of the above
An agency will terminate on the occurrence of all but which one of the following?
Incorrect Response
A. The goal of the agency is accomplished.
B. The agent decides to quit.
C. The subject matter of the agency is destroyed.
D. The principal leaves the country.
D. The principal leaves the country
The term "S Corporation" comes from
A. the Internal Revenue Code.
B. the FTC rules.
C. the Securities and Exchange Commission.
D. state corporation law.
A. the Internal Revenue Code
Which of the following is NOT required of an agency relationship?
A. Consideration between parties
B. A Fiduciary relationship
C. Consent of the parties to act as agent or principal
D. Control of principal over agent's conduct
A. Consideration between parties
Carey decided to incorporate her business under the name yStar Inc. Before yStar was incorporated,
Carey signed a contract in the name of yStar, Inc. to have some office space remodeled. Which
statement is correct?
, A. yStar is liable on the contract because the contract was signed in its name.
B. yStar becomes liable on the contract as soon as it is incorporated.
C. yStar is liable on the contract if the contractor knows that the corporation does not yet exist.
D. yStar will be liable on the contract only if the corporation adopts the contract
D. yStar will be liable on the contract only if the corporation adopts the contract
Charles and Ellen, an unmarried couple, run an ice cream store. The business is not incorporated and
they have filed no formation papers with the state. Their business is a
A. sole proprietorship.
B. partnership.
C. franchise.
D. limited liability company.
B. partnership
Which of the following is the correct definition for a partnership?
A. An association of two or more persons with one or more general partners and one or more limited
partners
B. A legal entity ordinarily consisting of an association of numerous individuals
C. An association of two or more persons to carry on as co-tenants in business
D. An association of two or more persons to carry on as co-owners a business for profit
D. An association of two or more persons to carry on as co-owners a business for profit
Howard and Raj started a retail business called Zebra Toy Company. The business is operated as a
partnership. Under partnership law:
a. Howard is personally liable for any business contracts entered into by Raj.
b. Howard is personally liable for any business debts, regardless of whether she or Raj created the
obligation.
c. Howard is personally liable for any negligent act committed by Raj in the scope of the business
activity.
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