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MBA 5100- Exam 1(Summer 2024/25- A01) Questions and Answers
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MBA 5100- Exam 1(Summer 2024/25- A01) Questions and Answers
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MBA 5100- Exam 1(Summer 2024/25- A01) Questionsand Answers
Sole Proprietorship Correct Ans-a business owned and managed by a single individual
Partnership Correct Ans-a business owned by two or more people
True Correct Ans-True or false: In all 50 states, Partnerships are automatically dissolved
upon death of a partner
Corporations Correct Ans-Ownership divided into units, called "shares of capital" or
"common stock"
True (elect board of directors, who hire management team) Correct Ans-True or False:
Shareholders of publicly traded companies do not manage day-to-day operations
Limited Liability Company Correct Ans-Business that combines the attributes of a
partnership and a corporation
Partnerships get taxed as personal tax rate, instead of corporate tax rate
Partnerships only have one level of taxation, while corporations get taxed twice (once at
entity level, again when distributed to stockholders) Correct Ans-Why would a LLC elect to
be taxed as a partnership?
Ease: Simple
Legal liability: No limit (No shield between personal assets and business assets)
Taxation: Nontaxable (considered accounting fiction)
Limited life: Yes
, MBA 5100- Exam 1(Summer 2024/25- A01) Questions
and Answers
Capital access: Limited Correct Ans-Proprietorship: Ease of formation, legal liability,
taxation, life, and capital access
Ease: Simple
Legal liability: No limit
Taxation: Nontaxable (considered accounting fiction)
Limited life: Yes
Capital access: Average Correct Ans-Partnership: Ease of formation, legal liability, taxation,
limited life, and capital access
Ease: Complex
Legal liability: Limited
Taxation: Nontaxable
Limited life: No
Capital access: Extensive Correct Ans-Corporation: Ease of formation, legal liability,
taxation, life, and capital access
Ease: Moderate
Legal liability: Limited
Taxation: Nontaxable
Limited life: Yes
Capital Access: Average Correct Ans-LLC: Ease of formation, legal liability, taxation, life, and
capital access
Depends on how business plans to gain advantage over its competitors to make money and
maximize profits
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