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BLAW EXAM 3/92 Q/A/100% ACCURATE
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BLAW EXAM 3/92 Q/A/100% ACCURATEAll of the following are methods that a sole proprietorship can raise money
except - - Sell ownership in the business
- Which of the following is true about a sole proprietorship? - - The owner
reports income and expenses on the owner's own tax return
- The person who is entitled to the profits of a business based on the
percentage of ownerships is - - Principal
- Reid Sterling owns a sole proprietorship called Dunkle Distributing. Dunkle
Distributing is a - - Trade Name
- Which statement below is correct about a sole proprietorship? - - It has low
start-up costs and minimal filing
- Gwendolyn Melvin wishes to start a children's sports store called, "Just Let
'Em Play!" as a sole proprietor. What form must she file so that she can use
another name than her own? - - DBA Certificate
- Josh is a sole proprietor of an ice cream shop. Regina, a customer, slips
and fall on some melted mint chocolate chip ice cream on the floor and
breaks her leg. Regina files suit and wins a judgment of $50,000. Josh does
not have any insurance and the total value of the assets of the ice cream
shop is $10,000. Which statement below is correct? - - Josh will have to use
his own personal assets to pay the remainder of the judgment
- Cyndy is a sole proprietor of a day care. She wishes to build a new
playground and also purchase new toys. She plans on doing this in stages
and therefore wants a loan where she can draw against a predetermined
amount as she needs it rather than getting a lump sum loan. Which type of
loan would you recommend for Cyndy? - - Line of Credit
- Raul wants a simple method to start-up a small marketing company. The
marketing firm has relatively low revenue and expenses. Which type of
business entity would you suggest? - - Sole proprietorship
- Stefan has opened a sole proprietorship bicycle shop. The business shows
a net income of $100,000. Stefan took a salary of $40,000. The remaining
money is left in the bank - - At tax time, Stefan pays taxes on $140,000
- A limited partnership requires - - at least one general and one limited
partner
, - limited partnerships are required to file a(n)________ return with the IRS
each year - - information
- Frank wants to leave his partnership and wants to stop being a principal.
What is this process called? - - Dissociation
- The duty of a partner to act in the best interests of the partnership is called
_______ duty - - Fiduciary
- Boris, Carina, and Theo have decided to go into business as a limited
partnership importing and selling exotic spices. Boris and Carina will manage
the business, and Theo will have no role in the day-to-day operations. Boris
and Carina have each invested $500,000, and Theo has contributed the
building and land that the business will be operated from. Alina, a customer,
contracts a rare disease from a contaminated spice sold by the company and
sues. Alina is awarded a judgment for $5 million. After she exhausts the
assets of the partnership, having the property and building sold, and seizing
all other property, $3 million remains unpaid. - - Boris and Carina each owe
$3million jointly and severally, so Alina may sue one or both of them; Theo
has no additional liability
- Franco and Jesse are operating as a general partnership. A question has
arisen that is not covered under their partnership agreement nor addressed
by the Revised Uniform Partnership Act. What will the courts do to resolve
the situation? - - Look to common law
- Redrock GP has decided to go out of the business. Selling the partnership
assets and making payments to creditors will occur during the _________
phase of the closing of partnership - - winding-up
- Regarding limited partners, - - they may not withdraw before the time that
the partners have agreed the partnership will terminate
- In a general partnership - - profits and losses may be unequally split based
on the partnership agreement
- With regard to taxation of partnerships - - a partnership must file an
information return
- LLCs are frequently governed by an agreement of the parties called an LLC
agreement or - - Operating agreement
- LLCs were originally created by the - - Wyoming legislature
- Bob is an owner in an LLC which makes him a ________ - - member
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