Ch 17 Business Organization

Which of the following is not an advantage of a sole proprietorship?

• Full control by the owner

• Easy and inexpensive to start

• Access to large amounts of capital

• Owner keeps all profits

In a sole proprietorship, who is personally liable for the business's debts?

• The government

• Business investors

• The owner

• Creditors only

What does "joint and several liability" mean in a partnership?

• Each partner is responsible only for their share of the debt

• Partners are only liable when a contract is in writing

• Each partner can be held fully liable for the entire partnership's debt

• Partners can only be sued as a group

Which of the following is an advantage of an LLP over a general partnership?

• Partners must remain silent in business decisions

• LLPs offer personal liability protection from other partners' actions

• LLPs dissolve automatically if one partner leaves

• LLPs require no formal agreement

What happens if one partner in a general partnership is sued for the full debt?

• The lawsuit must be dismissed

• Only that partner pays and cannot recover from others

• That partner pays and may seek contribution from the other partners

• All partners must be sued together

Which of the following is true about a limited partner in a limited partnership?

• They have full control over management decisions

• They are personally liable for all partnership debts

• They can lose liability protection if they manage the business

• They are always responsible for filing partnership taxes

What is one key reason entrepreneurs might choose an LLC instead of a sole proprietorship?

• LLCs are easier to set up

• LLCs require no government filing

• LLCs offer liability protection

• LLCs must be owned by multiple people

Which type of business organization is most likely to face double taxation?

• Sole proprietorship

• General partnership

• Limited liability company (LLC)

• Corporation (C-corp)

In a franchise agreement, what must the franchisor provide before a sale?

• A loan to the franchisee

• A guarantee of profit

• A Franchise Disclosure Document (FDD)

• A training certificate

Which of the following is a disadvantage of forming a partnership?

• Shared responsibility

• Shared profits

• Joint and several liability

• Easy decision-making