LAW 531 Week 1 Knowledge Check

Topics: Corporation, Types of companies, Types of business entity Pages: 21 (1782 words) Published: April 19, 2015
Week 1 Knowledge Check Study Guide
Concepts

Mastery

Sole proprietorships and
general partnerships

Corporations

Questions

100%

1

2

3

100%

4

5

6

100%

7

8

9

100%

10

11

12

100%

13

14

15

100%

16

17

18

Limited partnerships and
special partnerships

Score: 18 / 18

Limited liability companies
and limited liability
partnerships
Franchising, licensing,
and joint ventures
Alternative forms of
dispute resolution

Concept: Sole proprietorships and general partnerships
Mastery

100%

Questions

1

2

3

1.
Identify an accurate statement about a sole proprietorship.

A. It is a form of business that is seldom found in the
United States.

B. It is a form of business that has only one owner.
C. It is a separate legal entity, distinct from an owner.
D. It is a business form in which the owner enjoys limited
liability.

Correct:
The Correct Answer is: B.
A sole proprietorship is a form of business that has a single owner, known as the sole proprietor. The business is not a separate legal entity distinct from the owner. 2.
Sara and Cilia run a café together. They share ownership of and liability for the café and have come to an agreement about how the profits from the cafe should be divided between them. If the cafe runs into debt, both Sara and Celia are responsible for the debt. What form of business is best demonstrated in this scenario?

A. A sole proprietorship
B. A corporation
C. A general partnership
D. A limited liability company

Correct:
The Correct Answer is: C.
A general partnership is a form of business that involves two or more individuals acting as co-owners. The Uniform Partnership Act codifies law for general partnerships.
3.
What criterion under the Uniform Partnership Act (UPA) must be met by a business, for it to qualify as a general partnership?

A. The objective of the partnership should be to create
profits.

B. One of the owners must be willing to assume
completely liability of the business.

C. The partnership should not involve more than two
persons.

D. Only one owner should take up the legal responsibility
of contracts.

Correct:
The Correct Answer is: A.
According to the UPA, a partnership needs to be an association between two or more persons who act as co-owners to carry out a business to create profits.

Concept: Limited partnerships and special partnerships
Mastery

100%

Questions

4

5

6

4.
What is true about a limited partnership?

A. All the partners are personally liable for partnership
debts.

B. The partnership cannot involve more than two
individuals.

C. The general partners do not invest capital or participate in the management of the business.

D. The limited partners are not personally liable for
partnership debts beyond the amount invested by them.

Correct:
The Correct Answer is: D.
In a limited partnership, the general partners participate in the management of the business and invest capital; they are also personally liable for the debts of the partnership. Limited partners invest capital in the partnership but are not personally liable for the debts of the partnership beyond their capital contributions. 5.

Who among the following is most likely to be a limited partner in a limited partnership?

A. David, who takes up the task of work delegation in the
business.

B. Kiara, who makes contracts with suppliers for the
partnership.

C. Kevin, who does not have to make up for losses if a
contract made by the partnership fails.

D. Nelson, who is required to use his personal wealth to
pay for any debts incurred by the partnership.

Correct:
The Correct Answer is: C.
Limited partners in a limited partnership are liable only for the contributions they make. They are not personally liable for the contracts and debts made by the partnership.
6.

Who has unlimited liability for the debts and...
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