Question 1

Compared to sole proprietorships,partnerships offer the advantage of shared management and pooled knowledge.

Accepted Answer

Partnerships allow multiple individuals to share management responsibilities and bring their collective knowledge and skills to the business, offering a potential advantage over sole proprietorships where all management and decision-making falls solely on one person.

Question 2

Limited partnerships are just like general partnerships,except that they are organized to operate as a going concern for only a limited time period.

Accepted Answer

Limited partnerships are organized with at least one general partner and at least one limited partner, and the partnership agreement typically provides for the continuation of the partnership until a specific event occurs, such as the death, retirement, or withdrawal of a general partner. The limited partnership does not have a set time period for operation.

Question 3

A limited partner is an owner who takes no management responsibility and has no liability for losses beyond the amount invested.

Accepted Answer

This is the definition of a limited partner.

Question 4

A recent study showed that partnerships are more likely to fail than sole proprietorships.

Accepted Answer

The answer of A recent study showed that partnerships are...

Question 5

Setting up a partnership under the terms of a written agreement is a bad idea,because written agreements tend to be too inflexible and impersonal.

Accepted Answer

Setting up a partnership under the terms of a written agreement can actually be a good idea because it allows for clear communication and established guidelines. While some parts of the agreement may be inflexible, it provides a framework for the partnership that can help prevent conflicts and misunderstandings. Additionally, a well-drafted agreement can include personal touches and customized provisions to suit the needs of the partners.

Question 6

One advantage of a partnership is that there is a simple process for partners to terminate their business.

Accepted Answer

The answer of One advantage of a partnership is that...

Question 7

In a general partnership,all active partners are entitled to an equal share of the firm's profits.

Accepted Answer

The answer of In a general partnership,all active partners are...

Question 8

Marco is a limited partner in an e-commerce company.As a limited partner,Marco can be involved with the company for a maximum of five years.

Accepted Answer

There is no set limit on how long a limited partner can be involved with a company. They can remain a limited partner for as long as they choose or until the partnership agreement specifies the termination of the partnership.

Question 9

One of the major disadvantages of a partnership is that profits must be divided according to very specific legal guidelines.

Accepted Answer

The answer of One of the major disadvantages of a...

Question 10

Ted and Mark have been partners in a dry cleaning business for the past three years.They would like their brother Todd to join them.Unfortunately,partnership law states that only two partners can participate in a partnership.

Accepted Answer

Partnership law does allow for more than two partners in a partnership. However, the decision to add another partner would need to be agreed upon by all current partners and formalized through a partnership agreement.

Question 11

In a general partnership,all owners share in both management of the business and in the assumption of liability for the firm's debts.

Accepted Answer

In a general partnership, all partners have equal responsibility for management and assume unlimited personal liability for the debts of the business.

Question 12

Alphonzo has agreed to become a partner in his brother's new clothing store and has provided 30 percent of the start-up capital for Remora's Clothiers.Since he provided 30 percent of the money to start the firm,he is entitled to 30 percent of any the profits the firm earns during its first year of operations.

Accepted Answer

Profit-sharing agreements in partnerships are not automatically determined by the percentage of capital contribution unless explicitly stated in the partnership agreement.

Question 13

All of the partners in a general partnership have limited liability for the debts of their firm.

Accepted Answer

In a general partnership, all partners have unlimited liability for the debts and obligations of the partnership. This means that their personal assets may be used to pay off the partnership's debts.

Question 14

A limited partnership refers to a partnership set up for a temporary purpose,such as a real estate development project.

Accepted Answer

The answer of A limited partnership refers to a partnership...

Question 15

Two of Rolanda's friends have approached her to see if she would like to join them in starting a new business.Rolanda is willing to invest money in the business and share in its profits,but she has no desire to be involved in the day-to-day management of the company.She is also very nervous about the risk of losing her personal assets.Rolanda's preferences suggest that she would like to see the business operated as a general partnership.

Accepted Answer

The answer of Two of Rolanda's friends have approached her...

Question 16

Compared to sole proprietorships,an advantage of partnerships is their ability to obtain more financial resources.

Accepted Answer

Partnerships have the ability to bring in more financial resources as there are multiple owners who can contribute capital and also have the option to take on partners who can invest in the business. Sole proprietorships, on the other hand, rely solely on the owner's personal finances and funding options.

Question 17

A general partner has unlimited liability for the debts of the partnership only if he or she personally approved the decisions that resulted in those debts.

Accepted Answer

The answer of A general partner has unlimited liability for...

Question 18

Sharon,Lois and Sam have just formed a business partnership.Under their arrangement,Sharon will actively manage the company and assume unlimited liability for the firm's debts.Sam and Lois will invest several thousand dollars of their money and will share in the profits,but will not actively manage the firm and will not have liability for losses beyond their initial investment.This describes a limited partnership.

Accepted Answer

The answer of Sharon,Lois and Sam have just formed a...

Question 19

In order to protect all parties and minimize misunderstandings among partners,all terms of the partnership should be spelled out in writing.

Accepted Answer

This is because a written agreement helps to ensure clarity and understanding of the partnership terms by all involved parties, and can also serve as a reference point in case of any conflicts or disputes.

Question 20

Ron and Jon want to go into business together.They do not want to bring in other partners,but they both want to avoid unlimited liability for any debts incurred by their new company.Ron and Jon can achieve their aims by organizing the firm as a limited partnership.

Accepted Answer

The answer of Ron and Jon want to go into...

Quiz 6: Forms of Business Ownership