9. Payment of the principal obligation will not discharge the guarantor from the obligation.
10. A sole proprietor
owns the entire business
but doe not receive all of the profit.
14. In a general partnership
, the acts of one partner in the ordinary course of business subjects the other partners
to personal liability.
18. In a limited partnership
, a general partner's dissociation from the firm may lead to dissolution.
22. An S corporation
is treated the same as a regular corporation
for tax purposes.
34. Kelly, the owner of Llama Farms, a sole proprietorship, wants to obtain additional business capital
maintain control. This can best be accomplished by
a. borrowing funds.
b. bringing in partners.
c. issuing stock.
d. selling the business
36. Ben, who runs a livestock breeding business, owes the Circle C Ranch $40,000. Ben agrees to pay the Circle
C a percentage of his profits each month until the debt is paid. Because of this agreement, the Circle C is
a. Ben's creditor and partner.
b. Ben's creditor only.
c. Ben's partner only.
d. neither Ben's creditor nor his partner.
38. Mead, Nero, and Olen do business as Pipe & Plumbing Services, a partnership
. After Mead's relationship to
the firm ends, Nero and Olen agree to discontinue the business. This is
c. gross negligence.
d. simple misconduct.
39. Rick and Sandy are limited partners in Terrific Profit Enterprises, a limited partnership. To avoid personal
liability for partnership obligations, they must not
a. acquire an interest in the firm.
b. contribute property to the firm.
c. engage in activities independent of the firm's business.
d. participate in the firm's management.
40. Genetic Innovations, LP, is a limited partnership. The partners sign an agreement purporting to state how the
firm's profits and losses are to be divided. The profits and losses of the firm will be divided
a. according to the agreement.
b. equally, despite the agreement.
c. in proportion to capital contributions, despite the agreement.
d. in proportion to each partner's participation in the firm's management, despite the
41. Dunn and Etta are limited partners in Fancee Fashion Stores, a limited partnership. In terms of the firm's
books, Dunn and Etta are entitled to
a. access in proportion to their participation in managing the firm.
b. access to the books directly related to their capital contributions.
c. no access.
d. total access.
43. Connie, Drew, and Ellen are the general partners of Foreign Auto Repair, a limited partnership. Connie dies.
The partnership can
a. continue only after a distribution of its assets.
b. continue only as a general partnership.
c. continue only if Drew and Ellen consent.
d. not continue because Connie's death dissolves the firm.
48. Frida and Gregor want to market a new line of fishing gear. To avoid income taxes at the corporate level, they
a. a C corporation
b. a close corporation
c. an S corporation.
d. a private corporation
49. Like the bylaws
of other corporations
, the bylaws of Farmland Equipment, Inc.,
a. establish the operating name of the corporation.
b. establish the value and classes of corporate stock.
c. were adopted at its first organizational meeting.
d. were submitted for approval to the public official in charge.