25.
Which one of the following statements concerning a sole proprietorship is correct?
A.
A sole proprietorship is the least common form of business ownership.
B.
The profits of a sole proprietorship are taxed twice.
C.
The owners of a sole proprietorship share profits as established by the partnership agreement.
D.
The owner of a sole proprietorship may be forced to sell his/her personal assets to pay company debts.
E.
A sole proprietorship is often structured as a limited liability company.
26.
Which one of the following statements concerning a sole proprietorship is correct?
A.
The life of the firm is limited to the life span of the owner.
B.
The owner can generally raise large sums of capital quite easily.
C.
The ownership of the firm is easy to transfer to another individual.
D.
The company must pay separate taxes from those paid by the owner.
E.
The legal costs to form a sole proprietorship are quite substantial.
27.
Which one of the following best describes the primary advantage of being a limited partner rather than a general partner?
A.
Entitlement to a larger portion of the partnership’s income
B.
Ability to manage the day-to-day affairs of the business
C.
No potential financial loss
D.
Greater management responsibility
E.
Liability for firm debts limited to the capital invested
28.
A general partner:
A.
has less legal liability than a limited partner.
B.
has more management responsibility than a limited partner.
C.
faces double taxation whereas a limited partner does not.
D.
cannot lose more than the amount of his/her equity investment.
E.
is the term applied only to corporations which invest in partnerships.
29.
A partnership:
A.
is taxed the same as a corporation.
B.
agreement defines whether the business income will be taxed like a partnership or a corporation.
C.
terminates at the death of any general partner.
D.
has less of an ability to raise capital than a proprietorship.
E.
allows for easy transfer of interest from one general partner to another.
30.
Which of the following are disadvantages of a partnership?
I. Limited life of the firm
II. Personal liability for firm debt
III. Greater ability to raise capital than a sole proprietorship
IV. Lack of ability to transfer partnership interest
A.
I and II only
B.
III and IV only
C.
II and III only
D.
I, II, and IV only
E.
I, III, and IV only
