BUL 3130 ACTUAL FINALS QUESTIONS AND
ANSWERS SET A+
✔✔Disadvantages of Sole Proprietorship - ✔✔unlimited liability, lack of continuity, lack
of money, limited management skills, difficulty in hiring employees
✔✔Advantages of General Partnership - ✔✔ability to pool financial resources, ability to
share responsibilities and capitalize on complementary skills, ease of formation,
possible tax advantages
✔✔disadvantages of General Partnerships - ✔✔unlimited liability, potential for
disagreements, lack of continuity, difficulty in withdrawing from a partnership
✔✔The Uniform Partnership Act (UPA) - ✔✔I. govern s the operation of partnerships in
absence of express agreement
II. has down much to reduce controversies in the law relating to partnerships
✔✔Partnerships as defined by UPA - ✔✔"an association of two or more persons to
carry on a s co-owners a business for profit" [UPA 102(11)]
✔✔Essential Elements of a Partnership - ✔✔1. A sharing of profits and losses
2. A joint ownership of the business
3. An equal right to be involved in the management of the business
✔✔limited partnerships - ✔✔a partnership that includes at least one general partner
who actively manages the company and accepts unlimited liability and one limited
partner who gives up the right to actively manage the company in exchange for limited
liability
✔✔Advantages of Limited Partnership - ✔✔1. General partners have right to participate
in management
2. Limited partners have limited liability for business obligations
3. Choice of taxation, deductible losses and expenses
, 4. Survives withdrawal of partner (except sole general partner)
✔✔Disadvantages of limited partnership - ✔✔1. Legal formalities to create
2. General partners have unlimited liability
3. Limited partners have no right to participate in management
4. Limited transferability of ownership (requires partner approval, and must leave at
least one general partner)
✔✔limited liability limited partnership (LLLP) - ✔✔I. A special type of limited partnership
that has both general partners and limited partners, where both the general and limited
partners have limited liability and are not personally liable for the debts of the LLLP.
II. liability limited to the amount of their investment in the firm.
✔✔Corporation - ✔✔a company or group of people authorized to act as a single entity
(legally a person) and recognized as such in law.
✔✔Advantages of a corporation - ✔✔limited liability, ability to raise capital and transfer
ownership
✔✔Disadvantages of a corporation - ✔✔-double taxation
-cost of setup and report filing
✔✔S Corporations - ✔✔A special designation that allows small businesses that meet
qualifications to be taxed as if they were a proprietorship or a partnership rather than a
corporation.
✔✔S Corporation Advantages - ✔✔- limited liability of owners
- avoids double taxation
- ability to continue in perpetuity
- easy to transfer ownership to others
✔✔S-Corporation Disadvantages - ✔✔-Restrictions on use and deference of losses
-Tax recognition on sales of assets
-**Limitation on Capital Attraction (VCs may
require changing the form and status to C-Corp.)
-limited shareholders (no more than 100)
✔✔Limited Liability Company (LLC) - ✔✔A hybrid form of business enterprise that offers
the limited liability of the corporation but the tax advantages of a partnership.
✔✔LLC Advantages - ✔✔1. Limited liability
2. Choice of taxation
3. Flexible ownership rules
4. Flexible distribution of profits and losses
5. Operating flexibility
ANSWERS SET A+
✔✔Disadvantages of Sole Proprietorship - ✔✔unlimited liability, lack of continuity, lack
of money, limited management skills, difficulty in hiring employees
✔✔Advantages of General Partnership - ✔✔ability to pool financial resources, ability to
share responsibilities and capitalize on complementary skills, ease of formation,
possible tax advantages
✔✔disadvantages of General Partnerships - ✔✔unlimited liability, potential for
disagreements, lack of continuity, difficulty in withdrawing from a partnership
✔✔The Uniform Partnership Act (UPA) - ✔✔I. govern s the operation of partnerships in
absence of express agreement
II. has down much to reduce controversies in the law relating to partnerships
✔✔Partnerships as defined by UPA - ✔✔"an association of two or more persons to
carry on a s co-owners a business for profit" [UPA 102(11)]
✔✔Essential Elements of a Partnership - ✔✔1. A sharing of profits and losses
2. A joint ownership of the business
3. An equal right to be involved in the management of the business
✔✔limited partnerships - ✔✔a partnership that includes at least one general partner
who actively manages the company and accepts unlimited liability and one limited
partner who gives up the right to actively manage the company in exchange for limited
liability
✔✔Advantages of Limited Partnership - ✔✔1. General partners have right to participate
in management
2. Limited partners have limited liability for business obligations
3. Choice of taxation, deductible losses and expenses
, 4. Survives withdrawal of partner (except sole general partner)
✔✔Disadvantages of limited partnership - ✔✔1. Legal formalities to create
2. General partners have unlimited liability
3. Limited partners have no right to participate in management
4. Limited transferability of ownership (requires partner approval, and must leave at
least one general partner)
✔✔limited liability limited partnership (LLLP) - ✔✔I. A special type of limited partnership
that has both general partners and limited partners, where both the general and limited
partners have limited liability and are not personally liable for the debts of the LLLP.
II. liability limited to the amount of their investment in the firm.
✔✔Corporation - ✔✔a company or group of people authorized to act as a single entity
(legally a person) and recognized as such in law.
✔✔Advantages of a corporation - ✔✔limited liability, ability to raise capital and transfer
ownership
✔✔Disadvantages of a corporation - ✔✔-double taxation
-cost of setup and report filing
✔✔S Corporations - ✔✔A special designation that allows small businesses that meet
qualifications to be taxed as if they were a proprietorship or a partnership rather than a
corporation.
✔✔S Corporation Advantages - ✔✔- limited liability of owners
- avoids double taxation
- ability to continue in perpetuity
- easy to transfer ownership to others
✔✔S-Corporation Disadvantages - ✔✔-Restrictions on use and deference of losses
-Tax recognition on sales of assets
-**Limitation on Capital Attraction (VCs may
require changing the form and status to C-Corp.)
-limited shareholders (no more than 100)
✔✔Limited Liability Company (LLC) - ✔✔A hybrid form of business enterprise that offers
the limited liability of the corporation but the tax advantages of a partnership.
✔✔LLC Advantages - ✔✔1. Limited liability
2. Choice of taxation
3. Flexible ownership rules
4. Flexible distribution of profits and losses
5. Operating flexibility
