ENTR 460 Exam 2 With
Complete Solution
Sole Proprietorship - Answer business venture owned by an individual who is personally
liable for the venture's liabilities
One; little time and low legal costs - Answer NUMBER OF OWNERS AND OWNER'S EASE
OF STARTUP: Sole Proprietorship
Unlimited - Answer Investor Liability for: Sole Proprietorship
Owner - Answer Equity Capital Sources for: Sole Proprietorship
Life determined by owner; often difficult to transfer ownership - Answer Firm Life and
Liquidity of Ownership for: Sole Proprietorship
Personal tax rates - Answer Taxation for: Sole Proprietorship
Unlimited (joint and several liability) - Answer Investor Liability for: General Partnership
Two or more; moderate time and legal costs - Answer # of owners and ease of startup
for: General partnership
Partners, families, and friends - Answer Equity Capital Sources for: General Partnership
Life determined by partners; often difficult to transfer ownership - Answer Firm Life and
Liquidity of Ownership for: General Partnership
Personal Tax Rate - Answer Taxation for: General Partnership
One or more general and one or more limited partners; moderate time and legal costs -
Answer NUMBER OF OWNERS AND OWNER'S EASE OF STARTUP for: Limited
partnership
Limited part-ners' liability limited to their investments - Answer Investor Liability for:
Limited Partnership
General and Limited Partners - Answer Equity Capital Sources for: Limited Partnership
Life determined by general partner; often difficult to transfer ownership - Answer FIRM
LIFE AND LIQUIDITY OF OWNERSHIP: Limited Partnership
Personal tax rates - Answer Taxation: Limited Partnership
One or more, with no limit; long time and high legal costs - Answer Number of owners
and owner's ease of startup: C Corp
limited to shareholders' investments - Answer Investor liability: C Corp
, Venture investors and common shareholders - Answer equity capital sources: C Corb
Unlimited life; usually easy to transfer ownership - Answer Firm life and liquidity of
ownership: C Corp
Corporate taxation; dividends subject to personal tax rate - Answer Taxation: C Corp
100 or fewer owners; long time and high legal costs - Answer Number of owners and
owner's ease of startup: S Corp
Limited to shareholders' investments - Answer Investor Liability: S Corp
Venture investors and subchapter S investors - Answer Equity capital sources: S Corp
Unlimited life; often difficult to transfer ownership - Answer Firm life and liquidity of
ownership: S Corp
income flows to shareholders; taxed at personal tax rates - Answer Taxation: S corp
One or more, with no limit; long time and high legal costs - Answer Number of owners
and owners ease of startup: LLC
Limited to owners' membership interests - Answer Investor liability: LLC
venture investors and equity offerings to owners - Answer Equity capital sources: LLC
Life set by owners; often difficult to transfer ownership - Answer Firm life and liquidity of
ownership: LLC
Unlimited liability - Answer personal obligation to pay a venture's liabilities not covered
by the venture's assets
Parntership - Answer business venture owned by two or more individuals who are jointly
and personally liable for the venture's liabilities
Partnership agreement - Answer an agreement that spells out how business decisions
are to be made and how profits and losses will be shared
1) Participation in profits
2) full participation in management
3) veto right on new partners
4) Reimbursement for expenses
5) Eventual return of capital
6) Access to formal account of affairs
7) Access to partnership books - Answer Rights of General Partners
Complete Solution
Sole Proprietorship - Answer business venture owned by an individual who is personally
liable for the venture's liabilities
One; little time and low legal costs - Answer NUMBER OF OWNERS AND OWNER'S EASE
OF STARTUP: Sole Proprietorship
Unlimited - Answer Investor Liability for: Sole Proprietorship
Owner - Answer Equity Capital Sources for: Sole Proprietorship
Life determined by owner; often difficult to transfer ownership - Answer Firm Life and
Liquidity of Ownership for: Sole Proprietorship
Personal tax rates - Answer Taxation for: Sole Proprietorship
Unlimited (joint and several liability) - Answer Investor Liability for: General Partnership
Two or more; moderate time and legal costs - Answer # of owners and ease of startup
for: General partnership
Partners, families, and friends - Answer Equity Capital Sources for: General Partnership
Life determined by partners; often difficult to transfer ownership - Answer Firm Life and
Liquidity of Ownership for: General Partnership
Personal Tax Rate - Answer Taxation for: General Partnership
One or more general and one or more limited partners; moderate time and legal costs -
Answer NUMBER OF OWNERS AND OWNER'S EASE OF STARTUP for: Limited
partnership
Limited part-ners' liability limited to their investments - Answer Investor Liability for:
Limited Partnership
General and Limited Partners - Answer Equity Capital Sources for: Limited Partnership
Life determined by general partner; often difficult to transfer ownership - Answer FIRM
LIFE AND LIQUIDITY OF OWNERSHIP: Limited Partnership
Personal tax rates - Answer Taxation: Limited Partnership
One or more, with no limit; long time and high legal costs - Answer Number of owners
and owner's ease of startup: C Corp
limited to shareholders' investments - Answer Investor liability: C Corp
, Venture investors and common shareholders - Answer equity capital sources: C Corb
Unlimited life; usually easy to transfer ownership - Answer Firm life and liquidity of
ownership: C Corp
Corporate taxation; dividends subject to personal tax rate - Answer Taxation: C Corp
100 or fewer owners; long time and high legal costs - Answer Number of owners and
owner's ease of startup: S Corp
Limited to shareholders' investments - Answer Investor Liability: S Corp
Venture investors and subchapter S investors - Answer Equity capital sources: S Corp
Unlimited life; often difficult to transfer ownership - Answer Firm life and liquidity of
ownership: S Corp
income flows to shareholders; taxed at personal tax rates - Answer Taxation: S corp
One or more, with no limit; long time and high legal costs - Answer Number of owners
and owners ease of startup: LLC
Limited to owners' membership interests - Answer Investor liability: LLC
venture investors and equity offerings to owners - Answer Equity capital sources: LLC
Life set by owners; often difficult to transfer ownership - Answer Firm life and liquidity of
ownership: LLC
Unlimited liability - Answer personal obligation to pay a venture's liabilities not covered
by the venture's assets
Parntership - Answer business venture owned by two or more individuals who are jointly
and personally liable for the venture's liabilities
Partnership agreement - Answer an agreement that spells out how business decisions
are to be made and how profits and losses will be shared
1) Participation in profits
2) full participation in management
3) veto right on new partners
4) Reimbursement for expenses
5) Eventual return of capital
6) Access to formal account of affairs
7) Access to partnership books - Answer Rights of General Partners
