Farm Management: Chapter 14
questions with 100% correct answers
Sole Proprietorship Organization Characteristics: - correct answer ✔✔1) manager assumes all
risks, receives all profits and losses.
2) no separation between owner and manager
3) easy to form and operate, inexpensive to begin
4) requires no legal procedures, permits or licenses
5) most popular business organization
6) owned, operated, and taxed as an individual
Sole Proprietorship Advantages: - correct answer ✔✔1) simplicity and freedom
2) tax benefits: tax on profit paid at tax rate of owner
3) simple to start-up
4) low start-up costs
Sole Proprietorship Disadvantages: - correct answer ✔✔1) difficult to raise money
2) owner's collateral is at risk
3) reliance on individual for skills and management
4) unlimited liability
5) lack of continuity
Operating Agreements: - correct answer ✔✔an arrangement between two or more individuals
whereby they perform some of their business activities jointly while maintaining individual
ownership of resources being used
-operating expenses usually shared among the parties in some fixed portion
, -income is shared in same portion as fixed assets and expenses are contributed
Partnership: - correct answer ✔✔an association of two or more people who share the
ownership of a business to be conducted for profit
2 types:
general and limited
General Partnership: - correct answer ✔✔a partnership by which all parties are general
partners; they all participate in management and have unlimited financial liability for
partnership actions
Limited Partnership: - correct answer ✔✔a form of business in which more than one person has
ownership, but some (the limited partners) do not participate in management and have liability
limited to the amount of their investment
Partnership Organization Characteristics: - correct answer ✔✔1) a sharing of business profits
and losses
2) shared control of property, with possible shared ownership of property
3) Shared management of business
4) joint ownership of assets in the partnership capital account
5) operation under a firm name
6) a joint bank account
7) a single set of business records
8) management participation by all parties
Written Partnership Agreements: - correct answer ✔✔1) Management: who is responsible for
which decisions and how they shall be made
2) Property: list the property each partner will contribute and how it will be owned
questions with 100% correct answers
Sole Proprietorship Organization Characteristics: - correct answer ✔✔1) manager assumes all
risks, receives all profits and losses.
2) no separation between owner and manager
3) easy to form and operate, inexpensive to begin
4) requires no legal procedures, permits or licenses
5) most popular business organization
6) owned, operated, and taxed as an individual
Sole Proprietorship Advantages: - correct answer ✔✔1) simplicity and freedom
2) tax benefits: tax on profit paid at tax rate of owner
3) simple to start-up
4) low start-up costs
Sole Proprietorship Disadvantages: - correct answer ✔✔1) difficult to raise money
2) owner's collateral is at risk
3) reliance on individual for skills and management
4) unlimited liability
5) lack of continuity
Operating Agreements: - correct answer ✔✔an arrangement between two or more individuals
whereby they perform some of their business activities jointly while maintaining individual
ownership of resources being used
-operating expenses usually shared among the parties in some fixed portion
, -income is shared in same portion as fixed assets and expenses are contributed
Partnership: - correct answer ✔✔an association of two or more people who share the
ownership of a business to be conducted for profit
2 types:
general and limited
General Partnership: - correct answer ✔✔a partnership by which all parties are general
partners; they all participate in management and have unlimited financial liability for
partnership actions
Limited Partnership: - correct answer ✔✔a form of business in which more than one person has
ownership, but some (the limited partners) do not participate in management and have liability
limited to the amount of their investment
Partnership Organization Characteristics: - correct answer ✔✔1) a sharing of business profits
and losses
2) shared control of property, with possible shared ownership of property
3) Shared management of business
4) joint ownership of assets in the partnership capital account
5) operation under a firm name
6) a joint bank account
7) a single set of business records
8) management participation by all parties
Written Partnership Agreements: - correct answer ✔✔1) Management: who is responsible for
which decisions and how they shall be made
2) Property: list the property each partner will contribute and how it will be owned
