ACCT 351
ACCT351-Exam 2 Study Questions with
Correct Answers 2025-2026
Respondent Superior -Correct Answers ✔-A doctrine under which a principal is
held liable for the wrongful acts committed by agents while acting within the scope
of their agency
Acts -Correct Answers ✔-Assaults or Negligence committed while performing acts
within scope of job
Sole Proprietorship -Correct Answers ✔-A business owned and managed by a
single individual; No separate legal entity; No separation for liability, tax, and
accounting purposes. Personal liability for debts of business
Change in Business Type from Sole Prop -Correct Answers ✔-Does not change
liability for obligations incurred while a Sole Prop - Stone Scone Case
General Partnership -Correct Answers ✔-Association of two or more persons to
carry on a business for profit as co-owners; Governed by state partnership laws and
partnership agreement for specific entity
General Partnership Rights -Correct Answers ✔-Unless Contract States Otherwise:
May be dissolved by act of any GP; Each GP has right to participate in
management; One partner = One Vote (even if capital contributions are different)
ACCT 351
, ACCT 351
General Partnership Profits & Losses -Correct Answers ✔-Contract states how to
split up profits but not losses -> loss distribution follows profits; Contract states
how to split up losses but not profits -> profits are still split up equally
Dissolution of GP -Correct Answers ✔-Distribution of assets in order of who gets
money first: (1) Non Partner Creditors & Employees (2) Partner Creditors (3)
Capital Contributions (4) Profits
Limited Partnership -Correct Answers ✔-Requires a certificate to be filed with
State; LP is effective upon filing; GP - unlimited liability, LP - liability limited to
amount contributed
Corporations: Shareholder Rights -Correct Answers ✔-Right to vote on board of
directors, Inspect the books, and participate in general meetings; but no right to
day-day operation of business affairs & strategy - These are protected by Directors
fiduciary duties (Duty of Loyalty & Good Faith, Duty of Care)
Corporations: Directors -Correct Answers ✔-Business affairs are to be managed by
elected board of directors; Directors then delegate this authority to management
(CEO, CFO, CAO, CIO) & employees who carry out daily operations of business
Corporations: Interested Directors -Correct Answers ✔-Two Types: Legal/Ethical
or Business; If Business requires (1) Disclosure & (2) Approval. DGCL states
contracts between 1 of its directors and corporation or 2 corporations where
directors are involved on both sides of the contract IS permitted; If the facts are
disclosed, then board/committee in good faith authorizes contract or transaction by
the affirmative votes of majority of disinterested directors
ACCT 351
ACCT351-Exam 2 Study Questions with
Correct Answers 2025-2026
Respondent Superior -Correct Answers ✔-A doctrine under which a principal is
held liable for the wrongful acts committed by agents while acting within the scope
of their agency
Acts -Correct Answers ✔-Assaults or Negligence committed while performing acts
within scope of job
Sole Proprietorship -Correct Answers ✔-A business owned and managed by a
single individual; No separate legal entity; No separation for liability, tax, and
accounting purposes. Personal liability for debts of business
Change in Business Type from Sole Prop -Correct Answers ✔-Does not change
liability for obligations incurred while a Sole Prop - Stone Scone Case
General Partnership -Correct Answers ✔-Association of two or more persons to
carry on a business for profit as co-owners; Governed by state partnership laws and
partnership agreement for specific entity
General Partnership Rights -Correct Answers ✔-Unless Contract States Otherwise:
May be dissolved by act of any GP; Each GP has right to participate in
management; One partner = One Vote (even if capital contributions are different)
ACCT 351
, ACCT 351
General Partnership Profits & Losses -Correct Answers ✔-Contract states how to
split up profits but not losses -> loss distribution follows profits; Contract states
how to split up losses but not profits -> profits are still split up equally
Dissolution of GP -Correct Answers ✔-Distribution of assets in order of who gets
money first: (1) Non Partner Creditors & Employees (2) Partner Creditors (3)
Capital Contributions (4) Profits
Limited Partnership -Correct Answers ✔-Requires a certificate to be filed with
State; LP is effective upon filing; GP - unlimited liability, LP - liability limited to
amount contributed
Corporations: Shareholder Rights -Correct Answers ✔-Right to vote on board of
directors, Inspect the books, and participate in general meetings; but no right to
day-day operation of business affairs & strategy - These are protected by Directors
fiduciary duties (Duty of Loyalty & Good Faith, Duty of Care)
Corporations: Directors -Correct Answers ✔-Business affairs are to be managed by
elected board of directors; Directors then delegate this authority to management
(CEO, CFO, CAO, CIO) & employees who carry out daily operations of business
Corporations: Interested Directors -Correct Answers ✔-Two Types: Legal/Ethical
or Business; If Business requires (1) Disclosure & (2) Approval. DGCL states
contracts between 1 of its directors and corporation or 2 corporations where
directors are involved on both sides of the contract IS permitted; If the facts are
disclosed, then board/committee in good faith authorizes contract or transaction by
the affirmative votes of majority of disinterested directors
ACCT 351
