ARE 5.0 Practice Management Final
Exam with Guaranteed Pass Solutions
2025-2026 Updated.
Fidelity Bond - Answer Ensures a business for loses caused by the dishonest acts of its
employees.
Legal Entity - Answer A legal form or vehicle for a firm's practice. Even a sole practitioner can
form a corporation or LLC as a vehicle for practice.
Sole Proprietorship - Answer A business organization easy to set up with total management
control, offers no liability protection, and personal assets are at risk if there is a claim.
General Partnership - Answer Two or more owners, called general partners, share in the
management, profits, and risk of a business.
Partnership Agreement - Answer Advisable for general partnerships, sets out the detailed
terms of their association.
Limited Partnership - Answer General partner and at least one limited partner. Limited
partners are investors who receive shares of the profits but have no say in management.
Limited Liability Company - Answer Has largely superseded limited partnerships, combines
the advantages of a partnership and corporation. Company assets are liable but personal assets
are protected.
LLC (Limited Liability Company) - Answer United States-specific form of a private limited
company, a business structure that combines the pass-through taxation of a partnership or sole
proprietorship with the limited liability of a corporation.
Pass-through taxation - Answer The owners pay taxes of all business profits on their
individual tax returns. The business income 'passes through' the business to the owners' tax
returns.
Limited Liability Partnership - Answer Combines a partnership or sole proprietorship with the
limited liability of a corporation. Offers liability protections that are not available in general
partnerships.
, Single Purpose Entity through an LLC - Answer An independent limited liability company
created for the single purpose of planning, designing, and constructing a particular project.
Single Purpose Entities (SPE) - Answer One of the methods used in Integrated Project
Delivery. Intended to maximize benefits and rewards, dispute resolution is internalized, risk
allocation is shared and parties agree to waive most claims against each other.
'C' Corporation or business corporation - Answer An association that exists as a legal entity
apart from its members, and is financially and legally independent from its shareholders.
Personal assets are protected against liability. It must be created in accordance with statutory
requirements. States require Certificate of Authorization.
Business Corporation - Answer Most common form of legal entity for an architectural firm. It
has three levels of participants: stockholders, directors elected by stockholders, and officers
elected by directors.
'S' Corporation or small corp - Answer Limited to the definition in Chapter 1, Subsection 'S' of
the Internal Revenue Code: must be domestic company with no more than 100 shareholders.
Income and losses are divided among and passed-through reported to its shareholders
individual tax returns.
Professional Corporation - Answer a corporation formed for professionals such as architects,
lawyers, or doctors. It is dependent on state laws and is state regulated. Liability is limited to the
person responsible.
Secretary of State's Office - Answer In order for an LLP, LLC, or corporation to come into legal
existence, it must make an initial filing with this office in the state in which it has been formed.
Joint Venture - Answer An agreement between two or more companies to share a business
project, as a legal entity using a Teeming Agreement or Memorandum of Understanding.
Partnering - Answer An agreement between architects and design and construction
professionals for projects not yet obtained by the architect, assembled as a project team
marketing effort to acquire new projects.
Characteristics of Partnering - Answer 1. Used in conjunction with mediation and arbitration
to prevent lawsuits.
2. Applies only to the project at hand.
3. Can include owners, architects, contractors and consultants
4. Does not become part of Owner-Architect or Owner-Contractor agreements.
Exam with Guaranteed Pass Solutions
2025-2026 Updated.
Fidelity Bond - Answer Ensures a business for loses caused by the dishonest acts of its
employees.
Legal Entity - Answer A legal form or vehicle for a firm's practice. Even a sole practitioner can
form a corporation or LLC as a vehicle for practice.
Sole Proprietorship - Answer A business organization easy to set up with total management
control, offers no liability protection, and personal assets are at risk if there is a claim.
General Partnership - Answer Two or more owners, called general partners, share in the
management, profits, and risk of a business.
Partnership Agreement - Answer Advisable for general partnerships, sets out the detailed
terms of their association.
Limited Partnership - Answer General partner and at least one limited partner. Limited
partners are investors who receive shares of the profits but have no say in management.
Limited Liability Company - Answer Has largely superseded limited partnerships, combines
the advantages of a partnership and corporation. Company assets are liable but personal assets
are protected.
LLC (Limited Liability Company) - Answer United States-specific form of a private limited
company, a business structure that combines the pass-through taxation of a partnership or sole
proprietorship with the limited liability of a corporation.
Pass-through taxation - Answer The owners pay taxes of all business profits on their
individual tax returns. The business income 'passes through' the business to the owners' tax
returns.
Limited Liability Partnership - Answer Combines a partnership or sole proprietorship with the
limited liability of a corporation. Offers liability protections that are not available in general
partnerships.
, Single Purpose Entity through an LLC - Answer An independent limited liability company
created for the single purpose of planning, designing, and constructing a particular project.
Single Purpose Entities (SPE) - Answer One of the methods used in Integrated Project
Delivery. Intended to maximize benefits and rewards, dispute resolution is internalized, risk
allocation is shared and parties agree to waive most claims against each other.
'C' Corporation or business corporation - Answer An association that exists as a legal entity
apart from its members, and is financially and legally independent from its shareholders.
Personal assets are protected against liability. It must be created in accordance with statutory
requirements. States require Certificate of Authorization.
Business Corporation - Answer Most common form of legal entity for an architectural firm. It
has three levels of participants: stockholders, directors elected by stockholders, and officers
elected by directors.
'S' Corporation or small corp - Answer Limited to the definition in Chapter 1, Subsection 'S' of
the Internal Revenue Code: must be domestic company with no more than 100 shareholders.
Income and losses are divided among and passed-through reported to its shareholders
individual tax returns.
Professional Corporation - Answer a corporation formed for professionals such as architects,
lawyers, or doctors. It is dependent on state laws and is state regulated. Liability is limited to the
person responsible.
Secretary of State's Office - Answer In order for an LLP, LLC, or corporation to come into legal
existence, it must make an initial filing with this office in the state in which it has been formed.
Joint Venture - Answer An agreement between two or more companies to share a business
project, as a legal entity using a Teeming Agreement or Memorandum of Understanding.
Partnering - Answer An agreement between architects and design and construction
professionals for projects not yet obtained by the architect, assembled as a project team
marketing effort to acquire new projects.
Characteristics of Partnering - Answer 1. Used in conjunction with mediation and arbitration
to prevent lawsuits.
2. Applies only to the project at hand.
3. Can include owners, architects, contractors and consultants
4. Does not become part of Owner-Architect or Owner-Contractor agreements.
