1|Page
FIN 325 EXAM #2 (VERSION 1 AND 2 )2026 ALL
QUESTIONS AND CORRECT DETAILEED
ANSWERS ALREADY A GRADED WITH EXPERT
FEEDBACK |NEW AND REVISED
A general partner:
A) Is personally responsible for all the partnership debts.
B) Has no say over a firm's daily operations.
C) Faces double taxation whereas a limited partner does not.
D) Has a maximum loss equal to his or her equity investment.
E) Receives a salary in lieu of a portion of the profits. - ANSWER- A) Is
personally responsible for all the partnership debts.
A limited partnership:
A) Has an unlimited life.
B) Can opt to be taxed as a corporation.
C) Terminates at the death of any limited partner.
D) Has a greater ability to raise capital than a sole proprietorship.
E) Consists solely of limited partners. - ANSWER- D) Has a greater
ability to raise capital than a sole proprietorship.
Which of the following apply to a partnership that consists solely of
general partners?
I. Double taxation of partnership profits.
,2|Page
II. Limited partnership life.
III. Active involvement in the firm by all the partners.
IV. Unlimited personal liability for all partnership debts.
A) II only.
B) I and II only.
C) II and III only.
D) I, II, and IV only.
E) II, III, and IV only. - ANSWER- E) II, III, and IV only.
Which of the following are advantages of the corporate form of business
ownership?
I. Limited liability for firm debt.
II. Double taxation.
III. Ability to raise capital.
IV. Unlimited firm life.
A) I and II only.
B) III and IV only.
C) I, III, and IV only.
D) II, III, and IV only.
E) I, II, III, and IV. - ANSWER- C) I, III, and IV only.
Which one of the following business types is best suited to raising large
amounts of capital?
A) Sole proprietorship.
, 3|Page
B) Limited liability company.
C) Corporation.
D) General partnership.
E) Limited partnership. - ANSWER- C) Corporation.
A business owned by a solitary individual who has unlimited liability for
its debt is called a:
A) Sole proprietorship.
B) Corporation.
C) Limited partnership.
D) Limited liability company.
E) General partnership. - ANSWER- A) Sole proprietorship.
Which one of the following statements is correct?
A) Transferring ownership of a sole proprietorship is easier than
transferring ownership of a corporation.
B) The life of a sole proprietorship is potentially unlimited.
C) It is easy to create a sole proprietorship.
D) A sole proprietor can generally raise large sums of capital quite
easily.
E) A sole proprietorship is taxed the same as a corporation. - ANSWER-
C) It is easy to create a sole proprietorship.
Which one of the following statements is correct?
FIN 325 EXAM #2 (VERSION 1 AND 2 )2026 ALL
QUESTIONS AND CORRECT DETAILEED
ANSWERS ALREADY A GRADED WITH EXPERT
FEEDBACK |NEW AND REVISED
A general partner:
A) Is personally responsible for all the partnership debts.
B) Has no say over a firm's daily operations.
C) Faces double taxation whereas a limited partner does not.
D) Has a maximum loss equal to his or her equity investment.
E) Receives a salary in lieu of a portion of the profits. - ANSWER- A) Is
personally responsible for all the partnership debts.
A limited partnership:
A) Has an unlimited life.
B) Can opt to be taxed as a corporation.
C) Terminates at the death of any limited partner.
D) Has a greater ability to raise capital than a sole proprietorship.
E) Consists solely of limited partners. - ANSWER- D) Has a greater
ability to raise capital than a sole proprietorship.
Which of the following apply to a partnership that consists solely of
general partners?
I. Double taxation of partnership profits.
,2|Page
II. Limited partnership life.
III. Active involvement in the firm by all the partners.
IV. Unlimited personal liability for all partnership debts.
A) II only.
B) I and II only.
C) II and III only.
D) I, II, and IV only.
E) II, III, and IV only. - ANSWER- E) II, III, and IV only.
Which of the following are advantages of the corporate form of business
ownership?
I. Limited liability for firm debt.
II. Double taxation.
III. Ability to raise capital.
IV. Unlimited firm life.
A) I and II only.
B) III and IV only.
C) I, III, and IV only.
D) II, III, and IV only.
E) I, II, III, and IV. - ANSWER- C) I, III, and IV only.
Which one of the following business types is best suited to raising large
amounts of capital?
A) Sole proprietorship.
, 3|Page
B) Limited liability company.
C) Corporation.
D) General partnership.
E) Limited partnership. - ANSWER- C) Corporation.
A business owned by a solitary individual who has unlimited liability for
its debt is called a:
A) Sole proprietorship.
B) Corporation.
C) Limited partnership.
D) Limited liability company.
E) General partnership. - ANSWER- A) Sole proprietorship.
Which one of the following statements is correct?
A) Transferring ownership of a sole proprietorship is easier than
transferring ownership of a corporation.
B) The life of a sole proprietorship is potentially unlimited.
C) It is easy to create a sole proprietorship.
D) A sole proprietor can generally raise large sums of capital quite
easily.
E) A sole proprietorship is taxed the same as a corporation. - ANSWER-
C) It is easy to create a sole proprietorship.
Which one of the following statements is correct?
