MIE 201 Exam 2: Chapters 4, 5, 8 Makanui NCSU
Question 1.
3 types of business ownership
ANSWER
- sole propreitorship
- partnership
- corporation
Question 2.
sole proprietorships
ANSWER
- businesses owned by one individual
- the most common form of business organization in the United States
- easiest and least expensive form of business to start
- ex: tutoring/bookkeeping/landscaping etc...
Question 3.
sole proprietorship advantages
ANSWER
- simplicity
- single layer of taxation - taxed at individual rates
- privacy
- flexibility and control
- personal satisfaction
- fewer limitations on personal income -complete ownership of the profits
Question 4.
sole proprietorship disadvantages
ANSWER
- unlimited liability
- finite life span
- resource limitations
- limited managerial experience
- demands on owner
- no employee benefits for the owner -lack of qualified employees (can't match wage demands)
Question 5.
Many sole proprietors will focus on ______
ANSWER
services (like child care, salons, etc) rather than on the manufacture of goods
, Question 6.
unlimited liability
ANSWER
- means that the owner is personally and fully responsible for all losses and debts of the business
- major drawback to a sole proprietorship or a partnership
- from a legal standpoint the owner and business are one and the same
Question 7.
definition of a partnership
ANSWER
an association of two or more persons to carry on, as co-owners, a business for profit; profits will be divided as specified in the agreement
Question 8.
types of partnerships
ANSWER
- general partnerships
- limited partnerships
- MLP
- LLP
Question 9.
general partnerships
ANSWER
- partners are considered equal by law and all are liable for the business's debts
- partners share ownership and both have unlimited liability ex) lawyers, accountants, etc.
Question 10.
limited partnerships
ANSWER
- one or more persons act as general partners who run the business while the re-maining partners are passive investors (not involved in managing the
business)
- called this because their liability (amount of money they can lose) is limited to the amount of the capital they invested at the beginning of their partnership
- passive investors and have limited liability
Question 11.
articles of part-nership
ANSWER
legal documents that set forth the basic agreement between partners -list the money or assets that each partner contributed -states each partner's individual
management role/duty
- defines the steps a partner must take to sell his or her partnership interest or what will happen if one of the patterns dies
, Question 12.
MLP (master limited partnership)
ANSWER
- allowed to raise money by selling units of ownership to the general public in the same way that corporations sell shares of stock to the public
- gives MLPs the fundraising capabilities of corporations without the double-taxation disadvantage
- mainly oil and gas companies
Question 13.
LLP (limited liability partnership)
ANSWER
- form of business was created to help protect individual partners in certain professions from major mistakes (such as errors that trigger malpractice
lawsuits) by other partners in the firm
- each partner has unlimited liability only for his or her own actions and at least some degree of limited liability for the partnership as a whole
Question 14.
advantages of a partnership
ANSWER
- simplicity
- single layer of taxation
- more resources than a sole proprietorship
- cost sharing between partners
- broader skills and experience
- longevity
Question 15.
disadvantages of a partnership
ANSWER
- unlimited liability for general partners
- interpersonal problems managing partner & unproductive partners
- limited partners have no voice in the management of the business
- distribution of profits
Question 16.
corporations
ANSWER
- businesses that are owned by many investors who buy shares of stock
- a legal entity with the power to own property and conduct business
- can receive, own, and transfer property; make contracts; sue; and be sued
- faces limited liability because it is its own legal entity
Question 17.
a corporation is like what?
ANSWER
- a horcrux
- they can be in so many types of business that even if you take out one component they will still survive and thrive in all their other components of business
Question 1.
3 types of business ownership
ANSWER
- sole propreitorship
- partnership
- corporation
Question 2.
sole proprietorships
ANSWER
- businesses owned by one individual
- the most common form of business organization in the United States
- easiest and least expensive form of business to start
- ex: tutoring/bookkeeping/landscaping etc...
Question 3.
sole proprietorship advantages
ANSWER
- simplicity
- single layer of taxation - taxed at individual rates
- privacy
- flexibility and control
- personal satisfaction
- fewer limitations on personal income -complete ownership of the profits
Question 4.
sole proprietorship disadvantages
ANSWER
- unlimited liability
- finite life span
- resource limitations
- limited managerial experience
- demands on owner
- no employee benefits for the owner -lack of qualified employees (can't match wage demands)
Question 5.
Many sole proprietors will focus on ______
ANSWER
services (like child care, salons, etc) rather than on the manufacture of goods
, Question 6.
unlimited liability
ANSWER
- means that the owner is personally and fully responsible for all losses and debts of the business
- major drawback to a sole proprietorship or a partnership
- from a legal standpoint the owner and business are one and the same
Question 7.
definition of a partnership
ANSWER
an association of two or more persons to carry on, as co-owners, a business for profit; profits will be divided as specified in the agreement
Question 8.
types of partnerships
ANSWER
- general partnerships
- limited partnerships
- MLP
- LLP
Question 9.
general partnerships
ANSWER
- partners are considered equal by law and all are liable for the business's debts
- partners share ownership and both have unlimited liability ex) lawyers, accountants, etc.
Question 10.
limited partnerships
ANSWER
- one or more persons act as general partners who run the business while the re-maining partners are passive investors (not involved in managing the
business)
- called this because their liability (amount of money they can lose) is limited to the amount of the capital they invested at the beginning of their partnership
- passive investors and have limited liability
Question 11.
articles of part-nership
ANSWER
legal documents that set forth the basic agreement between partners -list the money or assets that each partner contributed -states each partner's individual
management role/duty
- defines the steps a partner must take to sell his or her partnership interest or what will happen if one of the patterns dies
, Question 12.
MLP (master limited partnership)
ANSWER
- allowed to raise money by selling units of ownership to the general public in the same way that corporations sell shares of stock to the public
- gives MLPs the fundraising capabilities of corporations without the double-taxation disadvantage
- mainly oil and gas companies
Question 13.
LLP (limited liability partnership)
ANSWER
- form of business was created to help protect individual partners in certain professions from major mistakes (such as errors that trigger malpractice
lawsuits) by other partners in the firm
- each partner has unlimited liability only for his or her own actions and at least some degree of limited liability for the partnership as a whole
Question 14.
advantages of a partnership
ANSWER
- simplicity
- single layer of taxation
- more resources than a sole proprietorship
- cost sharing between partners
- broader skills and experience
- longevity
Question 15.
disadvantages of a partnership
ANSWER
- unlimited liability for general partners
- interpersonal problems managing partner & unproductive partners
- limited partners have no voice in the management of the business
- distribution of profits
Question 16.
corporations
ANSWER
- businesses that are owned by many investors who buy shares of stock
- a legal entity with the power to own property and conduct business
- can receive, own, and transfer property; make contracts; sue; and be sued
- faces limited liability because it is its own legal entity
Question 17.
a corporation is like what?
ANSWER
- a horcrux
- they can be in so many types of business that even if you take out one component they will still survive and thrive in all their other components of business
