BLAW Final
Partners must contribute all of the capital needs of the business, because the business cannot sell
shares as a corporation does. - ✔✔Capital contribution:
Partners have a duty to provide information to the business for the purpose of record keeping and
accounting. - ✔✔Record Keeping:
Each partner owes to the partnership and other partners the duty of care and the duty of loyalty. -
✔✔Fiduciary Duties
All partners have an equal right to participate in the management of the business, unless a
partnership agreement states otherwise - ✔✔Management:
Each of the partners has a right to equally share in the profits and losses, unless a different
arrangement has been made in a partnership agreement. - ✔✔Sharing of Profits and Losses
A partner generally does NOT have a right to compensation for his/her time, skill, and energy,
because a partner's income comes from the distribution of profits. However, the partners can agree
otherwise via a partnership agreement. - ✔✔Compensation:
100%
Each partner has the right to inspect the books of the business. - ✔✔Inspection of the books:
Property acquired by the partnership is owned by the partnership and not the partners individually.
Partners may not encumber the property to satisfy their own personal debts. - ✔✔Use of Property of
the Partnership:
A partner may act as an agent on behalf of the partnership and bind the partnership, absent a
partnership agreement that states otherwise. - ✔✔Agency
Each partner is personally liable for the debts of the partnership unless they qualify as a limited
partner, generally through joint and several liability, even if they did not know about or participate in
the conduct giving rise to the debt. - ✔✔Personal liability
may act as an agent who binds the partnership. - ✔✔Any partner
Fiduciary duties
Record keeping
Capital contribution - ✔✔Partners have which of the following duties? Select 3 answers.
, Nothing - ✔✔Which of the following is required to create a sole proprietorship?
Sole proprietorship - ✔✔Juan wants to start a car washing business. Juan takes some car washing
supplies from his house (a bucket, towels, and soap) and tells his neighbors he will wash their cars
for $7. Which relationship is this?
A partnership agreement - ✔✔A written agreement outlining the roles of partners, their rights, and
their duties are called:
Sharing of profits and losses, Sharing of management duties, two or more people, who intend to do
business together - ✔✔The formation of a partnership without a partnership agreement requires
which of the following?
Partnership - ✔✔Sadie runs a bakery and Tommy, her brother, often comes in to help Sadie fill
orders. Because Tommy has always been good at business, Sadie also lets Tommy do the
bookkeeping and handle all the contracts with vendors. Sadie does not pay Tommy a salary, but
whenever Sadie takes a distribution from her profits Sadie gives Tommy a distribution too. What
relationship does this represent?
the laws of the state in which the LLC is created - ✔✔The formation of LLCs is governed by:
100%
The name of the business, The principal place of business - ✔✔Which of the following is required in
the Articles of Organization for an LLC? Select 2 answers.
typically includes provisions about choosing the LLC's management. - ✔✔An operating agreement
for a limited liability company:
Partnerships are not taxed, Forming a partnership is simple and relatively inexpensive. - ✔✔Which
of the following are advantages of operating as a partnership?
Partners may suffer financial loss if the partnership is not profitable. - ✔✔Which of the following is a
disadvantage of operating as a partnership?
a partner's management rights.
the documents required for creation. - ✔✔A general partnership differs from a limited partnership in:
limited liability limited partnership. - ✔✔A partnership in which the liability of all the partners is limited
to the amount of their capital investment in the firm is called a:
sole proprietorship. - ✔✔The simplest form of business to establish is a:
Partners must contribute all of the capital needs of the business, because the business cannot sell
shares as a corporation does. - ✔✔Capital contribution:
Partners have a duty to provide information to the business for the purpose of record keeping and
accounting. - ✔✔Record Keeping:
Each partner owes to the partnership and other partners the duty of care and the duty of loyalty. -
✔✔Fiduciary Duties
All partners have an equal right to participate in the management of the business, unless a
partnership agreement states otherwise - ✔✔Management:
Each of the partners has a right to equally share in the profits and losses, unless a different
arrangement has been made in a partnership agreement. - ✔✔Sharing of Profits and Losses
A partner generally does NOT have a right to compensation for his/her time, skill, and energy,
because a partner's income comes from the distribution of profits. However, the partners can agree
otherwise via a partnership agreement. - ✔✔Compensation:
100%
Each partner has the right to inspect the books of the business. - ✔✔Inspection of the books:
Property acquired by the partnership is owned by the partnership and not the partners individually.
Partners may not encumber the property to satisfy their own personal debts. - ✔✔Use of Property of
the Partnership:
A partner may act as an agent on behalf of the partnership and bind the partnership, absent a
partnership agreement that states otherwise. - ✔✔Agency
Each partner is personally liable for the debts of the partnership unless they qualify as a limited
partner, generally through joint and several liability, even if they did not know about or participate in
the conduct giving rise to the debt. - ✔✔Personal liability
may act as an agent who binds the partnership. - ✔✔Any partner
Fiduciary duties
Record keeping
Capital contribution - ✔✔Partners have which of the following duties? Select 3 answers.
, Nothing - ✔✔Which of the following is required to create a sole proprietorship?
Sole proprietorship - ✔✔Juan wants to start a car washing business. Juan takes some car washing
supplies from his house (a bucket, towels, and soap) and tells his neighbors he will wash their cars
for $7. Which relationship is this?
A partnership agreement - ✔✔A written agreement outlining the roles of partners, their rights, and
their duties are called:
Sharing of profits and losses, Sharing of management duties, two or more people, who intend to do
business together - ✔✔The formation of a partnership without a partnership agreement requires
which of the following?
Partnership - ✔✔Sadie runs a bakery and Tommy, her brother, often comes in to help Sadie fill
orders. Because Tommy has always been good at business, Sadie also lets Tommy do the
bookkeeping and handle all the contracts with vendors. Sadie does not pay Tommy a salary, but
whenever Sadie takes a distribution from her profits Sadie gives Tommy a distribution too. What
relationship does this represent?
the laws of the state in which the LLC is created - ✔✔The formation of LLCs is governed by:
100%
The name of the business, The principal place of business - ✔✔Which of the following is required in
the Articles of Organization for an LLC? Select 2 answers.
typically includes provisions about choosing the LLC's management. - ✔✔An operating agreement
for a limited liability company:
Partnerships are not taxed, Forming a partnership is simple and relatively inexpensive. - ✔✔Which
of the following are advantages of operating as a partnership?
Partners may suffer financial loss if the partnership is not profitable. - ✔✔Which of the following is a
disadvantage of operating as a partnership?
a partner's management rights.
the documents required for creation. - ✔✔A general partnership differs from a limited partnership in:
limited liability limited partnership. - ✔✔A partnership in which the liability of all the partners is limited
to the amount of their capital investment in the firm is called a:
sole proprietorship. - ✔✔The simplest form of business to establish is a:
