BLAW EXAM 3
All of the following are methods that a sole proprietorship can raise money except - correct answer
✔✔Sell ownership in the business
Which of the following is true about a sole proprietorship? - correct answer ✔✔The owner reports
income and expenses on the owner's own tax return
The person who is entitled to the profits of a business based on the percentage of ownerships is - correct
answer ✔✔Principal
Reid Sterling owns a sole proprietorship called Dunkle Distributing. Dunkle Distributing is a - correct
answer ✔✔Trade Name
Which statement below is correct about a sole proprietorship? - correct answer ✔✔It has low start-up
costs and minimal filing
Gwendolyn Melvin wishes to start a children's sports store called, "Just Let 'Em Play!" as a sole
proprietor. What form must she file so that she can use another name than her own? - correct answer
✔✔DBA Certificate
Josh is a sole proprietor of an ice cream shop. Regina, a customer, slips and fall on some melted mint
chocolate chip ice cream on the floor and breaks her leg. Regina files suit and wins a judgment of
$50,000. Josh does not have any insurance and the total value of the assets of the ice cream shop is
$10,000. Which statement below is correct? - correct answer ✔✔Josh will have to use his own personal
assets to pay the remainder of the judgment
Cyndy is a sole proprietor of a day care. She wishes to build a new playground and also purchase new
toys. She plans on doing this in stages and therefore wants a loan where she can draw against a
predetermined amount as she needs it rather than getting a lump sum loan. Which type of loan would
you recommend for Cyndy? - correct answer ✔✔Line of Credit
, Raul wants a simple method to start-up a small marketing company. The marketing firm has relatively
low revenue and expenses. Which type of business entity would you suggest? - correct answer ✔✔Sole
proprietorship
Stefan has opened a sole proprietorship bicycle shop. The business shows a net income of $100,000.
Stefan took a salary of $40,000. The remaining money is left in the bank - correct answer ✔✔At tax time,
Stefan pays taxes on $140,000
A limited partnership requires - correct answer ✔✔at least one general and one limited partner
limited partnerships are required to file a(n)________ return with the IRS each year - correct answer
✔✔information
Frank wants to leave his partnership and wants to stop being a principal. What is this process called? -
correct answer ✔✔Dissociation
The duty of a partner to act in the best interests of the partnership is called _______ duty - correct
answer ✔✔Fiduciary
Boris, Carina, and Theo have decided to go into business as a limited partnership importing and selling
exotic spices. Boris and Carina will manage the business, and Theo will have no role in the day-to-day
operations. Boris and Carina have each invested $500,000, and Theo has contributed the building and
land that the business will be operated from. Alina, a customer, contracts a rare disease from a
contaminated spice sold by the company and sues. Alina is awarded a judgment for $5 million. After she
exhausts the assets of the partnership, having the property and building sold, and seizing all other
property, $3 million remains unpaid. - correct answer ✔✔Boris and Carina each owe $3million jointly
and severally, so Alina may sue one or both of them; Theo has no additional liability
Franco and Jesse are operating as a general partnership. A question has arisen that is not covered under
their partnership agreement nor addressed by the Revised Uniform Partnership Act. What will the courts
do to resolve the situation? - correct answer ✔✔Look to common law
Redrock GP has decided to go out of the business. Selling the partnership assets and making payments
to creditors will occur during the _________ phase of the closing of partnership - correct answer
✔✔winding-up
All of the following are methods that a sole proprietorship can raise money except - correct answer
✔✔Sell ownership in the business
Which of the following is true about a sole proprietorship? - correct answer ✔✔The owner reports
income and expenses on the owner's own tax return
The person who is entitled to the profits of a business based on the percentage of ownerships is - correct
answer ✔✔Principal
Reid Sterling owns a sole proprietorship called Dunkle Distributing. Dunkle Distributing is a - correct
answer ✔✔Trade Name
Which statement below is correct about a sole proprietorship? - correct answer ✔✔It has low start-up
costs and minimal filing
Gwendolyn Melvin wishes to start a children's sports store called, "Just Let 'Em Play!" as a sole
proprietor. What form must she file so that she can use another name than her own? - correct answer
✔✔DBA Certificate
Josh is a sole proprietor of an ice cream shop. Regina, a customer, slips and fall on some melted mint
chocolate chip ice cream on the floor and breaks her leg. Regina files suit and wins a judgment of
$50,000. Josh does not have any insurance and the total value of the assets of the ice cream shop is
$10,000. Which statement below is correct? - correct answer ✔✔Josh will have to use his own personal
assets to pay the remainder of the judgment
Cyndy is a sole proprietor of a day care. She wishes to build a new playground and also purchase new
toys. She plans on doing this in stages and therefore wants a loan where she can draw against a
predetermined amount as she needs it rather than getting a lump sum loan. Which type of loan would
you recommend for Cyndy? - correct answer ✔✔Line of Credit
, Raul wants a simple method to start-up a small marketing company. The marketing firm has relatively
low revenue and expenses. Which type of business entity would you suggest? - correct answer ✔✔Sole
proprietorship
Stefan has opened a sole proprietorship bicycle shop. The business shows a net income of $100,000.
Stefan took a salary of $40,000. The remaining money is left in the bank - correct answer ✔✔At tax time,
Stefan pays taxes on $140,000
A limited partnership requires - correct answer ✔✔at least one general and one limited partner
limited partnerships are required to file a(n)________ return with the IRS each year - correct answer
✔✔information
Frank wants to leave his partnership and wants to stop being a principal. What is this process called? -
correct answer ✔✔Dissociation
The duty of a partner to act in the best interests of the partnership is called _______ duty - correct
answer ✔✔Fiduciary
Boris, Carina, and Theo have decided to go into business as a limited partnership importing and selling
exotic spices. Boris and Carina will manage the business, and Theo will have no role in the day-to-day
operations. Boris and Carina have each invested $500,000, and Theo has contributed the building and
land that the business will be operated from. Alina, a customer, contracts a rare disease from a
contaminated spice sold by the company and sues. Alina is awarded a judgment for $5 million. After she
exhausts the assets of the partnership, having the property and building sold, and seizing all other
property, $3 million remains unpaid. - correct answer ✔✔Boris and Carina each owe $3million jointly
and severally, so Alina may sue one or both of them; Theo has no additional liability
Franco and Jesse are operating as a general partnership. A question has arisen that is not covered under
their partnership agreement nor addressed by the Revised Uniform Partnership Act. What will the courts
do to resolve the situation? - correct answer ✔✔Look to common law
Redrock GP has decided to go out of the business. Selling the partnership assets and making payments
to creditors will occur during the _________ phase of the closing of partnership - correct answer
✔✔winding-up
