LGS Final Exam questions with
complete solutions graded A+
Which of the following is NOT a major legal form in which to conduct a business? - correct answer
✔✔Limited Sole Proprietorship
Which of the following is NOT an advantage of a sole proprietorship? - correct answer ✔✔The sole
proprietorship "veil" shields the sole proprietor from personal liability for business debts.
Which of the following is an INCORRECT statement regarding the creation of a sole proprietorship? -
correct answer ✔✔Creation of a sole proprietorship utilizes the same procedure for the creation of a
corporation.
A sole proprietor has _____ personal liability. - correct answer ✔✔Unlimited
Nathan opens a clothing store called "The Clothing Store" and operates it as a sole proprietorship.
Nathan files the proper statement and publishes the necessary notice of the use of the trade name.
Nathan contributes $25,000 of his personal funds to the business and borrows $100,000 from a bank in
the name of the business. After several months, Nathan closes the business because it is unsuccessful. At
the time it is closed, the business has no assets, owes the bank $100,000, and owes other debts of
$25,000. Which of the following is a correct statement regarding Nathan's personal risk exposure for his
unsuccessful business? - correct answer ✔✔Nathan loses his $25,000 capital contribution, and he is
responsible for the $100,000 debt owed to the bank and the $25,000 debt owed to others.
_____ are personally liable for the debts and obligations of the general partnership. - correct answer
✔✔General partners
Which of the following is an INCORRECT statement regarding the Uniform Partnership Act (UPA)? -
correct answer ✔✔The UPA has been adopted in whole or in part by a minority of states.
Which of the following is NOT a criterion to qualify as a general partnership under the UPA? - correct
answer ✔✔the issuance of publicly-traded stock
complete solutions graded A+
Which of the following is NOT a major legal form in which to conduct a business? - correct answer
✔✔Limited Sole Proprietorship
Which of the following is NOT an advantage of a sole proprietorship? - correct answer ✔✔The sole
proprietorship "veil" shields the sole proprietor from personal liability for business debts.
Which of the following is an INCORRECT statement regarding the creation of a sole proprietorship? -
correct answer ✔✔Creation of a sole proprietorship utilizes the same procedure for the creation of a
corporation.
A sole proprietor has _____ personal liability. - correct answer ✔✔Unlimited
Nathan opens a clothing store called "The Clothing Store" and operates it as a sole proprietorship.
Nathan files the proper statement and publishes the necessary notice of the use of the trade name.
Nathan contributes $25,000 of his personal funds to the business and borrows $100,000 from a bank in
the name of the business. After several months, Nathan closes the business because it is unsuccessful. At
the time it is closed, the business has no assets, owes the bank $100,000, and owes other debts of
$25,000. Which of the following is a correct statement regarding Nathan's personal risk exposure for his
unsuccessful business? - correct answer ✔✔Nathan loses his $25,000 capital contribution, and he is
responsible for the $100,000 debt owed to the bank and the $25,000 debt owed to others.
_____ are personally liable for the debts and obligations of the general partnership. - correct answer
✔✔General partners
Which of the following is an INCORRECT statement regarding the Uniform Partnership Act (UPA)? -
correct answer ✔✔The UPA has been adopted in whole or in part by a minority of states.
Which of the following is NOT a criterion to qualify as a general partnership under the UPA? - correct
answer ✔✔the issuance of publicly-traded stock
