LGS Exam 4 Part 1 questions with
complete solutions
a person who forms and operates a business - correct answer ✔✔entrepreneur
what is a major form of conducting a business? - correct answer ✔✔corporation
the most common form of a business organization in the united states - correct answer ✔✔sole
proprietorship
Which of the following is true of a sole proprietorship?
A) A business operated under sole proprietorship cannot be transferred.
B) Large businesses cannot be operated under sole proprietorship.
C) A business operated under sole proprietorship should be owned by one or more people of the
same family.
D) Creditors can recover claims against the business from the sole proprietor's personal assets. - correct
answer ✔✔D
Which of the following is true of a business operating under sole proprietorship?
A) It is not considered a separate legal entity.
B) It cannot be sold when the owner decides to do so.
,C) It requires governmental approval when being transferred.
D) It has access to unrestricted capital by means of investments. - correct answer ✔✔A
Which of the following is true of creating a sole proprietorship?
A) No state government approval is required.
B) Federal taxation is levied upon sole proprietorship.
C) No licenses are required to do business within a city or state.
D) Special permission must be obtained to receive a sole proprietorship status. - correct answer ✔✔A
Jonathan Lopez wants to be his own boss and ventures into retailing fruit in the neighborhood after
borrowing some money from his mother. While obtaining a license to carry out business in his city,
Jonathan mentions the money he borrowed but forgets to specify what type of business undertaking his
store will be. Under which of the following major forms of business is Jonathan's store listed by default? -
correct answer ✔✔a sole proprietorship
Orlando opened a hot dog stand in Brooklyn which unfortunately did not earn him a profit.
He had borrowed $5,000 from the bank to set it up, which had to be repaid to the bank in two
days. However, Orlando's friend Bob agreed to partner with him starting the subsequent month.
From which of the following sources can the bank recover its $5,000 with interest? - correct answer
✔✔orlando's savings account
,Why does a sole proprietorship not pay taxes at the business level?
A) It does not have a separate legal personality.
B) It is a small business that is exempted from taxation.
C) It is a not-for-profit organization.
D) It is generally an institution with no business dealings. - correct answer ✔✔A
The earnings and losses from a sole proprietorship are reported on ________.
A) the federal income tax filing document
B) the business license that is renewed each year
C) the proprietor's personal income tax filing
D) the state income tax filing document - correct answer ✔✔C
An association of two or more persons to carry on as co-owners of a business for profit is known as a(n)
________. - correct answer ✔✔general partnership
An organization or venture must have a ________ motive in order to qualify as a partnership - correct
answer ✔✔profit
Which of the following is true of general partnership?
A) A business should make a profit in order to qualify as a general partnership.
, B) The general partners need not be the co-owners of the business.
C) General partnerships can be either oral or implied from the conduct of the parties.
D) Charity organizations and schools are mostly formed from general partnerships. - correct answer
✔✔C
Inference of the existence of a general partnership is drawn only if profits are received as ________.
A) share in partnership
B) payment of wages
C) interest owed on a loan
D) a debt owed to a creditor - correct answer ✔✔A
Which of the following is true in the creation of a general partnership?
A) The business name has to have the names of all the partners.
B) The business name cannot be a fictitious name.
C) The name selected by the partnership cannot indicate that it is a corporation.
D) The business cannot operate under a trade name. - correct answer ✔✔C
what must be in writing even if its below the time stipulation of the statute of frauds?
complete solutions
a person who forms and operates a business - correct answer ✔✔entrepreneur
what is a major form of conducting a business? - correct answer ✔✔corporation
the most common form of a business organization in the united states - correct answer ✔✔sole
proprietorship
Which of the following is true of a sole proprietorship?
A) A business operated under sole proprietorship cannot be transferred.
B) Large businesses cannot be operated under sole proprietorship.
C) A business operated under sole proprietorship should be owned by one or more people of the
same family.
D) Creditors can recover claims against the business from the sole proprietor's personal assets. - correct
answer ✔✔D
Which of the following is true of a business operating under sole proprietorship?
A) It is not considered a separate legal entity.
B) It cannot be sold when the owner decides to do so.
,C) It requires governmental approval when being transferred.
D) It has access to unrestricted capital by means of investments. - correct answer ✔✔A
Which of the following is true of creating a sole proprietorship?
A) No state government approval is required.
B) Federal taxation is levied upon sole proprietorship.
C) No licenses are required to do business within a city or state.
D) Special permission must be obtained to receive a sole proprietorship status. - correct answer ✔✔A
Jonathan Lopez wants to be his own boss and ventures into retailing fruit in the neighborhood after
borrowing some money from his mother. While obtaining a license to carry out business in his city,
Jonathan mentions the money he borrowed but forgets to specify what type of business undertaking his
store will be. Under which of the following major forms of business is Jonathan's store listed by default? -
correct answer ✔✔a sole proprietorship
Orlando opened a hot dog stand in Brooklyn which unfortunately did not earn him a profit.
He had borrowed $5,000 from the bank to set it up, which had to be repaid to the bank in two
days. However, Orlando's friend Bob agreed to partner with him starting the subsequent month.
From which of the following sources can the bank recover its $5,000 with interest? - correct answer
✔✔orlando's savings account
,Why does a sole proprietorship not pay taxes at the business level?
A) It does not have a separate legal personality.
B) It is a small business that is exempted from taxation.
C) It is a not-for-profit organization.
D) It is generally an institution with no business dealings. - correct answer ✔✔A
The earnings and losses from a sole proprietorship are reported on ________.
A) the federal income tax filing document
B) the business license that is renewed each year
C) the proprietor's personal income tax filing
D) the state income tax filing document - correct answer ✔✔C
An association of two or more persons to carry on as co-owners of a business for profit is known as a(n)
________. - correct answer ✔✔general partnership
An organization or venture must have a ________ motive in order to qualify as a partnership - correct
answer ✔✔profit
Which of the following is true of general partnership?
A) A business should make a profit in order to qualify as a general partnership.
, B) The general partners need not be the co-owners of the business.
C) General partnerships can be either oral or implied from the conduct of the parties.
D) Charity organizations and schools are mostly formed from general partnerships. - correct answer
✔✔C
Inference of the existence of a general partnership is drawn only if profits are received as ________.
A) share in partnership
B) payment of wages
C) interest owed on a loan
D) a debt owed to a creditor - correct answer ✔✔A
Which of the following is true in the creation of a general partnership?
A) The business name has to have the names of all the partners.
B) The business name cannot be a fictitious name.
C) The name selected by the partnership cannot indicate that it is a corporation.
D) The business cannot operate under a trade name. - correct answer ✔✔C
what must be in writing even if its below the time stipulation of the statute of frauds?
