BADM 300 UIUC Exam 1 Questions and
Answers
Uniform Partnership Act (UPA) - ANSWER-model act that codifies partnership law
Revised Uniform Partnership Act (RUPA) - ANSWER-issued by the national
conference of commissioners on uniform state laws, but not adopted by many states
(limited partnerships)
gp taxation - ANSWER-flow through taxation
income and losses flow onto and have to be reported on individual partners' personal
income tax returns
gp management right - ANSWER-each partner has the right to participate in
management of partnership with equal vote (unless otherwise agreed upon)
general partnership rights - ANSWER-share profits equally
right to compensation (not entitled to receive salary unless agreed upon)
right to indemnification (reimbursement for business expenses)
right to return of loans
right to return of capital
right to information
duty of loyalty - ANSWER-a duty not to act adversely to the interests of the
partnership
duty of care - ANSWER-obligation to use same level of care and skill that a
reasonable person in same position would use (breach is negligence)
duty to inform - ANSWER-a partner owes to inform his or her copartners of all the
information he or she possesses that is relevant to the affairs of the partnership
duty of obedience - ANSWER-requires partners to adhere to provisions of the
partnership agreement and decisions of partnership
general partnership liability - ANSWER-unlimited liability for the debts of partnership
joint and several liability - ANSWER-tort liability of partners together and individually
a plaintiff can sue one or more partners separately
gp liability of incoming/outgoing partners - ANSWER-a new partner is only liable for
existing debts to extent of capital contribution
personally liable for debts incurred after becoming partner
, if gp is dissolved, each partner is personally liable for debts of partnership
limited partners - ANSWER-invest capital but do not participate in management and
are not personally liable beyond capital contributions
must file certificate of limited partnerships with SoS
limited liability partnerships - ANSWER-same as gp but general partners are not
personally liable
limited liability limited partnerships - ANSWER-same as LP but general partners are
not personally liable
Corporations - ANSWER-85% of business in US
owners are shareholders
separate legal entity (person) in eyes of law
free transferability of shares - ANSWER-for corps: free by sale, assignment, pledge
or gift
perpetual existence - ANSWER-corps: exist in perpetuity unless a specific duration is
stated by articles of incorp, but may be voluntarily terminated by shareholders
centralized management - ANSWER-corps: board of directors and officers of
corporation
BoD elected by shareholders
Directors appoint officers
Limited liability of shareholders - ANSWER-corps: shareholders are only liable to
extent of cap contributions
categories of corporations - ANSWER-private for profit
public for profit
not for profit corp
govt owned
domestic corp
foreign corp (different state than where it was formed)
alien corp (formed in another country)
private for profit corp - ANSWER-formed to conduct privately, owned by private
parties (usually a few shareholders)
public for profit corp - ANSWER-hundreds or thousands of shareholders and their
shares traded on organized securities market
process of starting corp - ANSWER-pick a state
pick a name
determine shareholders, directors, officers, and registered agent
Answers
Uniform Partnership Act (UPA) - ANSWER-model act that codifies partnership law
Revised Uniform Partnership Act (RUPA) - ANSWER-issued by the national
conference of commissioners on uniform state laws, but not adopted by many states
(limited partnerships)
gp taxation - ANSWER-flow through taxation
income and losses flow onto and have to be reported on individual partners' personal
income tax returns
gp management right - ANSWER-each partner has the right to participate in
management of partnership with equal vote (unless otherwise agreed upon)
general partnership rights - ANSWER-share profits equally
right to compensation (not entitled to receive salary unless agreed upon)
right to indemnification (reimbursement for business expenses)
right to return of loans
right to return of capital
right to information
duty of loyalty - ANSWER-a duty not to act adversely to the interests of the
partnership
duty of care - ANSWER-obligation to use same level of care and skill that a
reasonable person in same position would use (breach is negligence)
duty to inform - ANSWER-a partner owes to inform his or her copartners of all the
information he or she possesses that is relevant to the affairs of the partnership
duty of obedience - ANSWER-requires partners to adhere to provisions of the
partnership agreement and decisions of partnership
general partnership liability - ANSWER-unlimited liability for the debts of partnership
joint and several liability - ANSWER-tort liability of partners together and individually
a plaintiff can sue one or more partners separately
gp liability of incoming/outgoing partners - ANSWER-a new partner is only liable for
existing debts to extent of capital contribution
personally liable for debts incurred after becoming partner
, if gp is dissolved, each partner is personally liable for debts of partnership
limited partners - ANSWER-invest capital but do not participate in management and
are not personally liable beyond capital contributions
must file certificate of limited partnerships with SoS
limited liability partnerships - ANSWER-same as gp but general partners are not
personally liable
limited liability limited partnerships - ANSWER-same as LP but general partners are
not personally liable
Corporations - ANSWER-85% of business in US
owners are shareholders
separate legal entity (person) in eyes of law
free transferability of shares - ANSWER-for corps: free by sale, assignment, pledge
or gift
perpetual existence - ANSWER-corps: exist in perpetuity unless a specific duration is
stated by articles of incorp, but may be voluntarily terminated by shareholders
centralized management - ANSWER-corps: board of directors and officers of
corporation
BoD elected by shareholders
Directors appoint officers
Limited liability of shareholders - ANSWER-corps: shareholders are only liable to
extent of cap contributions
categories of corporations - ANSWER-private for profit
public for profit
not for profit corp
govt owned
domestic corp
foreign corp (different state than where it was formed)
alien corp (formed in another country)
private for profit corp - ANSWER-formed to conduct privately, owned by private
parties (usually a few shareholders)
public for profit corp - ANSWER-hundreds or thousands of shareholders and their
shares traded on organized securities market
process of starting corp - ANSWER-pick a state
pick a name
determine shareholders, directors, officers, and registered agent
