ARE 5.0 Practice Management Test Questions and Answers Graded A+
Sole Proprietorship The business is owned by an individual
Two or more people (general partners) share in the man-
General Partnership
agement, profits and risk of the business
Has at least one general partner (invests in the business,
manages it and are financially responsible for it) and at
Limited Partnership least one limited partner (investor who receives a portion
of the profits but has no say in the management of the
company)
An association of individuals (stockholders, directors and
C Corporation
oflcers) that exists as a legal entity apart from its members
Owners of the corporation in proportion to the number of
Stockholders
shares they own
Have the fiduciary duty to act in the best interest of the
Directors stockholders and are responsible for broad policy deci-
sions
Oflcers Carry out the day-to-day management of the corporation
A corporation that chooses to allocate it's income and loss-
es directly to shareholders in proportion to their holdings.
S Corporation
Limited to small business corporations with less than 100
shareholders.
Similar to other corporations except that liability for mal-
Professional Corporation
practice is limited to the person responsible for the act.
Business structure that combines the advantages of a
Limited Liability Company (LLC) partnership or sole proprietorship with the limited liability
of a corporation. (Aka LLP Limited Liability Partnership)
A temporary association of two or more persons or firms
Joint Venture for the purpose of completing a specific project or achiev-
ing a specific goal
Teaming Agreement
, Defines the roles, responsibilities and contractual relation-
ships that will be established if the firms are awarded the
project and the joint venture is formed. (Aka Memoran-
dum of Understanding)
Defines the roles, responsibilities and contractual relation-
ships that will be established if the firms are awarded
Memorandum of Understanding
the project and the joint venture is formed (Aka Teaming
Agreement)
The level of skill and diligence that a reasonably prudent
architect would exercise in the same community, in the
Standard of Care
same time frame, and given the same or similar facts and
circumstances
Statt is organized into departments, each of which spe-
cializes in a ditterent function. A project moves from one
Departmental Organization
department to another in its route from start to finish
(Horizontal Organization or Flat Organization)
Statt is organized in groups called studios. Each studio
Studio Organization is responsible for completing an entire project (Vertical
Organization or Tall Organization)
Contracting with another company to do some of the work
Outsourcing
needed for a project
Employees other than the professional statt and senior
Support Statt
management
Allows the business to practice and usually serves as a
Business License
basis for taxation
Some states require a firm to obtain this in order to otter
Certificate of Authorization (COA)
services to the public
Involves the entire range of hiring, compensating, man-
aging and terminating employees, along with the legal
Sole Proprietorship The business is owned by an individual
Two or more people (general partners) share in the man-
General Partnership
agement, profits and risk of the business
Has at least one general partner (invests in the business,
manages it and are financially responsible for it) and at
Limited Partnership least one limited partner (investor who receives a portion
of the profits but has no say in the management of the
company)
An association of individuals (stockholders, directors and
C Corporation
oflcers) that exists as a legal entity apart from its members
Owners of the corporation in proportion to the number of
Stockholders
shares they own
Have the fiduciary duty to act in the best interest of the
Directors stockholders and are responsible for broad policy deci-
sions
Oflcers Carry out the day-to-day management of the corporation
A corporation that chooses to allocate it's income and loss-
es directly to shareholders in proportion to their holdings.
S Corporation
Limited to small business corporations with less than 100
shareholders.
Similar to other corporations except that liability for mal-
Professional Corporation
practice is limited to the person responsible for the act.
Business structure that combines the advantages of a
Limited Liability Company (LLC) partnership or sole proprietorship with the limited liability
of a corporation. (Aka LLP Limited Liability Partnership)
A temporary association of two or more persons or firms
Joint Venture for the purpose of completing a specific project or achiev-
ing a specific goal
Teaming Agreement
, Defines the roles, responsibilities and contractual relation-
ships that will be established if the firms are awarded the
project and the joint venture is formed. (Aka Memoran-
dum of Understanding)
Defines the roles, responsibilities and contractual relation-
ships that will be established if the firms are awarded
Memorandum of Understanding
the project and the joint venture is formed (Aka Teaming
Agreement)
The level of skill and diligence that a reasonably prudent
architect would exercise in the same community, in the
Standard of Care
same time frame, and given the same or similar facts and
circumstances
Statt is organized into departments, each of which spe-
cializes in a ditterent function. A project moves from one
Departmental Organization
department to another in its route from start to finish
(Horizontal Organization or Flat Organization)
Statt is organized in groups called studios. Each studio
Studio Organization is responsible for completing an entire project (Vertical
Organization or Tall Organization)
Contracting with another company to do some of the work
Outsourcing
needed for a project
Employees other than the professional statt and senior
Support Statt
management
Allows the business to practice and usually serves as a
Business License
basis for taxation
Some states require a firm to obtain this in order to otter
Certificate of Authorization (COA)
services to the public
Involves the entire range of hiring, compensating, man-
aging and terminating employees, along with the legal
