MGMT 254 FINAL EXAM QUESTIONS AND ANSWERS | MGMT 254
COMPREHENSIVE STUDY GUIDE & PRACTICE TEST 2026/2027
types of business organizations - ✔✔sole proprietorship
partnerships, LLPs, and LLCs
corporations
joint ventures
unincorporated associations
cooperatives
franchises
sole proprietorships - ✔✔most common business form
advantages of sole proprietorship - ✔✔no organizational costs
owner has complete control
income taxed ONLY at personal level
Disadvantages of Sole Proprietorship - ✔✔unlimited personal liability for owner
business ends upon death of owner
partnerships - ✔✔voluntary combination of two or more "general partners" operating a business as co-
owners for a profit
advantages of partnerships - ✔✔No or low organizational costs
Combines talents and resources of multiple persons
Income taxed at partner's personal level only
disadvantages of partnerships - ✔✔Unlimited personal liability of partners (partners are jointly liable
for contracts of the partnership and jointly and severally liable for torts of the partnership)
Dissolution upon death or withdrawal of a partner
Partner must give notice or withdrawal to other partners and third parties to avoid continuing liability for
partnership debts
fact determination - ✔✔Existence of partnership is a ______ _________________ and not dependent
on the intent of the parties
written partnership agreement - ✔✔not required, but a good idea
look first to this when determining rights and obligations of the partners
if this doesn't cover an issue, you look to the UPA or RUPA
tenancy in partnership - ✔✔partnership property is owned in ______ ____ _____________
, rights of a partnership - ✔✔participate in management
inspect books
share in profits
repayment of loans with interest
contribution and indemnity
distribution of capital upon dissolution
duties of partnership - ✔✔loyalty, good faith, obedience
assignment of partner's interest - ✔✔only results in assignee having right to share in profits and capital
upon dissolution, unless partners unanimously consent to assignee as a new full partner
limited partnerships (LPs) - ✔✔requires at least one general partner and at least one limited partner, a
certificate of limited partnership filed with appropriate authority and must use LP or limited partnership
in name
general partners - ✔✔have the right to manage/control LP and are personally liable for debts of LP
limited partners - ✔✔only have the right to share in profits of LP and capital upon dissolution; liability is
limited to amount they have invested in the LP
unlimited personal liability - ✔✔failure to form LP and file required certificate can result in
___________ ___________ ___________ for limited partners along with general partners
joint ventures - ✔✔two or more persons or entities combine for a single undertaking
treated as a partnership
liable for torts and contracts of fellow ventures
unincorporated associations - ✔✔No existence apart form its members, cannot sue or be sued, no
liability of members for the torts or contracts made by other members; but, member making the
contract or committing the tort is personally liable.`
cooperatives - ✔✔All revenue over expenses returned to the owners. Exempt for antitrust laws under
certain conditions.
franchises - ✔✔Franchisor enters into a "franchise agreement" with franchisee to allow franchisee to
use franchisor's trademarks, trade names and trade secrets.
Federal and state laws require franchisee receive disclosures prior to signing agreement. To avoid liability
franchisor may require franchisee to disclose its separate business identity to customers
LLCs - ✔✔advantages of this include:
income may be taxed at personal level only if partnership tax treatment is elected
limited liability for owners
owners called "members"
rights determined by Operating Agreement
member managed - ✔✔LLPs may be ___________ __________
COMPREHENSIVE STUDY GUIDE & PRACTICE TEST 2026/2027
types of business organizations - ✔✔sole proprietorship
partnerships, LLPs, and LLCs
corporations
joint ventures
unincorporated associations
cooperatives
franchises
sole proprietorships - ✔✔most common business form
advantages of sole proprietorship - ✔✔no organizational costs
owner has complete control
income taxed ONLY at personal level
Disadvantages of Sole Proprietorship - ✔✔unlimited personal liability for owner
business ends upon death of owner
partnerships - ✔✔voluntary combination of two or more "general partners" operating a business as co-
owners for a profit
advantages of partnerships - ✔✔No or low organizational costs
Combines talents and resources of multiple persons
Income taxed at partner's personal level only
disadvantages of partnerships - ✔✔Unlimited personal liability of partners (partners are jointly liable
for contracts of the partnership and jointly and severally liable for torts of the partnership)
Dissolution upon death or withdrawal of a partner
Partner must give notice or withdrawal to other partners and third parties to avoid continuing liability for
partnership debts
fact determination - ✔✔Existence of partnership is a ______ _________________ and not dependent
on the intent of the parties
written partnership agreement - ✔✔not required, but a good idea
look first to this when determining rights and obligations of the partners
if this doesn't cover an issue, you look to the UPA or RUPA
tenancy in partnership - ✔✔partnership property is owned in ______ ____ _____________
, rights of a partnership - ✔✔participate in management
inspect books
share in profits
repayment of loans with interest
contribution and indemnity
distribution of capital upon dissolution
duties of partnership - ✔✔loyalty, good faith, obedience
assignment of partner's interest - ✔✔only results in assignee having right to share in profits and capital
upon dissolution, unless partners unanimously consent to assignee as a new full partner
limited partnerships (LPs) - ✔✔requires at least one general partner and at least one limited partner, a
certificate of limited partnership filed with appropriate authority and must use LP or limited partnership
in name
general partners - ✔✔have the right to manage/control LP and are personally liable for debts of LP
limited partners - ✔✔only have the right to share in profits of LP and capital upon dissolution; liability is
limited to amount they have invested in the LP
unlimited personal liability - ✔✔failure to form LP and file required certificate can result in
___________ ___________ ___________ for limited partners along with general partners
joint ventures - ✔✔two or more persons or entities combine for a single undertaking
treated as a partnership
liable for torts and contracts of fellow ventures
unincorporated associations - ✔✔No existence apart form its members, cannot sue or be sued, no
liability of members for the torts or contracts made by other members; but, member making the
contract or committing the tort is personally liable.`
cooperatives - ✔✔All revenue over expenses returned to the owners. Exempt for antitrust laws under
certain conditions.
franchises - ✔✔Franchisor enters into a "franchise agreement" with franchisee to allow franchisee to
use franchisor's trademarks, trade names and trade secrets.
Federal and state laws require franchisee receive disclosures prior to signing agreement. To avoid liability
franchisor may require franchisee to disclose its separate business identity to customers
LLCs - ✔✔advantages of this include:
income may be taxed at personal level only if partnership tax treatment is elected
limited liability for owners
owners called "members"
rights determined by Operating Agreement
member managed - ✔✔LLPs may be ___________ __________
