BULE 303 Exam 4: Chapter 14,15, & 18
questions with complete solutions
Entrepreneur - correct answer ✔✔One who initiates and assumes the financial risk of a new
business enterprise and undertakes to provide or control its management.
Sole Proprietorship - correct answer ✔✔The simplest form of business, in which the owner is
the business. The owner reports business income on his or her personal income tax return and
is legally responsible for all debts and obligations incurred by the business.
Partnership - correct answer ✔✔An agreement by two or more persons to carry on, as co-
owners, a business for profit.
pass-through entity - correct answer ✔✔A business entity that has no tax liability. The entity's
income is passed through to the owners, and they pay taxes on the income.
information return - correct answer ✔✔A tax return submitted by a partnership that only
reports the income and losses earned by the business. The partnership as an entity does not
pay taxes on the income received by the partnership.
articles of partnership - correct answer ✔✔A written agreement that sets forth each partner's
rights and obligations with respect to the partnership.
joint liability - correct answer ✔✔in partnership law, partners share liability for partnership
obligations and debt. Thus, if a third party sues a partner on a partnership debt, the partner has
the right to insist that the others partners need to be sued with him or her.
, joint and several liability - correct answer ✔✔In partnership law, a doctrine under which a
plaintiff can file a lawsuit against all of the partners together (jointly) or one or more of the
partners are separately (severally or individually). All partners in a partnership can be held liable
regardless of whether the partner participated in, knew about, or ratified the conduct that gave
rise to the lawsuit.
Dissociation - correct answer ✔✔the severance of the relationship between a partner and a
partnership when the partner ceases to be associated with the carrying on the partnership
business.
buyout price - correct answer ✔✔The amount payable to a partner on his or her dissociation
from a partnership, based on the amount distributable to that partner if the firm were wound
up on that date, and offset by any damages for wrongful dissociation.
dissolution - correct answer ✔✔the formal disbanding of a partnership or a corporation.
winding up - correct answer ✔✔The second of two stages in the termination of a partnership or
corporation, in which the firm's assets are collected, liquidated, and distributed, and liabilities
are discharged.
limited liability partnership - correct answer ✔✔A hybrid form of business organization that is
used mainly by professionals who normally do business in a partnership. Like a partnership, it
passes through an entity for tax purposes, but the personal liability of the partners is limited.
Limited Partnership (LP) - correct answer ✔✔A partnership consisting of one or more general
partners (who manage the business and are liable to the full extent of their personal assets for
debts of the partnership) and one or more limited partners (who contribute only assets and are
liable only up to the extent of their contributions).
General Partner - correct answer ✔✔In a limited partnership, a partner who assumes
responsibility for the management of the partnership and liability for all partnership debts.
questions with complete solutions
Entrepreneur - correct answer ✔✔One who initiates and assumes the financial risk of a new
business enterprise and undertakes to provide or control its management.
Sole Proprietorship - correct answer ✔✔The simplest form of business, in which the owner is
the business. The owner reports business income on his or her personal income tax return and
is legally responsible for all debts and obligations incurred by the business.
Partnership - correct answer ✔✔An agreement by two or more persons to carry on, as co-
owners, a business for profit.
pass-through entity - correct answer ✔✔A business entity that has no tax liability. The entity's
income is passed through to the owners, and they pay taxes on the income.
information return - correct answer ✔✔A tax return submitted by a partnership that only
reports the income and losses earned by the business. The partnership as an entity does not
pay taxes on the income received by the partnership.
articles of partnership - correct answer ✔✔A written agreement that sets forth each partner's
rights and obligations with respect to the partnership.
joint liability - correct answer ✔✔in partnership law, partners share liability for partnership
obligations and debt. Thus, if a third party sues a partner on a partnership debt, the partner has
the right to insist that the others partners need to be sued with him or her.
, joint and several liability - correct answer ✔✔In partnership law, a doctrine under which a
plaintiff can file a lawsuit against all of the partners together (jointly) or one or more of the
partners are separately (severally or individually). All partners in a partnership can be held liable
regardless of whether the partner participated in, knew about, or ratified the conduct that gave
rise to the lawsuit.
Dissociation - correct answer ✔✔the severance of the relationship between a partner and a
partnership when the partner ceases to be associated with the carrying on the partnership
business.
buyout price - correct answer ✔✔The amount payable to a partner on his or her dissociation
from a partnership, based on the amount distributable to that partner if the firm were wound
up on that date, and offset by any damages for wrongful dissociation.
dissolution - correct answer ✔✔the formal disbanding of a partnership or a corporation.
winding up - correct answer ✔✔The second of two stages in the termination of a partnership or
corporation, in which the firm's assets are collected, liquidated, and distributed, and liabilities
are discharged.
limited liability partnership - correct answer ✔✔A hybrid form of business organization that is
used mainly by professionals who normally do business in a partnership. Like a partnership, it
passes through an entity for tax purposes, but the personal liability of the partners is limited.
Limited Partnership (LP) - correct answer ✔✔A partnership consisting of one or more general
partners (who manage the business and are liable to the full extent of their personal assets for
debts of the partnership) and one or more limited partners (who contribute only assets and are
liable only up to the extent of their contributions).
General Partner - correct answer ✔✔In a limited partnership, a partner who assumes
responsibility for the management of the partnership and liability for all partnership debts.
