BL Chapter 16 (BPL) Worksheet
True/False
Indicate whether the statement is true or false.
____
1. Business profits or losses are combined with the sole proprietor's other income for income tax purposes.
____
2. In a general partnership, each partner is liable for the other partners' actions within the scope of the
partnership.
____
3. A secret partner has limited liability for the partnership's debts.
____
4. The biggest advantage to a sole proprietorship is the limited liability regarding losses and lawsuits.
____
5. A partner cannot personally transfer ownership of property.
____
6. Unless otherwise stated in the partnership agreement, partners share equally in the profits.
____
7. The difference between a joint venture and a partnership is that there is no ongoing relationship in a joint
venture.
____
8. A public corporation can be either a C corporation or an S corporation.
____
9. The articles of incorporation is a legal document filed with the state in order to establish a corporation.
____ 10. The dissolution of an LLC is similar to a partnership and can occur for any of the same reasons.
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____ 11. Most partnership law is set forth in the
a. Articles of Partnership.
c. Uniform Partnership Act.
b. Uniform Commercial Code.
d. Tenancy in Partnership Act.
____ 12. A partnership that is formed simply by the way two or more people conduct their business together is called
a. partnership by estoppel.
c. apparent partnership.
b. partnership by proof of existence.
d. limited partnership.
____ 13. A partner who takes no active role, but is known publicly and has unlimited liability is a
a. silent partner.
c. dormant partner.
b. secret partner.
d. limited partner.
____ 14. Co-ownership of all real and personal property included in the partnership is referred to as
a. joint tenancy.
c. tenancy by estoppel.
b. uniform tenancy.
d. tenancy in partnership.
____ 15. When a partnership ends, the firm's assets are first paid to
a. partners who lent money to the firm.
b. partners who put money into the firm.
c. surplus due partners.
d. creditors other than partners.
____ 16. Which of the following partnership rights was added when the UPA was revised?
a. the right to share in the profits
b. the right to manage the firm
c. the right to use partnership property
d. the right to sue a partner or the partnership
____ 17. Which of the following is NOT a way that a partnership can be dissolved?
a. by the acts of the partners
c. by the RUPA
b. by operation of law
d. by court order
____ 18. A corporation that formed in Texas but operates in Florida is called a(n)
a. domestic corporation.
c. alien corporation.
b. foreign corporation.
d. S corporation.
____ 19. An example of a public corporation is
a. the local school district.
c. Habitat for Humanity.
b. Microsoft.
d. McDonald’s.
____ 20. In a corporation, the shareholder’s liability is
a. limited to the amount of money paid for the shares in the corporation.
b. unlimited based on the articles of incorporation.
c. limited to $100,000.
d. unlimited based on the most recent vote by the board of directors.
Completion
Complete each statement.
21. The owners of an LLC escape ____________________ taxation.
22. Every partnership must have at least one ____________________ partner.
23. A(n) ____________________ partner has an active role and unlimited liability but is not publicly known to
be a partner.
24. A ____________________ is the easiest type of business to form.
25. Before a partnership ends, there must be ____________________ period to close down business operations.
26. Courts will sometimes ____________________ and hold shareholders personally liable.
27. An LLC must have a(n) ____________________ in the state where it is organized.
28. Property contributed to the partnership when it is established is called ____________________.
29. A(n) ____________________ corporation is formed for educational, religious, charitable, or social purposes.
Matching
Match each term with its definition.
a. sole proprietorship
b. dissociation
c. limited partnership
d. limited liability partnership (LLP)
e. shareholder
____
____
____
____
____
____
30.
31.
32.
33.
34.
35.
f.
g.
h.
i.
j.
S corporation
limited liability company (LLC)
corporation
joint liability
C corporation
A business entity that combines the best features of a partnership and a corporation
Allows the business to continue doing business when a partner leaves the firm
An entity with the legal authority to act as a single person, distinct from its owners
Form of business that is owned and operated by one person
A partnership with one or more general partners and one or more limited partners
An individual who has one vote for every share of stock held
____
____
____
____
36.
37.
38.
39.
Subject to double taxation
A business in which each partner is not responsible for the acts of the other partners
In a partnership, all the partners must be sued together in a lawsuit
Avoids double taxation but has limitations on the number of shareholders allowed
Short Answer
40. Compare and contrast a sole proprietorship and a partnership. Include advantages, disadvantages, how each is
established, how each is dissolved, and the rights and duties of those involved. Then discuss an LLC and how
it is the same or different from a partnership.