LAW 531 Week 1 Knowledge Check
1. Identify an accurate statement about a sole proprietorship.
A. It is a form of business that is seldom found in the United States.
B. It is a form of business that has only one owner.
C. It is a separate legal entity, distinct from an owner.
D. It is a business form in which the owner enjoys limited liability.
2. Sara and Cilia run a café together. They share ownership of and liability for the café and have come to an agreement about how the profits from the cafe should be divided between them. If the café runs into debt, both Sara and Celia are responsible for the debt.
What form of business is best demonstrated in this scenario?
A. A sole proprietorship
B. A corporation
C. A general partnership
D. A limited liability company
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3. What criterion under the Uniform Partnership Act (UPA) must be met by a business, for it to qualify as a general partnership?
A. The objective of the partnership should be to create profits.
B. One of the owners must be willing to assume completely liability of the business.
C. The partnership should not involve more than two persons.
D. Only one owner should take up the legal responsibility of contracts.
4. What is true about a limited partnership?
A. All the partners are personally liable for partnership debts.
B. The partnership cannot involve more than two individuals.
C. The general partners do not invest capital or participate in the management of the business.
D. The limited partners are not personally liable for partnership debts beyond the amount invested by them.
5. Who among the following is most likely to be a limited partner in a limited partnership?
A. David, who takes up the task of work delegation in the business.
B. Kiara, who makes contracts with suppliers for the partnership.
C. Kevin, who does not have to make up for losses if a contract made by the...