Business Entities

Question 1

In a general partnership. If debts of the firm become due and the firm cannot pay them,

Answer 1

Partners of general partnerships are jointly and severally liable for the debts and obligations of the partnership incurred within the scope of partnership business.

Question 2

LLC’s are taxed as a _________________ unless otherwise elected to be treated as an S-Corp.

Answer 2

Partnership

Question 3

Who has apparent authority in a partnership?

Answer 3

Every partner is an agent of the partnership and has apparent authority to bind the partnership to contracts that appear to carry on in the usual way the business of the partnership.

Question 4

Joint ventures are treated as a …

Answer 4

partnership in most important legal aspects.

Question 5

A joint venture need not be dissolved upon the completion of a single undertaking.

Answer 5

Joint ventures may be formed for a single transaction or for a related series of transactions.

Question 6

On dissolution of a general partnership the “order of distribution” would be as follows:

Answer 6

1. General partner loans.
2. Partners’ capital accounts.
3. General partners’ profits

Question 7

When a judgment is obtained against both a partnership and an individual general partner, the plaintiff must proceed against

Answer 7

the partnership assets first and then the assets of any individual general partner. The partnership assets must be exhausted before any general partner’s individual assets can be attached.

Question 8

In an LLC, Absent an agreement to the contrary, the members’ voting strength is

Answer 8

proportionate to their contributions.

Question 9

In an LLC, an Operating AGreement is

Answer 9

Optional, doesn’t have to filed with the state.

Question 10

In an LLC, Absent an agreement to the contrary, if a member of an LLC dies, the LLC is

Answer 10

dissolved unless the other members consent to continue.

Question 11

In a General Partnership, When the partnership agreement is silent as to how profits are to be divided, they are divided equally. Note also that when the agreement is silent, losses are treated similar to profits, there is no reverse rule that profits are treated like losses.

Answer 11

they are divided equally. Note also that when the agreement is silent, losses are treated similar to profits, there is no reverse rule that profits are treated like losses.

Question 12

In an LLC, profits will be divided among the members

Answer 12

in proportion to their contributions, absent an agreement to the contrary.

Question 13

Limited partners must give_________ notice of withdrawal in absence of an agreement to the contrary.

Answer 13

6 months

Question 14

In regards to the liabilities of a general partnership

Answer 14

All partners are subject to joint and several liabilities on partnership debts and contracts under the Revised Act

Question 15

Partners are agents of the other partners of a partnership, and thus act as

Answer 15

both an agent and principal (for the actions of other partners) in authorized partnership transactions

Question 16

A joint venture is an association of persons engaged as co-owners in a single (special transaction) undertaking for profit. A joint venture is treated as ___________ for most important legal respects.

Answer 16

a partnership

Question 17

Concerning liability when a partner in a general partnership commits a tort while engaged in partnership business

Answer 17

Each partner is jointly and severally liable

Question 18

A limited partnership must have what mix of partners?

Answer 18

At least one general partner and one limited partner

Question 19

A limited partner will be considered a general partner with full personal liability

Answer 19

only to those that the limited partner transacts with as if he were a general partner.

Question 20

The death of a general partner will, by operation of law,

Answer 20

dissolve the limited partnership.

Question 21

Fundamental Corporate Changes (DAMS)
Dissolution
Amendments to the Aritcles of Incorporation
Mergers, Consolidations, and compulsory share exchanges
Sale of substantially all of the Corp’s assets outside the
regular course of business.

Answer 21

Need the following: Board & Shareholder Aprroval-Not Unanimous.

1. Majority Board Resolution
2. Notice to all shareholers
3. Majority of the shareholders approval
4. Filing of the articles with the state

Question 22

A partner’s death is an event of

Answer 22

dissociation. Where a partner dies, the partner’s executor does not take the partner’s place.

Rule: The partner’s estate remains liable for the partner’s obligations to the partnership and has a right to the deceased partner’s share of distributions