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BA3010 test 3 > Chapter 12: Commonly used Forms of Business > Flashcards

Chapter 12: Commonly used Forms of Business Flashcards

1
Q

Sole Proprietorship (SP) (456)

A

A single person engaged in business to make a profit

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2
Q

General partnership (GP) (456)

A

At least 2 general partners engaged in business to make a profit

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3
Q

Limited partnership (LP) (456)

A

At least 1 general and 1 limited partner engaged in business to make a profit

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4
Q

Limited Liability COmpany (LLC) (457)

A

An unincorporated business entity that combines the most favorable attributes of general partnerships, limited partnerships and corporations

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5
Q

Corporations (Corp.) (458)

A

A fictitious legal entity created by statutory requirement

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6
Q

Most common form of business and is not separate from the owner? (459)

A

Sole proprietorship

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7
Q

Formation is easy or difficult, depending on the occupation chosen? (459)

A

Sole proprietorship

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8
Q

Owner has the right to make all management decisions concerning the business? (459)

A

Sole proprietorship

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9
Q

______ have unlimited personal liability? (465)

A

Sole proprietorship

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10
Q

A _____ access to capital is limited (465)

A

Sole proprietorship

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11
Q

Sole proprietorships are taxed at ____? (466)

A

The personal rate of the sole proprietor

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12
Q

The sole proprietor tax payer files a ____?

There is a _____ tax treatment? (466)

A

Form 1040 Tax Return augmented by Schedule C

Pass through

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13
Q

Who governs general partnership law? (468)

A

The uniform partnership act (UPA)

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14
Q

General partnership should file a _____ name? (468)

A

Fictitious

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15
Q

The general partnership agreement can be ____, ____ or ___? (469)

A

Oral, written, implied

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16
Q

Partnership agreement should be ___ and can also be called articles of _____? (469)

A

Written

Partnership

17
Q

Partnership at will (469)

A

General partnership formed impliedly by behavior or knowingly, but without any kind of partnership agreement, oral, or written

18
Q

General partnerships are taxed at ____? (470)

A

The personal rate of the general partner

19
Q

The partner tax payer files ____?

There is ____ tax treatment? (470)

A

All forms and schedules necessary for his personal tax bill

pass through

20
Q

Right of general partners are to: (471)

A
  • Participate in management, each with an equal vote.
  • Share in profits
  • Receive compensation
  • A return of loans and capital
21
Q

Duties of General Partnership: Loyalty (473)

A
  • No self-dealing
  • No usurping
  • No competing
  • No secret profits
  • No breach of confidentiality
  • No misuse of property
22
Q

Duty of Care (474)

A

Reasonable care and skill or an experts level of care and skill are required to be used by partners
Breach of this duty is negligence

23
Q

Duty of inform (474)

A

Each partner must sure with the other partners all relevant information

24
Q

Duty of obedience (474)

A

each partner must abide by the partnership agreement and the partners decisions

25
Q

General partners (481)

A

invest capital, manage the business, are personally liable for partnership debts

26
Q

Limited partners (481)

A

invest capital, do not participate in partnership management, are not persoanlly liable for partnership debts unless they exceed the “safe habor”

27
Q

Limited partnership agreements are governed by?

A

ULPA

28
Q

There must be a _______ Filed with the secretary of state

A

Formal written agreement

29
Q

A corporation is a separate legal entity:

A

A fictitious legal entity

30
Q

Shares are

A

freely transferable

31
Q

S Corporation

A

met certain requirement and have elected to be taxed as an S corporations for federal income tax purposes

  • loss flows to the shareholder or income must be reported on the shareholders’ individual income tax return.
  • No more than 100 shareholders
  • Corporations or partnerships CANNOT be shareholders in S corporations
32
Q

C Corporation

A

do not qualify for or have not sought S corporations statue.

  • Taxed twice “Double taxation” occurs when income is taxed when it comes into the corporation and then again when dividends are distributed to shareholders.
  • Taxed at corporate rate
  • Shareholders are taxed at personal rates
33
Q

Piercing the Corporation veil

A

when the corporation fails to act as a corporation and it fails to observe all the corporation formalities, shareholders will not be given the safety of limited personal liability.

34
Q

Watered Stock

A

Firm sells par or stated value stock for less than par or stated value, the potential investor is deceived into thinking the firm has greater assets than it does

35
Q

Derivative Lawsuit

A

initiated by shareholders to force the corporation to act when the humans running the corporation do not make the corporation act up its legitimate purposes

BA3010 test 3 (5 decks)

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