(Q4) Sole Proprietorship, Partnerships, Corporations

Question 1

Sole Proprietorship

Answer 1

• One person as owner
• Not a partnership or corporation

Question 2

Partnership

Answer 2

Association of two or more people to carry on a business for profit

Question 3

General Partnership

Answer 3

• Most common form of partnership
• Created under the Uniform Partnership Act (UPA)
• Partnership ownership is tendency in common

Question 4

Limited Partnership

Answer 4

• At least one partner is limited as to their liability

Question 5

Trading Partnership

Answer 5

Deals in goods
ex. casket manufacturer

Question 6

Non-Trading Partnerships

Answer 6

• Deals in services
• funeral homes are considered non-trading partnerships

Question 7

Uniform Partnership Act (UPA)

Answer 7

• Governs the creation, operation, and termination of partnerships
• adopted in most states

Question 8

General Partnership

Answer 8

Created under the UPA

Question 9

Limited Partnership

Answer 9

• Limited as to liability
• state must have a limited partnership act

Question 10

Secret Partnership

Answer 10

• Partner is not known to the public but has a voice in management

Question 11

Silent Partner

Answer 11

• Partner is known to the public and has a voice in management
  ex. Elon Musk and Twitter

Question 12

Dormant Partner

Answer 12

Combination of both silent and secret partner

Question 13

Nominal Partner

Answer 13

• Partner in name only.
• Known to the public and has no voice in management

Question 14

Liability of Partners

Answer 14

Fiduciary relationship (a relationship of trust)

Question 15

Contract Liability

Answer 15

Completely liable if partner is acting within the scope of partnership business

Question 16

Tort Liability

Answer 16

Completely liable but if the other partner commits a tort, he must reimburse partnership for loss

Question 17

Joint Stock Company

Answer 17

Ownership is evidenced by shares of stock, but have unlimited liability

Question 18

Joint Venture

Answer 18

Partnership for only one specific transaction

Question 19

Liability of Limited Liability Company or Partnership

Answer 19

Limited as to liability like a corporation
- has “flow through taxation” like a partnership
- Partnership does not pay taxes, but each partner does

Question 20

Creation of Partnership

Answer 20

1. By agreement (contractual relationship)
2. By estoppel

Question 21

Dissolution of Partnership

Answer 21

• If a partner leaves for whatever reason
• If the partners all decide to close

Question 22

Effect of Dissolution

Answer 22

Termination of a partnership but the remaining partners can form a new partnership

Question 23

Corporation

Answer 23

An entity formed by individuals on a business for or not for profit, to adopt a corporate name, and to change it’s members without dissolution

Question 24

Classifications of Corporations

Answer 24

• Public Corporation (can be governmental or private)
• Close Corporation (limited number of shareholders)
• Domestic Corporation (foreign/alien)
• Promoters (prepare articles of incorporation: file with the state and appoint a board of directors)

Question 25

Board of Directors

Answer 25

Policymakers for a corporation

Question 26

Officers

Answer 26

Elected by the Board initially

Question 27

Powers of a Corporation

Answer 27

- Expressed - Incidental - Implied

Question 28

Ultra Vires Acts

Answer 28

- any acts that lie beyond the authority of a corporation to perform - is not limited to illegal acts, although it encompasses actions barred by statute as well as by the corporate charter.

Question 29

Promotors

Answer 29

Incorporators (those who create a corporation) - File articles of incorporation - elect a board of directors - may elect officers - may hire and fire people

Question 30

Stockholders

Answer 30

the owners of a company's outstanding shares, which represents a residual portion of the corporation's assets and earnings as well as a percentage of the company's voting power.

Question 31

Classes of Stock

Answer 31

- Capital - Common - Preferred - Par Value

Question 32

Capital Stock

Answer 32

Declared value of outstanding stock

Question 33

Common Stock

Answer 33

Has voting privileges - Proxy: authoriation given to someone by a common stockholder to vote on their behalf

Question 34

Preferred Stock

Answer 34

- Special advantages for dividend and capital - Has not voting privileges

Question 35

Par Value Stock

Answer 35

Has assigned face value

Question 36

Treasury Stock

Answer 36

Stock reacquired after saile

Question 37

Watered Stock

Answer 37

Stock paid for with property of inflated value

Question 38

Stock Options

Answer 38

Right to purchase shares at a set price

Question 39

Dividends

Answer 39

Profits of the corporation allocated to the stockholders

Question 40

Rights of Stockholders

Answer 40

Have the right to inspect books, vote, and have a share in profits (dividends)

Question 41

Management

Answer 41

- Officers of a corporation - Usually "line management": type of management that refers to a chain or line structure of management, with each link in the chain working towards a CEO, managing director or board of directors.

Question 42

Dissolution of a Corporation

Answer 42

- Winding up of the affairs - Does not equal termination