Unit 2 - Chapter 14

Question 1

____ ____ is an unincorporated business organization that has only one owner

Answer 1

Sole Proprietorship

Question 2

In sole proprietorship, the owner has ______ personal liability for all debts and obligations of the business

Answer 2

unlimited

Question 3

A _____ is a business carried on by two or more persons with the objective of making a profit

Answer 3

partnership

Question 4

______ liability means liability is shared by two or more parties (partners), where each is personally liable for the full amount of the obligation

Answer 4

joint

Question 5

____ Act sets out default rules for partnerships that can be varied by written agreement

Answer 5

Partnership

Question 6

_____ & _____ Liability means individual and collective liability for a debt. Each liable party is individually responsible for the entire debt as well as being collectively liable for the entire debt

Answer 6

joint and several

e.g. adam gives poor advice to a client as to its computer systems needs and is sued for the tort of negligence, all the partners, not just Adam, are liable for any damages that result

Question 7

_______ partnership is a partnership in which the liability or some of the partners is limited to their capital contribution

Answer 7

limited

–> at least one partner has unlimited liability while others have limited liability

Question 8

A _____ comes into existence only if proper documents are submitted to the government and its issues, in return, a certificate of incorporation. Whether public or private, shares must also be issued to the owners

Answer 8

Corporation

Question 9

____ is a person who has ownership interest in a corporation

Answer 9

shareholder

Question 10

_____ is the person elected by shareholders to manage a corporation

Answer 10

director

Question 11

______ is the division of profits payable to shareholders

Answer 11

Dividend

Question 12

____ ___ means profits of the corporation are distributed to shareholders through dividends

Answer 12

profit sharing

Question 13

_____ is the fact that a corporation has a separate legal identity often allows for easy transference of an ownership interest represented by shares

Answer 13

transferability

Question 14

___ ____ means the corporation exists independently of its shareholders, the death or bankruptcy of one or more shareholders does not affect the existence of the corporation

Answer 14

perpetual existence

Question 15

The basis of a _____ is a contractual arrangement b/w a manufacturer, wholesaler, or service organization, and an indepedent business, which buys the right to own and operate one of the units in the franchise system

Answer 15

franchise

Question 16

___ ____ is the grouping of two or more businesses to undertake a particular project

Answer 16

joint venture

Question 17

Product _____ is an agreement whereby the owner of a trademark or other property right grants to another the right to manufacture and distribute products associated with the trademark or other proprietary rights

Answer 17

licensing