Exam 26: Small Business, Entrepreneurship, and Partnerships

Seline operates,as a sole proprietorship,a dog grooming service under the fictitious name "Grooving to Grooming." She specializes in preparing her canine clients for dog shows.Unfortunately,one of Susie's employees used a bad combination of grooming products,causing an extreme amount of hair loss on a prize poodle.The poodle's owner sued Seline.Seline was not overly concerned,because she had most of her assets in her own name,and only a small amount of capital invested in her business.Is Seline's lack of concern about the safety of her personal assets warranted?

A limited partner who takes an active part in managing a limited partnership:

The number of votes that a partner has on partnership issues is directly proportional to the percentage of the partner's capital contribution.

For federal income tax purposes,a sole proprietor must prepare a personal income tax Form 1040 U.S.Individual Income Tax Return and report the income or loss from the sole proprietorship on his or her personal income tax form.

All states have enacted statutes that provide for the creation of limited partnerships.

A sole proprietorship is a separate legal entity,so it pays taxes at the business level.

A sole proprietor's liability for business debts is limited to the value and assets of the sole proprietorship.

The Uniform Partnership Act is the controlling law for both general and limited partnerships.

A partner who is made to pay more than his or her proportionate share of contract liability may seek indemnification from the partnership and from those partners who have not paid their share of the loss.

A general partnership is a voluntary association of one (1)or more persons for carrying on a business for profit.

The sole proprietor owns all of the business and has the right to receive all of the business's profits.

If a partner has the power,but not the right,to withdraw from a partnership,this means that:

There are no upper limits on the number of general or limited partners allowed in a limited partnership.

The UPA's definition of "person" who may be a general partner does not include a corporation.

A general partner who is offered an opportunity on behalf of the partnership cannot ________ the partnership opportunity.

A partnership that operates under a fictitious name has no obligation to report the fictitious name to any governmental entity.

What is the effect of a "continuation agreement" among partners in a general partnership?

If a limited partner personally guarantees the repayment of a loan to a limited partnership,the creditor may enforce the personal guarantee and recover payment from the limited partner who personally guaranteed the repayment of the debt.

A person may be both a general partner and a limited partner.

Which of the following best describes the Revised Uniform Limited Partnership Act?