39.
Partnerships are more effective than proprietorships in raising funds.
40.
An equal partnership between owners is advisable in order to facilitate decision-making.
41.
The Uniform Partnership Act (UPA) governs the operations of partnerships in the absence
of other expressed agreements.
42.
In a partnership, each partner is responsible for the acts of all the other partners.
43.
(p. 62)
A limited partnership firm is managed by the concerned limited partners.
44.
In a limited partnership, the general partners have limited personal liability for the debts of
the business.
45.
The articles of copartnership should be drawn during the preoperating period and should
show the rights, duties, and responsibilities of each partner.
46.
A corporation is considered by law to be a unique entity, separate and apart from those
who own it.
47.
In a corporation, personal property of the owners can be taken to pay the debts of the
business.
48.
The traditional form of a corporation is called a C corporation.
49.
In a corporation, the shareholders elect a board of directors to oversee major policies and
decisions.
50.
An advantage of a corporation is that large amounts of capital can be raised easily.
51.
The main disadvantage of a corporation is double taxation.
52.
Articles of incorporation are the instrument by which a corporation is formed under the
corporation laws of a given state.
53.
A buy-sell agreement states what a business can do and provides other organizational and
financial information.
54.
A buy-sell agreement details the terms by which stockholders can buy out each other’s
interest.
55.
The owners of any corporation are usually the corporate officers.
56.
The board of directors conducts the day-to-day operations of a business.
57.
In an S corporation, all shareholders involved in the firm must be individuals, estates, or
some type of personal trust.
3-32
58.
Limited-liability companies are permissible only in a few states in the United States.
59.
The cooperative form of business is usually associated with the purchasing, selling, and
financing of farm equipment and materials.
60.
Usually, income derived from a joint venture is taxed as if the organization were a
partnership.
Essay Questions
61.
What are some of the factors that should be considered while choosing the proper legal
form for a business?
62.
Why do small business owners prefer proprietorship? What are the disadvantages of
proprietorship?
63.
Compare the features of a partnership with that of a proprietorship.
64.
Differentiate between a general partnership and a limited partnership.
65.
State the advantages and disadvantages of a corporation.
66.
Describe the people who govern a corporation.
67.
What are the features of an S corporation?
68.
(p. 67)
What is a family limited partnership?
69.
Describe in brief the features of a cooperative and a joint venture.
70.
What is fractional ownership?
