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Copyright © 2019 Pearson Education, Inc.
Chapter 6, Page 105
Student responses may include, and are not limited to, the following:
Lack of follow through based on the agreed division of partner responsibilities
and duties
Lack of communication — talking and listening
Lack of mutual respect
Misuse of company funds and resources
Dishonesty and actions that lead to mistrust
Conflicting behavior when interacting with people — employees and customers
Divergent behaviors regarding the management of business finances
3. Suppose that two of your friends are about to launch a business together with
nothing but a handshake. “We’ve been best friends since grammar school,” they
say. What advice would you give them? (LO 1) (AACSB: Interpersonal relations
Part 4: Chapter Discussion Questions
6-1. What factors should an entrepreneur consider before choosing a form of
ownership? (AACSB: Reflective thinking)
Copyright © 2019 Pearson Education, Inc.
Chapter 6, Page 106
Management succession plans – consider a smooth transition when passing
company to the next generation of buyers.
Cost of formation – some forms are more costly to create.
6-2. Why are sole proprietorships so popular as a form of ownership? (LO 1)
6-3. What issues should the articles of partnership address? (LO 1) (AACSB:
Reflective thinking)
6-4. Why are the articles important to a successful partnership? (LO 1) (AACSB:
Reflective thinking)
6-5. Explain why one partner cannot commit another to a business deal without the
other’s consent. (LO 1) (AACSB: Reflective thinking)
6-6. What issues should the certificate of incorporation cover? (LO 2) (AACSB:
Reflective thinking)
6-7. How does an S corporation differ from a regular corporation? (LO 2) (AACSB:
6-8. What role do limited partners play in a partnership? (LO 1) (AACSB:
Reflective thinking)
6-9. What happens if a limited partner takes an active role in managing the
business? (LO 3) (AACSB: Reflective thinking)
Copyright © 2019 Pearson Education, Inc.
Chapter 6, Page 108
Unlike a limited partnership, which prohibits limited partners from participating in the day-
to-day management of the business, an LLC does not restrict its members’ ability to
become involved in managing the company.
In the limited partnership if the limited partner does take an active part in managing the
business, a limited partner may actually forfeit limited liability, taking on the liability status
of a general partner.
6-10. What advantages does an LLC offer over an S corporation? (LO 3) (AACSB:
6-11. What advantages does an LLC offer over a partnership? (LO 3) (AACSB:
6-12. How is an LLC created? (LO 3) (AACSB: Reflective thinking)
Part 5: Case Studies
The following text case may be used for lecture and assignments for topics presented in
this chapter.
Case 4: ThinkImpact
Part 6: Online Videos and Podcasts
These online videos may enhance class discussion and provide additional insight for the
chapter topics.
How to Avoid 3 Common Mistakes Small Business Owners Make 12:47 minutes
http://www.youtube.com/watch?v=zahVagoP3SU
Copyright © 2019 Pearson Education, Inc.
Chapter 6, Page 109
Forms of Business Ownership 3:54 minutes
http://www.youtube.com/watch?v=Wtmw1oxNiWg
Business Entities: Limited Liability Company 5:47 minutes
http://www.youtube.com/watch?v=aq5zdacU4E4
The Corporation – A Legal “Person” 5:48 minutes
http://www.youtube.com/watch?v=wkygXc9IM5U
Links to additional online resources are available on the companion Web site at
