Operates beauty salon as sole proprietorship

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Reference no: EM132236277

1. Aretha operates a beauty salon as a sole proprietorship. If a customer is injured while in her business, the extent of Aretha's potential liability could best be described as:

limited to the assets of the business.

limited to the amount of business insurance she carries.

unlimited, most of her business and personal assets could be taken.

limited by federal law to $100,000.

2. Alice, Raul, and Artis properly form a limited partnership to operate a delivery service. Alice is the general partner and properly runs the business. Raul & Artis are limited partners and not involved in the management of the business. Which statement best describes the potential liability of the partners?

Alice, Raul, & Artis are personally liable for any partnership debts & obligations.

Alice, Raul, & Artis are liable to the extent of their capital contributions to the partnership.

Raul & Artis are liable to the extent of their capital contribution & Alice has unlimited liability.

Alice is liable to the extent of her capital contribution and Raul & Artis have unlimited liability.

3. Travis, Phong, & Sarah are owners of a properly formed and run Limited Liability Company (LLC). Travis contributed $50,000 to the LLC. Phong & Sarah contributed $10,000. After two years the LLC failed with $150,000 in debt. Which statement is correct?

Travis will lose his capital contribution and will be personally liable for the rest of the LLC's unpaid debt because he was the leading member of the LLC.

Travis will lose his capital contribution and will be personally liable for his proportionate share of the LLC's unpaid debt.

Travis will lose his capital contribution and will be personally liable for $80,000 of the LLC's unpaid debt.

Travis will lose his capital contribution but will not be personally liable for any of the LLC's unpaid debt.

Reference no: EM132236277

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