Reference no: EM132544923

Problem 1: The relationship that exists between persons carrying on a business in common with a view to profit is referred to as a:

a. company.
b. proprietorship.
c. partnership.
d. retailer.

Problem 2: Which of these is an advantage of a partnership over a sole proprietorship?

a. Ease of transferring ownership
b. Unlimited liability
c. Mutual agency
d. Pooling of resources

Problem 3: Which of these is a not a disadvantage of operating as a partnership rather than as a company?

a. Greater difficulty in selling a share of the business
b. Unlimited liability
c. Mutual agency
d. Fewer disclosure requirements

Problem 4: The characteristic of a partnership whereby each partner is liable for partnership debts to the full extent of his or her private assets is known as:

a. limited life.
b. unlimited liability.
c. limited liability.
d. mutual agency.

Problem 5: Mutual agency means:

a. unlimited liability for partnership debts.
b. sharing partnership resources.
c. that each partner is an agent for the partnership and can bind the other partners when acting within the normal scope of business.
d. consigning goods to other entities on a commission basis to increase sales.

Problem 6: Michael and Brian each invested $65 000 in a partnership where they agreed to share profits 40% Michael, 60% Brian. The partnership business was not successful and now has no assets. In addition, they are being sued for $70 000 by a supplier for non-payment of invoices. What is the amount for which Michael could be held personally responsible if the lawsuit is successful? (Ignore any possible legal costs.)
a. Zero
b. $28 000
c. $65 000
d. $75 000