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Home / Questions / If a sole proprietor is forced to liquidate and business debts exceed business assets, a

If a sole proprietor is forced to liquidate and business debts exceed business assets, a

 If a sole proprietor is forced to liquidate and business debts exceed business assets,

a. the maximum liability of the proprietor is limited to the amount invested in the
business

b. the proprietor’s business assets and only the financial portion of personal assets can
be taken to cover business debts

c. the proprietor has no liability for any of the business debts

d. the proprietor’s business and personal assets can be taken to cover business debts

e. only the proprietor’s profit from the business can be used to cover business debts

37.              Which of the following would be an advantage of a sole proprietorship?

a. ability to raise money by issuing stock

b. the sharing of risk with other investors

c. limited liability

d. unlimited liability

e. one person can make all decisions

38.              Which of the following would be a disadvantage of a sole proprietorship?

a. limited liability

b. limited ability to raise funds to expand business

c. too many people involved in decision making

d. inability to produce more than one product

e. inability to advertise

39.              In a sole proprietorship

a. only one product can be offered for sale

b. only family members can be employed in the business

c. the business cannot expand unless it becomes a partnership

d. one person owns the business

e. stock can be issued to raise money for the business

40.              In a partnership form of business

a. all, except one partner, are subject to limited liability

b. the business must operate in at least two countries

c. at least two different products must be produced

d. the partner who owns the majority of stock makes all of the important
managerial decisions

e. profits are shared by the partners

41.              Which of the following would be an advantage of the partnership form of business?

a. limited liability

b. unlimited liability

c. ability to raise money by issuing stock

d. ability to bring talents and money together

e. all of the profits earned flow to one person

42.              Which of the following would be a disadvantage of the partnership form of business?

a. limited liability

b. too many products

c. unlimited liability

d. profits flow directly to the one person responsible for creating it

e. one person must make all of the important managerial decisions

43.              Joe and Frank are partners in a delivery business. Their only business asset is the truck
                            they use for deliveries, which is jointly owned by the partners. Frank, while on a business
                            run, speeds through a red light, hits a car, and causes personal injury to the car owner of
                            $150,000. In the apportionment of liability for this injury among the partners

a. the most that could be taken from Joe is his half-ownership in the truck

b. the most that can be taken from Joe is $75,000

c. Joe is not liable at all since he was not the driver

d. Joe could be required to pay the full $150,000 in damages

e. Joe would be liable only for the amount of profit earned in the trucking business

44.              Which of the following distinguishes corporations from the other forms of business
                            organization?

a. Corporations can issue stock.

b. Corporations are permitted to operate in other countries.

c. Corporations can produce more than one product.

d. Corporations can offer both products and services.

e. Corporations are subject to unlimited liability.

45.              Which form of business organization creates a separate legal being?

a. partnerships and proprietorships

b. only proprietorships

c. only partnerships

d. only corporations

e. corporations and partnerships

Dec 12 2019 View more View Less

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