20. In what manner are a sole proprietorship and a partnership similar?

a. There is no legislated regulation affecting either.

b. Both require special steps to create.

c. Neither is a legal entity with capacity to contract.

d. Both require regulation of their profit motives.

21. Lita and Linda are partners in a general partnership and have borrowed $10,000 from the bank to

finance their start-up. How is their liability for the bank loan best characterized?

a. limited liability

b. joint liability

c. proportional limited liability

d. full and complete impunity

22. Which statement best describes how a partnership comes into existence?

a. The partners must sign a written partnership agreement.

b. The partners must register the partnership.

c. Two or more people carry on business together with a view to profit.

d. Two or more people purchase property together.

23. Ray and Mohammed are forming a general partnership but have not yet discussed how profits

will be shared between them. Which statement best describes their legal situation?

a. General partners are always required to share profits equally.

b. They are automatically entitled to a share proportional their relative contributions to the

capital of the partnership.

c. They cannot have a partnership until they determined how profits will be shared.

d. If they fail to agree, partnership legislation requires them to share profits equally.