TRUE OR FALSE QUESTIONS

1-A legal entity with authority to act and have liability separate from its owners is called a sole proprietorship.

2-The profits of a sole proprietorship are taxed as the personal income of the owner

3-The debts of a business operated as a sole proprietorship are considered to be the personal debts of the owner of the business.

4-If the business is designated a sole proprietorship, profits are passed along to the owner. For tax purposes, these profits are accounted for with any other personal income the owner may have accumulated and taxed at the owner's personal income tax rate.

5-If a person in a limited partnership dies, the partnership ceases to exist.

6- The fairest way to handle profits in any partnership arrangement is to divide things evenly. If there are two owners in the business, each gets 50%. If there are three owners (even if one is a limited partner), each gets 33.333% of any accumulated profits.

7-John has agreed to become a partner in his cousin's waste management business. Since he provided 30 percent of the money to start the company and built an air-conditioned garage, he is entitled to 30 percent of any profits the company earns during its first year of operation.

8-One method to avoid conflicts between partners is to solicit the services of a lawyer to create a well-written partnership agreement.

9-A conventional corporation is a state-chartered legal entity, with authority to act and have liability separate from its owners.

10- Double taxation means that a corporation pays twice the amount of taxes as a sole proprietorship or partnership.

11-Which of the following is an advantage of a partnership?

a)Unlimited liability

b)Ease of starting and ending the business

c)Little time commitment

d)Shared management and pooled skills