7. Franklin, John, Henry, and Harry have decided to pool their financial resources and business skills in order to open up and run a coffee shop. They will share any profits or losses that the business generates and will be personally responsible for making good on any debt that their business undertakes. Their business should be classified as a: LO2.6

a. corporation.

b. sole proprietorship.

c. partnership.

d. none of the above.

8. Ted and Fred are the owners of a gas station. They invested

$150,000 each and pay an employee named Lawrence $35,000 per year. This year revenues are $900,000, while costs are

$940,000. Who is legally responsible for bearing the $40,000 loss? LO2.6

a. Lawrence.

b. Ted.

c. Fred.

d. Ted and Fred.

e. Lawrence, Ted, and Fred.