Question

A personal liability of each partner in a general partnership is for:
A) the total debts of the partnership, only when they were unaware of those debts.
B) their fractional share of all partnership debts regardless of which partner incurred that debt.
C) all personal and partnership debts incurred by any partner, even if they were unaware of those debts.

D) only the partnership debts that they personally created.
E) None of the above

3) An LLC (limited liability company):
A) will always be taxed like a corporation.
B) provides limited liability for its owners irrespective of their conduct.

C) prefers to be taxed as a corporation.
D) is a combination between a partnership and a sole proprietorship.
E) can be created for professional service firms.

4) The ultimate financial goal of a corporation is to maximize:

A) value and its growth.
B) current profits.
C) market share.

D) current dividends.

E) none of the above

Answer 1

Ans

1. Option b: Their fractional share of all partnership debts regardless of which partner incurred the debt.

The liability of partners are joint and several. Hence their laibilty will go far behind the debt which are unknown to them.

2. Option E can be created by professional firms.

Professional firm are disquilified to form as corporation but they can form as LLC if the majority partners are professionally qualified.

3. Option C Market Share.

The ultimate financial goal of a corporation is to maximize market share.