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Chapter 10 Business Organizations TRUE/FALSE QUESTIONS 1. In a sole proprietorship, the owner receives all of the risk. ANSWER: T PAGE: 277 TYPE: N Objective: AACSB Analytic Skill Level: AICPA Legal 2. A sole proprietorships income is taxed only once. ANSWER: T PAGE: 277 TYPE: N Objective: AACSB Analytic Skill Level: AICPA Legal 3. A sole proprietorships income is taxed as the firms profits, not as the owners personal income. ANSWER: F PAGE: 277 TYPE: N Objective: AACSB Analytic Skill Level: AICPA Legal 4. A partnership is never considered a legal entity apart from its owners. ANSWER: F PAGE: 277 TYPE: N Objective: AACSB Analytic Skill Level: AICPA Legal 5. The income from a partnership is taxed in the same manner as the income from a sole proprietorship. ANSWER: F PAGE: 277 TYPE: N Objective: AACSB Analytic Skill Level: AICPA Legal 155 156 UNIT THREE: THE COMMERCIAL ENVIRONMENT 6. A general partner is personally liable for partnership debts if the firm cannot pay its creditors. ANSWER: T PAGE: 277 TYPE: N Objective: AACSB Analytic Skill Level: AICPA Legal 7. The formation of a limited partnership requires that a certificate of part- nership be filed in the state of formation. ANSWER: T PAGE: 278 TYPE: N Objective: AACSB Analytic Skill Level: AICPA Legal 8. In a limited partnership, the liability of a general partner is limited to the amount of capital he or she has invested in the partnership. ANSWER: F PAGE: 278 TYPE: N Objective: AACSB Analytic Skill Level: AICPA Legal 9. A limited liability company is operated in compliance with state law. ANSWER: T PAGE: 279 TYPE: N Objective: AACSB Analytic Skill Level: AICPA Legal 10. For federal jurisdictional purposes, a limited liability company is treated like a corporation. ANSWER: F PAGE: 280 TYPE: N Objective: AACSB Analytic Skill Level: AICPA Legal 11. A limited liability company is a citizen of every state of which its members are citizens. ANSWER: T PAGE: 280 TYPE: N Objective: AACSB Analytic Skill Level: AICPA Legal 12. For federal income tax purposes, a limited liability company can choose to be taxed like a corporation. ANSWER: T PAGE: 280 TYPE: = Objective: AACSB Analytic Skill Level: AICPA Legal 13. A limited liability company must have an operating agreement. CHAPTER 10: BUSINESS ORGANIZATIONS 157 ANSWER: F PAGE: 280 TYPE: = Objective: AACSB Analytic Skill Level: AICPA Legal 14. In a limited liability company, members cannot participate in its manage- ment.... View Full Document

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