Leach TB Chap03 Ed3

Leach TB Chap03 Ed3 - CHAPTER 3 ORGANIZING AND FINANCING A...

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CHAPTER 3 ORGANIZING AND FINANCING A NEW VENTURE True-False Questions T. 1. The difference between a limited partnership and a general partnership is that the limited partnership has partners who actively manage the day-to-day operations but also has passive investors. T. 2. A limited partnership limits certain partners’ liabilities to pay the venture’s obligations to the amount each paid for their partnership interests. F. 3. In a corporate legal entity, the personal assets of the owners are separate from the business’ assets, but the personal liabilities of the owners are not. F. 4. Limited liability in the corporate business structure means creditors can seize only some of the corporation’s assets. T. 5. The articles of incorporation are the basic legal declarations contained in the corporate charter. F. 6. Limited liability companies (LLCs) are owned by shareholders with limited liability and its earnings are taxed at the corporate rate. T. 7. Partnerships are treated with pass-through taxation. This means that profits and losses of the business pass directly through to investors on the basis specified in the partnership agreement. T. 8. An employment contract is an agreement between an employer and employee about the terms and conditions of employment including the employee’s agreement to keep confidential information secret and to assign ideas and inventions to the employer. F. 9. Nondisclosure agreements prohibit the creator of an idea or other form of intellectual property from sharing it with others once it has been presented the first time. F. 10. Financial bootstrapping maximizes the need for financial capital. T. 11. The income received by a proprietorship is taxed at personal tax rates. F. 12. The equity capital sources for a proprietorship are partners, families, and friends. 17
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Chapter 3: Organizing and Financing a New Venture T. 13. The number of owners in a Subchapter S corporation must be fewer that 75. T. 14. The marginal tax rate for the first dollar of taxable income is higher for corporations than for individuals. F. 15. The highest marginal income tax rate for taxable personal income is 45 percent. T. 16. There are four types of “marks” that can be used to try to protect intellectual property. F. 17. “Certification marks” cover memberships in groups (e.g., a sorority or a labor union). T. 18. “Collective marks” cover memberships in groups (e.g., a sorority or a labor union). T. 19. Most trademarks take the form of names, words, or graphic designs. F. 20. A “color mark” is considered to be one four types of “marks” used to try to protect intellectual property. T. 21. There are four kinds of patents. T. 22. “Business method” is one kind of patent. F.
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Leach TB Chap03 Ed3 - CHAPTER 3 ORGANIZING AND FINANCING A...

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