BUL 3310 Exam 4 FSU Bailey - Questions and Answers (Complete Solutions) Phil has a 1/4 partnership interest in Green & Sons. He has been denied access to
... [Show More] the partnership books and records for over a year and he suspects that one of the partners has been engaging in secret business transactions using partnership funds. Phil wants to know the status of the business. Phil's remedy in this situation is to go to a court of equity for an ______________. Charging order Marshalling order Accounting Decree of insolvency One partner has the ability to veto the admission of a new partner into the business. T/F? True John, a partner in KLM Partners, had a personal loan from First Bank for 35,000. First Bank got a judgment against John after he defaulted on the loan. First Bank can reach John's interest in KLM Partners and require that a receiver be appointed to take John's share of the partnership profits to satisfy the judgment. The court order that will do this is an ________________ Marshalling order Accounting order Charging order Attachment order Partnership agreements often fund the purchase of a deceased partners' partnership interests with Life insurance policies Distributions of retained earnings Levies on partnership interests Partner advances The bankruptcy of a partner will cause the dissolution of the partnership by operation of law. T/F? True Partnership books must be kept in the firm's place of business and be accessible to all partners T/F? True A partnership maybe created by an express agreement between the parties or it may be implied from their conduct. T/F? True Subchapter S corporations are limited to _________shareholders. 10 35 100 There is no limit to the number of shareholders in a Subchapter S corporation. The written agreement between two or more persons that creates a partnership and sets for the rights and duties of each partner is the_____________. Articles of incorporation Articles of partnership By laws charter A partnership is a taxable entity. T/F? False If net profits are retained in a Subchapter S corporation, income tax must be paid by shareholders on these earnings even though the earnings have not yet been received. T/F True A limited partnership must have at least one general partner and one limited partner. T/F? True Which of the following is an informal association of two or more persons who agree to engage as co-owners in a single business transaction? Joint venture General partnership Trading group Limited partnership Which of the following issues do not require a unanimous vote of the partners? Admission of a new partner Confession of a judgment against the partnership Disposal of the good will of the business Hiring an office manager for 40 hours a week. The court order directing that the share of profits due a partner be given to his or her creditor to satisfy a judgment is a _________________order. Charging Marshaling Accounting Collection A partner's capital contribution may consist in business experience or service to the firm. T/F? False Partnerships are required to use the term "Company" in their names. T/F? False Which of the following statements about the taxation of corporations is false? Premiums paid for employee health insurance plans are fully deductible. Profits retained by the corporation are normally taxable to the shareholders under the corporate pass through rule. Salaries paid to employees are deductible expenses for the corporation. Most states impose license fees or franchise taxes on corporations doing business in the state. May is one of three limited partners in a limited partnership. Each limited partner made a capital contribution of $50,000. Assume there is a judgment against the partnership for $300,000 and that both the partnership and the general partner are insolvent. What is the maximum amount that May will have to pay on the judgment? 0: May is a limited partner so has no liability for the debts of the partnership under any circumstances. $50,000: May's capital contribution can be applied to the debt, but she is not personally liable beyond that. $100,000: May will be liable for up to 1/3 of the judgment since there are three limited partners. $300,000: As a limited partner May has joint and several liability for the debts of the partnership so she could be personally liable for the full amount. By statute, a limited partnership must have a minimum of ___________general partners. one two four five A Subchapter S corporation is taxed in the same way a partnership is taxed. T/F? True Any change in the identity of the partners, whether through death, withdrawal, or the adding of a new partner, results in the ________________of the old partnership. Termination Winding up Dissolution Disengagement A partner who does not participate in management and whose existence is not known by the public is a Silent partner Dormant partner Secret partner Phantom The purpose of a buy and sell agreement is to Create a trading partnership Arrange for the evaluation of the business and the method for financing the purchase of a withdrawing or deceased partner's interest. Determine the compensation for partners who manage the business. Set guide lines for selling the goodwill of the business. Which of the following is not a right of a partner? The right to participate in the management of the business. The right to draw yearly interest on his or her capital contribution The right to inspect the partnership books and records. The right to sue for an accounting if another partner has taken a secret profit. Jay, who is a partner in an accounting firm, is being sued for malpractice by a client. If the jury finds for the client, which of the following parties will have liability on the judgment? The partnership as an entity Jay individually Each of the other partners individually All of the above have liability on the judgment. Marshaling of assets is the tax doctrine that allows income to be taxed only at the owner level and not at the organization level. T/F? False Corporations normally have the power to make charitable contributions. T/F? True Some states use the alter ego theory to require corporations to assume liability for contracts negotiated on their behalf by the promoters. T/F? True A shareholder who dissents from a merger is entitled to Be paid the fair value of her stock Revoke her dissent within 10 days of the stock appraisal Sue the board of the surviving corporation in a derivative suit. All of the above are shareholder rights. In most states corporations can have perpetual existence. T/F? True The document that the state issues evidencing that a corporation has been duly formed is the corporation's __________. By laws Articles of incorporation Charter Certificate of authority to do business. Once a corporation has been dissolved and the remaining assets of the corporation have been distributed to the shareholders, a creditor of the corporation may be able to sue the former shareholders on the corporate debt. T/F? True [Show Less]