26-1
What are the three principal forms of business organization
1)sole proprietorship
2)partnerships
3)corporations
how are partnerships classified
according to their purpose and according to the extent of the liability of the partners
True or False
Partners are entitled to all profits earned
True
Which word matches this definition?
association of two or more persons, as co-owners, to carry on a business for profit
a.Partnership
b.corporation
c.general partner
d.termination
a.partnership
What type of business did L.W. Clement and Charles form?
a plumbing business
which of the three principle forms is the simplest, most flexible, and easiest to start
Sole proprietorship
classified by purpose, partnerships are either _____ or _____
trading or non-trading
describe "sell"
a partner can sell in the regular course of business any of the firm's goods and give customary warranties
Which word matches this definition
assumes full personal liability for debt of the firm
a.partnership at will
b.silent partner
c.non-trading partnership
d.general partner
d.general partner
What did L.W. have total control over?
the partnership finances and handling the partnership funds
describe general partnership legal status
not a separate entity in many states
True or False:
a limited partner's exposure to liability cannot exceed the amount of capital the partner has invested in the business as long as the partner does not participate in the managerial control of the business
true
The principal rights a partner has include the following...
1)right to participate in management
2)right to profits
3)rights in partnership property
4)rights to extra compensation
Define general partnership
General partnership-all partners assume full liability for debts of the firm
What did L.W. use the partnership funds for?
to invest in personal real estate and insurance policies
describe general partnership management
partners have equal say in management unless otherwise specified in agreement
Termination of a partnership generally occurs in three distinct phases:______,______,and the legal termination of the partnership's existence.
dissolution and winding-up
Name THREE tasks a partner has the authority to do
1)Make binding contracts for the firm
2)receive money owned to and settle claims against the firm
3)borrow money in the firm's name
4)sell
5)buy
6)draw and cash checks and drafts
7)hire and fire employees and agents
8)receive notice of matters affecting the partnership
define joint venture
Joint venture-partnership formed by two or more persons or firms combining resources and skills for one complex project
The chancellor of equity heard the case and awarded Charles one-half interest in he real estate and insurance policies in question. However, the appellate court reversed the chancellor's decision. Why?
Describe corporation termination
by shareholder agreement or running of time period set in charter, by action of law, or by consolidation or merger
A partnership has the power to...
1)take title to and transfer property in its own name
2)be regarded as a principal, for which each partner may act as agent, making contracts in the firm's name
3)use its own assets as security for loans and to pay its creditors before any individual partner's assets may be sized
Name a partner's duties
1)comply with partnership agreement and decisions
2)use reasonable care
3)act with integrity and good faith
4)not conduct competing business
5)keep accurate records
define dissolution
Dissolution-step in termination of a partnership that precedes the winding- up process; also, term for divorce or the ending of a marriage in some states
What was the issue perseived by the Pennsylvania Supreme Court?
whether L.W owed to Charles the duty of negating the inference that the source of the funds for the investment was the partnership coffers.