FSE 2202 MID TERM PREP EXAM QUESTIONS AND ANSWERS WITH
COMPLETE SOLUTIONS
A written document that states explicitly the rights and duties of partners in a
partnership
Articles of Partnership
Define a sole proprietorship
An individual conducting a business as an individual and sole owner
List the advantages of a partnership
• Combined management, talent, capital
• Easy to form
• Efficiency of labor
• Possibility of employees to buy into the business
• Each partner contributed good will in the business
List the advantages of a sole proprietorship
• Ease of starting
• Low cost of organization
• Profits
• Promptness of action
• Secrecy
• Customer recognition
• Unique credit standing
,List the disadvantages of a partnership
• Lack of continuity
• Decisions are binding on both parties
• Frozen investments
• Possibility of unsatisfactory division of profits
A legal form of organization whereby a legal entity is authorized by a state to
operate
Corporation
List the disadvantages of a sole proprietorship
• Unlimited financial risk
• Limited size
• Limited life
• Limited management ability
• Limited opportunities for employees
• Difficulty in raising capital
The written application for permission to incorporate that is approved by a state
official
Corporation Charter
A form of legal organization in which a business association made up of two or
more persons is formed for the purposes of carrying on as co-owners
Partnership
A partner in a partnership who is not active in its management and has limited
personal liability
, Limited partnership
A business organization that is recognized by the law as having a separate legal
existence
Corporation
A partner in a limited partnership who has unlimited personal liability
General partnership
A document specifying the number of shares owned by a stockholder
Stock certificate
A partner of a partnership who is personally liable for the debts of the business
SOLE PROPRIETORSHIP
List the advantages of a corporation
• Continuity in existence
• East of ownership
• Limited Liability
• Large financial capability
• Legal entity
List the disadvantages of a corporation
• Legal restrictions on activities
• Separation of ownership and control
• Lack of personal interest
• Double taxation of earning
• Lack of privacy
• Difficult to create
COMPLETE SOLUTIONS
A written document that states explicitly the rights and duties of partners in a
partnership
Articles of Partnership
Define a sole proprietorship
An individual conducting a business as an individual and sole owner
List the advantages of a partnership
• Combined management, talent, capital
• Easy to form
• Efficiency of labor
• Possibility of employees to buy into the business
• Each partner contributed good will in the business
List the advantages of a sole proprietorship
• Ease of starting
• Low cost of organization
• Profits
• Promptness of action
• Secrecy
• Customer recognition
• Unique credit standing
,List the disadvantages of a partnership
• Lack of continuity
• Decisions are binding on both parties
• Frozen investments
• Possibility of unsatisfactory division of profits
A legal form of organization whereby a legal entity is authorized by a state to
operate
Corporation
List the disadvantages of a sole proprietorship
• Unlimited financial risk
• Limited size
• Limited life
• Limited management ability
• Limited opportunities for employees
• Difficulty in raising capital
The written application for permission to incorporate that is approved by a state
official
Corporation Charter
A form of legal organization in which a business association made up of two or
more persons is formed for the purposes of carrying on as co-owners
Partnership
A partner in a partnership who is not active in its management and has limited
personal liability
, Limited partnership
A business organization that is recognized by the law as having a separate legal
existence
Corporation
A partner in a limited partnership who has unlimited personal liability
General partnership
A document specifying the number of shares owned by a stockholder
Stock certificate
A partner of a partnership who is personally liable for the debts of the business
SOLE PROPRIETORSHIP
List the advantages of a corporation
• Continuity in existence
• East of ownership
• Limited Liability
• Large financial capability
• Legal entity
List the disadvantages of a corporation
• Legal restrictions on activities
• Separation of ownership and control
• Lack of personal interest
• Double taxation of earning
• Lack of privacy
• Difficult to create
