AU 60 - ASSIGNMENT 4 -
UNDERWRITING THE COMMERCIAL
ORGANIZATION QUESTIONS &
ANSWERS (RATED A+)
Sole proprietorship - ANSWERA form of business in which one person owns the
business assets and is personally liable for the business's debts.
Unlimited liability - ANSWERThe liability that exists in sole proprietorships and
certain partnerships; if the business becomes bankrupt, creditors can seize business
and personal assets to satisfy claims.
Contract of hire - ANSWERThe agreement between an employer and employee to
assume an employment relationship from which both parties reasonably expect to
derive some benefit; may be express or implied.
Employer - ANSWERA person who hires another person (employee) to perform
services and under whose direction and control that person functions.
Unlimited Liability - ANSWER____ is the most significant disadvantage of a sole
proprietorship. Potentially, the owner may lose not only his or her business, but also
his or her personal assets. Sole proprietorships are often thinly financed and remain
so because of difficulty in obtaining needed funds.
Partnerships - ANSWER____ are unincorporated businesses of two or more
persons, each of which has a financial interest in the business. The "persons" in in
this type of business could be individuals, estates, trusts, other partnerships, or
corporations and are jointly liable for the debts of the business.
Partnerships - ANSWERUnlike a sole proprietorship, a ____ is recognized as an
entity distinct from its individual members for certain purposes. For example, can sue
and be sued, as well as own and convey real estate.
Partnerships - ANSWER____, like sole proprietorships, do not pay taxes. Profits are
passed to partners, who pay taxes on the business's earnings.
Professional employer organization (PEO) - ANSWERA company that leases
workers to small or medium-sized client companies to supply the client's permanent
workforce, making the client an indirect employer; these relationships create
insurance implications related to employee status.
,General contractor - ANSWERAn independent contractor who obtains the primary
contract for a project and either completes all the work or subcontracts portions (or
all) of the work to other independent contractors who specialize in such work.
Partnership - ANSWERA for-profit business entity jointly owned by two or more
persons who share ownership and profits (or losses), although not necessarily on an
equal basis.
General partnership - ANSWERA partnership in which each partner assumes
unlimited joint liability for all the partnership debts.
Limited partnership - ANSWERform of partnership made up of one or more general
partners, who have unlimited liability, and one or more limited partners, whose
liability is limited to the amount of capital they have contributed to the partnership.
Secret partner - ANSWERA general partner who is active in a business but who is
not known to the public.
Silent partner - ANSWERA partner who invests in a partnership and is known to the
public but takes no active role in the business.
Dormant partner - ANSWERA partner who is neither known to the public nor active
in the business.
Nominal partner - ANSWERAn individual who lends expertise or experience to a
partnership but has no investment in the partnership and is not a true partner.
Articles of partnership - ANSWERA legal document that specifies each partner's
financial and managerial responsibilities toward one another.
Corporation - ANSWERAn entity organized under law and entitled to the same rights
as a person, distinct from its owners.
Board of directors - ANSWERThe controlling entity of a corporation, elected by
stockholders.
Corporate charter (articles of incorporation) - ANSWERA document prepared during
the formation of a corporation stating the corporation's goals and objectives and the
kind of business for which the corporation was organized.
Sole Proprietorships - ANSWERinclude large enterprises with many employees and
hired managers, as well as part-time operations in which the owner is the only
person involved. In the United States, this type of company is more prevalent than
any other form of business entity.
Sole Proprietorships - ANSWER____ are usually subject to minimal state and
federal control (other than for obtaining required state and local licenses and
permits) and may be easily dissolved. In addition, profits are included in the owner's
personal income and not taxed separately.
, General Partnerships - ANSWER____ are a form of partnership in which each
partner usually has an active role in the business and assumes unlimited joint liability
for all the partnership debts.
Limited Partnerships - ANSWER____ enable their partners to avoid having unlimited
liability. This type of partnerships are made up of one or more general partners, who
have unlimited liability for all business debts, and one or more limited partners,
whose liability is limited to the amount of capital they have contributed to the
partnership.
Articles of Partnership - ANSWERThe ___ is a legal document that specifies each
partner's financial and managerial responsibilities toward one another. This
partnership agreement includes all types of partners and usually specifies these
items:
- Each partner's name
- The investment of each partner
- Each partner's share of profits
- The duties of each partner
- The salary, if any, of each partner
- A method of withdrawing from the partnership
- A method of dissolving the partnership
Corporations - ANSWER____ are artificial beings, invisible, intangible, and existing
only in the contemplation of the law and can either be public or private.
Public - ANSWER____ corporations are a type of corporation that is owned by the
general public; its stock is sold on stock exchanges such as the New York Stock
Exchange (NYSE) and the National Association of Securities Dealers Automated
Quotation System (NASDAQ).
Private - ANSWER____ corporations are owned by only a few stockholders, and
ownership of their stock is usually not open to the public. Many of this type of
corporations are family owned, and control of the stock—and thereby control of the
corporation—is commonly described as being "closely held."
Board of Directors - ANSWERCorporations are controlled by a ____. They hire the
management to operate the business.
Stockholders - ANSWER____, the owners of a corporation, are entitled to one vote
for each share of stock owned. These persons elect the board of directors.
Directors - ANSWER____ of corporations have responsibilities to the corporation
and the stockholders. They also have a legal duty to be loyal to the corporation and
the stockholders and to act in their best interests. This obligation means that they
must avoid conflicts of interest and not use his or her position for personal gain.
UNDERWRITING THE COMMERCIAL
ORGANIZATION QUESTIONS &
ANSWERS (RATED A+)
Sole proprietorship - ANSWERA form of business in which one person owns the
business assets and is personally liable for the business's debts.
Unlimited liability - ANSWERThe liability that exists in sole proprietorships and
certain partnerships; if the business becomes bankrupt, creditors can seize business
and personal assets to satisfy claims.
Contract of hire - ANSWERThe agreement between an employer and employee to
assume an employment relationship from which both parties reasonably expect to
derive some benefit; may be express or implied.
Employer - ANSWERA person who hires another person (employee) to perform
services and under whose direction and control that person functions.
Unlimited Liability - ANSWER____ is the most significant disadvantage of a sole
proprietorship. Potentially, the owner may lose not only his or her business, but also
his or her personal assets. Sole proprietorships are often thinly financed and remain
so because of difficulty in obtaining needed funds.
Partnerships - ANSWER____ are unincorporated businesses of two or more
persons, each of which has a financial interest in the business. The "persons" in in
this type of business could be individuals, estates, trusts, other partnerships, or
corporations and are jointly liable for the debts of the business.
Partnerships - ANSWERUnlike a sole proprietorship, a ____ is recognized as an
entity distinct from its individual members for certain purposes. For example, can sue
and be sued, as well as own and convey real estate.
Partnerships - ANSWER____, like sole proprietorships, do not pay taxes. Profits are
passed to partners, who pay taxes on the business's earnings.
Professional employer organization (PEO) - ANSWERA company that leases
workers to small or medium-sized client companies to supply the client's permanent
workforce, making the client an indirect employer; these relationships create
insurance implications related to employee status.
,General contractor - ANSWERAn independent contractor who obtains the primary
contract for a project and either completes all the work or subcontracts portions (or
all) of the work to other independent contractors who specialize in such work.
Partnership - ANSWERA for-profit business entity jointly owned by two or more
persons who share ownership and profits (or losses), although not necessarily on an
equal basis.
General partnership - ANSWERA partnership in which each partner assumes
unlimited joint liability for all the partnership debts.
Limited partnership - ANSWERform of partnership made up of one or more general
partners, who have unlimited liability, and one or more limited partners, whose
liability is limited to the amount of capital they have contributed to the partnership.
Secret partner - ANSWERA general partner who is active in a business but who is
not known to the public.
Silent partner - ANSWERA partner who invests in a partnership and is known to the
public but takes no active role in the business.
Dormant partner - ANSWERA partner who is neither known to the public nor active
in the business.
Nominal partner - ANSWERAn individual who lends expertise or experience to a
partnership but has no investment in the partnership and is not a true partner.
Articles of partnership - ANSWERA legal document that specifies each partner's
financial and managerial responsibilities toward one another.
Corporation - ANSWERAn entity organized under law and entitled to the same rights
as a person, distinct from its owners.
Board of directors - ANSWERThe controlling entity of a corporation, elected by
stockholders.
Corporate charter (articles of incorporation) - ANSWERA document prepared during
the formation of a corporation stating the corporation's goals and objectives and the
kind of business for which the corporation was organized.
Sole Proprietorships - ANSWERinclude large enterprises with many employees and
hired managers, as well as part-time operations in which the owner is the only
person involved. In the United States, this type of company is more prevalent than
any other form of business entity.
Sole Proprietorships - ANSWER____ are usually subject to minimal state and
federal control (other than for obtaining required state and local licenses and
permits) and may be easily dissolved. In addition, profits are included in the owner's
personal income and not taxed separately.
, General Partnerships - ANSWER____ are a form of partnership in which each
partner usually has an active role in the business and assumes unlimited joint liability
for all the partnership debts.
Limited Partnerships - ANSWER____ enable their partners to avoid having unlimited
liability. This type of partnerships are made up of one or more general partners, who
have unlimited liability for all business debts, and one or more limited partners,
whose liability is limited to the amount of capital they have contributed to the
partnership.
Articles of Partnership - ANSWERThe ___ is a legal document that specifies each
partner's financial and managerial responsibilities toward one another. This
partnership agreement includes all types of partners and usually specifies these
items:
- Each partner's name
- The investment of each partner
- Each partner's share of profits
- The duties of each partner
- The salary, if any, of each partner
- A method of withdrawing from the partnership
- A method of dissolving the partnership
Corporations - ANSWER____ are artificial beings, invisible, intangible, and existing
only in the contemplation of the law and can either be public or private.
Public - ANSWER____ corporations are a type of corporation that is owned by the
general public; its stock is sold on stock exchanges such as the New York Stock
Exchange (NYSE) and the National Association of Securities Dealers Automated
Quotation System (NASDAQ).
Private - ANSWER____ corporations are owned by only a few stockholders, and
ownership of their stock is usually not open to the public. Many of this type of
corporations are family owned, and control of the stock—and thereby control of the
corporation—is commonly described as being "closely held."
Board of Directors - ANSWERCorporations are controlled by a ____. They hire the
management to operate the business.
Stockholders - ANSWER____, the owners of a corporation, are entitled to one vote
for each share of stock owned. These persons elect the board of directors.
Directors - ANSWER____ of corporations have responsibilities to the corporation
and the stockholders. They also have a legal duty to be loyal to the corporation and
the stockholders and to act in their best interests. This obligation means that they
must avoid conflicts of interest and not use his or her position for personal gain.
