What is the most significant characteristic of a sole proprietorship regarding liability?

The owner has unlimited personal liability for all business debts and actions

Durable Power of Attorney

Authority remains in effect even after the principal’s disability or incapacity.

Springing Power of Attorney

Authority becomes effective only upon a certain event occurring, such as the principal becoming disabled or mentally incompetent.

General Power of Attorney

Authority ceases to exist upon the disability or incapacity of the principal.

Subchapter S Corporation

Must be a domestic corporation and have no more than 100 shareholders.

Shares of stock and managerial control are held by a limited number of people (often a family).

Closely Held Corporation

A corporation that operates in a state other than the one in which it was initially formed.

A person in a relationship of trust and confidence.

An individual actively and openly engaged in the business and who has unlimited personal liability.

An individual partner whose liability for the firm’s debts is limited only to the amount of their investment.

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quiz week 8 140

Question	Answer
A partnership is an entity that is required to file an annual tax return (Form 1065) but is not the entity that pays the tax; instead, the income or loss is "passed through" to the individual partners who pay the tax on their personal returns.	true
What is the most significant characteristic of a sole proprietorship regarding liability?	The owner has unlimited personal liability for all business debts and actions
Durable Power of Attorney	Authority remains in effect even after the principal’s disability or incapacity.
Springing Power of Attorney	Authority becomes effective only upon a certain event occurring, such as the principal becoming disabled or mentally incompetent.
General Power of Attorney	Authority ceases to exist upon the disability or incapacity of the principal.
A General Power of Attorney (POA) remains in effect even after the disability or incapacity of the principal.	False
Which type of agent authority is defined as the authority a third party believes an agent has because of the principal’s pattern of conduct over a period of time?	Apparent Authority
In an agency relationship, which legal doctrine requires that when a contract must be in writing (e.g., to satisfy the Statute of Frauds), the agent's authority to enter into that contract must also be in writing?	The Equal Dignity Rule
Subchapter S Corporation	Must be a domestic corporation and have no more than 100 shareholders.
Foreign Corporation	Shares of stock and managerial control are held by a limited number of people (often a family).
Closely Held Corporation	A corporation that operates in a state other than the one in which it was initially formed.
The taxing mechanism where a corporation's profits are taxed once at the corporate level and then taxed again when distributed to shareholders as dividends is specifically referred to as:	Double taxation
Fiduciary	A person in a relationship of trust and confidence.
General Partner	An individual actively and openly engaged in the business and who has unlimited personal liability.
Limited Partner	An individual partner whose liability for the firm’s debts is limited only to the amount of their investment.
A corporation, as a separate legal entity, has the same legal purposes as an actual person for activities like owning property and filing civil claims, but it cannot be subject to criminal charges.	false

Created by: peggert

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