CFA CI

A small group of investment professionals is looking to establish a partnership agreement

that specifies two of them as general partners and the rest as limited partners. The most

appropriate form of partnership is a:

• limited partnership.

• limited liability partnership.

• general partnership.

Under a limited partnership, there must be at least:

• one general partner, and one limited partner.

• one general partner, and two limited partners.

• two general partners, and one limited partner.

In a partnership, a general partner's liability for the obligations incurred by the business:

• is limited to the amount invested.

• is unlimited.

• depends on whether the partnership is general or limited.

Government regulators typically require periodic disclosure of a company's financial

performance for:

• listed companies only.

• private companies only.

• both private and listed companies.

The owner's liability for the business obligations of a sole proprietorship:

• is limited to the amount invested.

• is unlimited.

• may be limited or unlimited.

In a limited partnership, limited partners:

• typically receive a smaller share of profits than general partners.

• are responsible for managing the business, but they have limited financial liability.

• are not involved in business decisions, but they appoint/remove general partners.

With respect to the various business structures, which of the following statements about

income taxes is most accurate?

• In a limited partnership, all tax due on profits is paid by the limited partners.

• In a general partnership, income is taxed at both the partnership and partner

  (individual) level.

• Under a corporate structure, shareholders have no personal tax liability.

Which of the following statements comparing corporations and general partnerships is most

accurate?

• Owner liability is only limited under a corporation.

• Access to capital is easier under a general partnership, given the less complex

  business structure.

• Both corporations and general partnerships are separate legal entities.

A corporation that wishes to raise equity capital and have its shares publicly traded is most

likely to engage in:

• a management buyout.

• a direct listing on an exchange.

• an initial public offering.

Under which business structure are profits potentially subject to double taxation?

• General partnership.

• Limited partnership.

• Corporation.