$1,5,6,8,11,15.$

Review Questions and Problems

$1.$ Forms of Business Organizations

$($a$)$ What are the three traditional business organizations and the four hybrid forms?

The three traditional organizations are the sole proprietorship, the general partnership, and the corporation.

The hybrid forms include the limited partnership, the S corporation, the limited liability company, and the limited liability partnership.

Factors to Consider when Selecting a Business's Organizational Form

$5.$ Liability

What is meant by the phrase liability of a business organization as compared to the liability of the owners?

The factor of liability is used to describe the degree of personal responsibility an owner has for the debts of the organization. unlimited liability means an owner is personally obligated to satisfy the debts of an organization. Limited liability means an owner is not obligated beyond the amount that owner invested in the organization

$6.$ Taxation

Why is taxation an important element to consider when selecting the appropriate organization for your business activities?

anyone investing in a business organization needs to understand how the organization is or is not taxed and what this means to the likelihood of profits or losses being distributed to the owners.

Selecting the Best Organizational Form

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$8.$ Partnerships

Terry is the senior partner in an accounting firm. One of Terry's partners performs an audit. The audited firm sues Terry, as the senior partner, for alleged errors in the audit. If Terry is found liable, can Terry sue to collect a pro rata share of this liability from the other partners? Why or why not?

yes partners are jointly and severally liable for the debts of the partnership

$11.$ S Corporations

$($a$)$ Although it is technically a corporation, the S corporation has the attributes of which business organization when considering the taxation factor?

the government allow S$-$corporations to be treated as a partnership

$($b$)$ What is the implication of this treatment if the S corporation has a profitable year but does not distribute dividends to its shareholders?

the shareholders may have to pay taxes on income they did not receive

$15.$ Contractual Liability from an Agent's ActsFor several

years, Albert acted as a collection agent for Paulette. Recently, Paulette revoked Albert's authority to collect payments from customers. However, neither Paulette nor Albert told any customers of Albert's termination. Yesterday, Theresa, one of Paulette's customers, paid Albert the money owed to Paulette. Albert never gave this money to Paulette. Is Theresa liable to pay Paulette? Why or why not?

No$,$ theresa paid albert believing in good faith that albert still represented Paulette. Albert has apparent authority to receive this payment since neither Paulette nor Albert had notified Theresa that alberts actual authority had been withdrawn.