Forms of Business Organization Individual Assignment
This assignment covers the materials studied thus far regarding sole trader and partnership. Each question should be answered directly and concisely. All questions must be answered; do not answer a question by referring to an answer previously or subsequently offered. All questions must be answered with complete sentences. This exercise will be graded on your ability to answer each question correctly, spelling and punctuation, as well as neatness. Answer all questions presented on folder leaves. If you cannot answer a question completely, answer as best you can; partial answers will be given partial credit. Warning! No other persons should have identical answers; otherwise your score will be divided by the amount of persons who have the same answers as you do.
John, Jenny, and Suzette started business to sell Lumber. Each partner contributed $500,000 to the business. After 4 years, the business encounter bankruptcy. Sadly, the business owed approximately 10 million dollars to its creditors, who pursued legal actions. As result, John and Suzette along with Jenny had to sell the business assets to generate part of total amount to repay the debts incurred. To ascertain the entire amount, only Jenny was forced to sell her personal assets, namely a piece of land and her new BMW to repay the debts.
a)What type of partnership is described in the scenario? Give evidence to support your answer. [2 marks] b) Explain TWO advantages and THREE disadvantages of this form of business. [5 marks] c) In your own words, explain the terms (a) Limited Liability and (b) Unlimited Liability. Use evidence from the scenario to support your explanation for each term. [4 marks]
2. Contrast the strengths and weaknesses of a sole trader and partnership business structures using the criteria below:
Cost and ease of set up
Owners liability
Ability to raise capital
Ease of transfer of ownership
Ability to grow
Summarize your information in a table format. [10 marks 3. What is the difference between an ordinary partnership and a limited partnership? [4 marks]
4. Explain how the business profits and losses of a partnership are taxed. [2 marks]
5. Gerard is an incredible candy maker and would like to go into business for himself, but he needs some money to get started. His parents want to help him get his feet on the ground and start his career. They agree to invest in his business; however, they don’t want to be involved in any part of the business, they are just trying to help him out. Gerard asks your supervising attorney for advice on how to organize his business. The task is assigned to you.
a)What business form would suit the needs of Gerard? Why? What are the advantages of this business form? [5 marks]
Total: 27 marks + Timely submission 1 mark + Neatness 2 marks = 30 marks