Torrie Is Thinking of Starting Up a Small Business Selling

question 136

Multiple Choice

Torrie is thinking of starting up a small business selling hand-painted wine glasses.She asks her sister,Lisette,if she'd like to join her in setting up a partnership to start the business.What is one disadvantage in joining the partnership that Lisette should consider?

• A)Lisette should realize that her profits in the partnership will always be less than Torrie's profits,since Torrie had the idea to start the business.
• B)Lisette should realize that,as an owner of the business,she will be personally responsible for the debts of the business.
• C)Lisette should realize that only Torrie will be allowed to own stock in the business as the founding partner.
• D)Lisette should realize that Torrie will have complete control over the business because it was her idea.

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Definitions:

Transfer of Shares

The process by which ownership of a company's stock is moved from one party to another.

Par Value

The nominal or face value of a bond, share of stock, or other financial instrument as stated by the issuer.

Treasury Shares

Shares that were issued and subsequently reacquired by the issuing corporation, not considered when calculating earnings per share or dividends.

Issued

The process of distributing something, such as a publication, a financial instrument, or an official document, to the public or to a specific group.