Lawrence has a small house painting business with two employees. Lawre

QUESTION

Lawrence has a small house painting business with two employees. Lawrence’s father gave his son startup money and occasionally contributes to the business financially

when Lawrence is having a cash flow problem but has nothing to do with the running of the business. Lawrence always pays his father back out of business profits. What kind of business does Lawrence have?
A) a sole proprietorship
B) a partnership
C) a corporation
D) a cooperative
E) a franchise

ANSWER

Answer: B
Explanation: B) Even though Lawrence’s father has no say in how the business is run, he does have a financial interest in the company because he provided startup money and continues to help out Lawrence financially when money is tight. Therefore, he is a silent partner in his son’s business; Lawrence is running a partnership.