Q&A Hero

Q: How long should a general partnership have existed for it to be in writing under the Statute of Frauds? A) six months B) 180 days C) five years D) one year

Q: Which of the following is true of the management of a general partnership? A) The number of votes a general partner has depends on the proportion of his or her capital investment. B) Partnership matters are decided by unanimous agreement only. C) Only general partners in the board of directors have the authority to participate in the management. D) If the vote is tied, the action being voted on is considered to be defeated.

Q: Why does a sole proprietorship not pay taxes at the business level? A) It does not have a separate legal personality. B) It is a small business that is exempted from taxation. C) It is a not-for-profit organization. D) It is generally an institution with no business dealings.

Q: The earnings and losses from a sole proprietorship are reported on ________. A) the federal income tax filing document B) the business license that is renewed each year C) the proprietor's personal income tax filing D) the state income tax filing document

Q: An association of two or more persons to carry on as co-owners of a business for profit is known as a(n) ________. A) limited partnership B) sole proprietorship C) corporation D) general partnership

Q: An organization or venture must have a ________ motive in order to qualify as a partnership A) large-scale expansion B) non-commercial C) profit D) target market

Q: Which of the following is true of general partnership? A) A business should make a profit in order to qualify as a general partnership. B) The general partners need not be the co-owners of the business. C) General partnerships can be either oral or implied from the conduct of the parties. D) Charity organizations and schools are mostly formed from general partnerships.

Q: Which of the following is true of a business operating under sole proprietorship? A) It is not considered a separate legal entity. B) It cannot be sold when the owner decides to do so. C) It requires governmental approval when being transferred. D) It has access to unrestricted capital by means of investments.

Q: Which of the following is true of creating a sole proprietorship? A) No state government approval is required. B) Federal taxation is levied upon sole proprietorship. C) No licenses are required to do business within a city or state. D) Special permission must be obtained to receive a sole proprietorship status.

Q: Jonathan Lopez wants to be his own boss and ventures into retailing fruit in the neighborhood after borrowing some money from his mother. While obtaining a license to carry out business in his city, Jonathan mentions the money he borrowed but forgets to specify what type of business undertaking his store will be. Under which of the following major forms of business is Jonathan's store listed by default? A) a general partnership B) a sole proprietorship C) a limited partnership D) a limited liability corporation

Q: Orlando opened a hot dog stand in Brooklyn which unfortunately did not earn him a profit. He had borrowed $5,000 from the bank to set it up, which had to be repaid to the bank in two days. However, Orlando's friend Bob agreed to partner with him starting the subsequent month. From which of the following sources can the bank recover its $5,000 with interest? A) Orlando's secondary financer B) Orlando's savings account C) Orlando's family D) Bob, Orlando's prospective business partner

Q: A limited partner may engage in voting on the dissolution of the limited partnership without losing his or her limited liability.

Q: Which of the following best describes an entrepreneur? A) a person who forms and operates a business B) a person who invests in an existing business C) a person who lends capital to a new business D) a person who derives a profit from a new or an existing business

Q: Which of the following is a major form of conducting a business? A) institution B) charity C) corporation D) trust

Q: ________ are the most common form of business organization in the United States. A) General partnerships B) Sole proprietorships C) Limited liability companies D) Limited partnerships

Q: Which of the following is true of a sole proprietorship? A) A business operated under sole proprietorship cannot be transferred. B) Large businesses cannot be operated under sole proprietorship. C) A business operated under sole proprietorship should be owned by one or more people of the same family. D) Creditors can recover claims against the business from the sole proprietor's personal assets.

Q: Limited partners have unlimited personal liability for the debts and obligations of the limited partnership.

Q: Acting as a surety for the limited partnership makes a limited partner lose his or her limited liability.

Q: General partners are not personally liable for partnership debts beyond their capital contributions.

Q: It is not necessary for a limited partnership to have general partners if the limited partners share management responsibility among themselves.

Q: The creation of a limited partnership is formal and requires public disclosure.

Q: Defective formation of a limited partnership occurs when a certificate of limited partnership is not properly filed.

Q: General partners have unlimited personal liability for the debts and obligations of the partnership.

Q: A third party who sues to recover on a partnership contract need not name all the general partners in the lawsuit.

Q: The process of liquidating a partnership's assets and distributing the proceeds to satisfy claims against the partnership is known as winding up.

Q: The dissolution of a general partnership discharges the liability of an outgoing partner for existing partnership debts and obligations.

Q: A limited partnership cannot have general partners.

Q: A general partnership agreement must always be in writing to be considered legal.

Q: General partnerships do not pay federal income taxes.

Q: Flow-through taxation is the federal income tax imposed on general partnerships.

Q: The right to share in the profits of the partnership is the right to share in the earnings from the investment of capital.

Q: General partners are not permitted to sue other partners at law.

Q: Receipt of a share of business profits is prima facie evidence of a general partnership.

Q: The name selected by a general partnership cannot indicate that it is a corporation.

Q: A sole proprietorship does not does not pay taxes at the business level.

Q: The UPA is a model act that codifies sole proprietorship law.

Q: The Revised Uniform Partnership Act is a federal statute that holds in all states.

Q: In a sole proprietorship, the business is considered a separate legal entity.

Q: No federal or state government approval is required for creating a sole proprietorship.

Q: If no other form of business organization is chosen while obtaining a license, the business is by default a sole proprietorship.

Q: The designation of d.b.a. refers to the description for a business that is operating under a trade name.

Q: A sole proprietor has limited personal liability.

Q: If unsecured creditors do not agree to a plan of reorganization, the court can use its ________ and make the dissenting class accept the plan.

Q: An entrepreneur is a person who forms and operates a business.

Q: A sole proprietorship cannot be easily transferred when the owner desires to do so.

Q: A sole proprietor is legally responsible for the business's contracts.

Q: Chapter 11 of the Bankruptcy Code deals with ________ form of bankruptcy.

Q: The term ________ refers to a document required to be filed by a creditor that states the amount of his or her claim against the debtor.

Q: The suspension of certain legal actions by creditors against a debtor or the debtor's property is known as a(n) ________.

Q: A contract or lease that has not been fully performed is termed as a(n) ________ contract.

Q: A(n) ________ transaction occurs when a seller sells goods to a buyer who has obtained financing from a third-party lender that takes a security interest in the goods sold.

Q: The term ________ refers to a security interest in property that was not in the possession of the debtor when the security agreement was executed.

Q: ________ refers to an interest a creditor automatically obtains when he or she extends credit to a consumer to purchase consumer goods.

Q: In a(n) ________ arrangement, a third party promises to be primarily liable with the borrower for the payment of the borrower's debt.

Q: In a(n) ________ arrangement, a third party promises to be secondarily liable for the payment of another's debt.

Q: Explain in brief the Chapter 11 plan of reorganization.

Q: The lender in a credit transaction is known as the ________.

Q: ________ is a form of credit that does not require any security to protect the payment of the debt.

Q: Personal property that is subject to a security agreement is known as ________.

Q: A(n) ________ is the instrument that gives the creditor a security interest in the debtor's property that is pledged as collateral.

Q: What does the Chapter 11 plan of reorganization set forth?A) an equilateral division of the Chapter 11 estate among all creditorsB) division of the bankruptcy estate according to the debt to be paid to each creditorC) discharge of a debtor's unsecured debts and payment of secured debtsD) a proposed new capital structure for a debtor to assume when it emerges from Chapter 11 bankruptcy

Q: Distinguish between secured and unsecured credit.

Q: Distinguish between two-party and three-party secured transactions with examples.

Q: Outline the priority of claims in secured and unsecured transactions.

Q: Explain in brief the constitution of a bankruptcy estate.

Q: Which of the following is determined by the means test?A) The debtor's median family income is less than the state's median family income.B) The debtor's median family income is more than the state's median family income.C) A debtor can pay prepetition debts out of postpetition income.D) A debtor who has sufficient disposable income to pay prepetition debts qualifies for Chapter 13 bankruptcy.

Q: ________ is a rehabilitation form of bankruptcy that permits bankruptcy courts to supervise the debtor's plan for the payment of unpaid debts in installments over the plan period.A) Chapter 7B) Chapter 13C) Chapter 11D) Chapter 12

Q: A(n) ________ provides for the reduction of a debtor's debts. A) extension B) liquidation C) limitation D) composition

Q: A(n) ________ is a document required to be filed by an equity security holder that states the amount of his or her interest against the debtor. A) proof of claim B) proof of interest C) voluntary petition D) involuntary petition

Q: The suspension of certain legal actions by creditors against a debtor or the debtor's property is known as a(n) ________. A) discharge of debt B) composition C) automatic stay D) order for relief

Q: What is a homestead exemption? A) investment in realty that a debtor must forfeit B) equity in a home that a debtor is permitted to retain C) remainder of the debtor's interest in commercial property that is returned to him after fulfilling creditors' claims D) all of the debtor's assets converted to cash

Q: ________ is a form of bankruptcy in which the debtor's nonexempt property is sold for cash, the cash is distributed to the creditors, and any unpaid debts are discharged. A) abusive filing B) dissolution of debt C) liquidation D) reorganization

Q: A(n) ________ is a statutory lien given to workers on personal property to which they furnish services or materials in the ordinary course of business. A) super-priority lien B) floating lien C) artisan's lien D) judgment lien

Q: An arrangement in which a third party promises to be primarily liable with the borrower for the payment of the borrower's debt is referred to as ________. A) garnishment B) accommodation C) surety arrangement D) guaranty arrangement

Q: Which of the following is true about the surety's liability to pay in a surety arrangement? A) The surety is secondarily liable for payment. B) The surety is primarily liable for payment. C) The principal debtor must be in default before the surety can be approached. D) The surety can only be approached as a last resort to the creditor.

Q: Which of the following is true of a guarantor in a guaranty arrangement? A) The guarantor is primarily liable the principal debtor's debt when it is due. B) The guarantor can be approached even if the principal debtor is not in default. C) The creditor can seek first remedy from a guarantor. D) The guarantor has full legal rights to possession of the real property in this type of arrangement.

Q: Which of the following transactions occurs when a seller sells goods to a buyer on credit and retains a security interest in the goods? A) two-party secured B) three-party secured C) perfected D) attached

Q: A(n) ________ refers to a security interest in property that was not in the possession of the debtor when the security agreement was executed. A) floating lien B) after-acquired property C) attachment D) future advance

Q: ________ is a process that establishes the right of a secured creditor against other creditors who claim an interest in the collateral. A) Disposition of collateral B) Retention of collateral C) Perfection of a security interest D) Repossession of a security interest

Q: A(n) ________ refers to a document filed by a secured creditor with the appropriate government office that constructively notifies the world of his or her security interest in personal property. A) security disclosure B) financing statement C) possession statement D) custodial statement