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Q:
Which of the following is an element of a joint venture?
A. An express or implied agreement to carry on a continuing business.
B. A measure of proprietorship of joint control of the enterprise.
C. A manifestation of intent by one of the parties to be associated as joint venturers.
D. A joint interest as reflected in the contribution of skill by at least one party to the joint venture.
Q:
The significant difference between a joint venture and partnership is that:
A. joint venturers sometimes are held to have less implied and apparent authority than partners.
B. a joint venture relates to a continuing business, and a partnership relates to a single enterprise.
C. the requirement for joint ventures is more formal in comparison with partnership agreements.
D. joint ventures unlike partnership agreements come into existence only when there is an express contract.
Q:
A partner has express authority to do whatever he/she is authorized to do by:
A. the written articles of partnership.
B. the written articles of incorporation.
C. customs and usages of a particular partnership.
D. customs and usages of similar businesses in a particular area.
Q:
To act contrary to a partnership agreement:
A. vote of the majority prevails.
B. unanimous agreement is required.
C. implied authority by RUPA is provided.
D. approval of senior partners is required.
Q:
The final act of winding up a dissolved partnership is the distribution of assets.
Q:
Normally, management of the business of the limited partnership is in the hands of the limited partner or partners.
Q:
The limited partnership certificate must be canceled when all limited partners have died or withdrawn.
Q:
A partnership is a:
A. limited association in which parties sign a contract expressing their intent to form the partnership.
B. voluntary and consensual association involving two or more persons.
C. voluntary association formed by an express agreement.
D. consensual association which requires the property to be used in the business to be owned by it.
Q:
After retiring from Jones & Co., a partnership founded by Megan, Jim Jones, and other partners, Megan grew tired of staying at home and started visiting the firm's place of business. The other partners would introduce her to prospective customers as "My partner, Ms. Jones," or "Our partner, Ms. Jones." Megan did not bother to correct anybody about this. She was introduced in this manner to Tiffany, a new customer. Relying on the idea that Megan was a partner, Tiffany entered into a contract with Jones & Co. If Jones & Co. does not fulfill its obligations, can Megan be held liable?
A. Under the RUPA, Megan is not liable as she did not make any claims to partnership.
B. Megan is liable, as she failed to correct the statement when she was being introduced as a partner.
C. Megan is not liable, but the partner who introduced Megan is liable.
D. Megan is not liable as she has withdrawn from the partnership agreement by retiring. She is no more an actual partner.
Q:
In the partnership agreement, the partners also may provide for expelling a partner. Such a provision eliminates the right the expelled partner would otherwise have to insist on liquidation.
Q:
Partners no longer have fiduciary duties to one another during the winding up process.
Q:
Partners may agree at any time that the interest of one partner shall be purchased by the partnership or by one or more of the other partners.
Q:
A continuing partnership becomes liable for the debts incurred by the original partnership.
Q:
An individual who joins an existing partnership has no liability for partnership debts that arose prior to his joining the partnership.
Q:
The partnership will not be liable for contracts created by a partner acting outside the scope of her authority, even when the other partners ratify the unauthorized action.
Q:
Partners have the right to sell, mortgage, or devise to an heir any individual item of the firm's property.
Q:
A creditor of a partner can attach any property owned by the partnership.
Q:
A partner is free to engage in activities that are in competition with the partnership.
Q:
When a general partner sells his/her partnership interests, the purchaser:
A. is granted automatic partnership by operation of law.
B. does not become a partner until he/she is unanimously accepted by the other partners.
C. is granted partnership only after he divests all interests in other general partnerships.
D. does not become a partner until he is nominated by the director and unanimously accepted by other members.
Q:
Statutory law has been supplanted by the common law of partnerships.
Q:
No express agreement is needed to create a partnership.
Q:
People who are involved in a nonprofit association are considered partners.
Q:
A ______ provides the greatest ease of management.
A. close corporation
B. sole proprietorship
C. general partnership
D. limited partnership
Q:
A freeze-out:
A. occurs when a majority shareholder is "frozen out" by the management regarding such issues as a reduction or elimination of dividends.
B. can be easily reversed in court.
C. results in the minority shareholder having little influence in important corporate issues such as loss of employment.
D. occurs mostly in S Corporations.
Q:
Which of the following is a taxable entity?
A. A corporation
B. A sole proprietorship
C. A partnership
D. An S Corporation
Q:
The advantages of sole proprietorship and partnership taxation include:
A. The tax burden can be lessened if the shareholders are active in the operation of the business.
B. The tax burden experienced by shareholders can be reduced by keeping the dividend rate constant.
C. The owners can reduce their tax liability on their other income by the amount of they lose individually.
D. Exemption of privilege taxes for doing intrastate business in another state.
Q:
Partnerships:
A. are not required to pay corporate franchise taxes.
B. need to pay privilege taxes to do intrastate business in another state.
C. are taxed on their operations at the same level as corporations.
D. cannot save income tax even if losses are anticipated in the early years of business.
Q:
When a general business partnership fails, the partners:
A. lose only their investment.
B. may be required to pay partnership debts from personal assets.
C. can waive their limited liability.
D. are liable for losses equivalent to their own individual contributions.
Q:
Arthur and Alan decide to open a retail store and operate the business as a partnership. As they require some additional funds to get the business in operation, they ask Jayne whether she would like to invest some funds in the business and become a limited partner. Assuming that Jayne becomes and remains a limited partner, which of the following statements concerning her status is correct?
A. She may be involved in management of the business, but to a rather limited degree.
B. She will not be entitled to any share in the profits of the business.
C. She will have no personal liability for partnership debts, although she may lose the amount she invested in the business.
D. She may be considered an employee and therefore will be entitled to wages for the services she rendered to the partnership.
Q:
"Piercing the corporate veil" implies that:
A. a corporation is held liable for money laundering.
B. corporate shareholders are stripped of their limited liability to prevent unfair results.
C. shareholders have no liability to prevent unfair results.
D. members will not be personally liable for the debts.
Q:
In terms of an S corporation, which of the following requirements must be maintained so that the corporation does not lose its tax status?
A. There can be no more than 120 shareholders in an S corporation.
B. The shareholders must all be corporate shareholders or partnerships.
C. The losses and earnings are not to be reported on the shareholders' individual tax returns.
D. Shareholders must consent in writing to having the corporation taxed as a partnership.
Q:
In a(n) _____, shareholders directly report their share of the corporation's losses or earnings on their individual tax returns.
A. S corporation
B. general partnership
C. franchising
D. limited partnership
Q:
Which of the following run the risk of unlimited personal liability?
A. Partners in a general partnership
B. Partners in a limited partnership
C. Corporate shareholders
D. Shareholders in S Corporations
Q:
Attempts by franchisors to require franchisees to buy products and equipment from the franchisor may violate the Clayton Act.
Q:
Franchisee-franchisor business relationships are governed by federal legislation only.
Q:
Identify the correct statement about sole proprietorship.
A. The owner shares responsibility with the agents and employees.
B. It may be operated under an assumed or trade name.
C. Employees of the business are not the personal employees of the owner.
D. The salaries paid to the employees are not deductible in determining taxable income.
Q:
The formation of a general partnership requires:
A. filing appropriate paperwork with the secretary of state.
B. a formal certificate of cancellation when the partnership is terminated.
C. no express agreement.
D. that each partner be liable for losses depending on the individual partner's contribution to the enterprise.
Q:
Which form of business organization most limits personal liability for its shareholders?
A. Sole proprietorship
B. General partnership
C. Corporation
D. They all share this attribute equally
Q:
States generally permit LLCs to have an indefinite duration.
Q:
Anyone who buys the interest of an LLP partner is automatically a partner.
Q:
By forming an LLP, the personal assets of partners not involved in wrongdoing by other members of the firm will be sheltered from malpractice claims against the firm.
Q:
Like limited partnerships, all of the investors in an LLC are able to share in management.
Q:
A sole proprietorship and a partnership are taxable entities, but a corporation is not.
Q:
S Corporations are similar to partnerships in that corporate tax is paid.
Q:
A corporation will be dissolved upon the death or insolvency of a shareholder.
Q:
Shareholders in close corporations are often restricted in the sale of their stock.
Q:
A partner cannot terminate an ordinary partnership at will.
Q:
If the business involves little risk or the owners have few other assets, limited liability should be given little weight.
Q:
From a risk standpoint, a shareholder or limited partner is better off than a general partner.
Q:
What are the factors to be considered in the creation of an LLC?
Q:
What are the advantages of franchising?
Q:
In a general partnership, each of the partners is an owner and has a right to share in the profits of the business.
Q:
A person's status as a shareholder in a corporation automatically gives such person a right to be an employee of the corporation.
Q:
The Federal Trade Commission:
A. requires franchisors to explain the termination, cancellation, and renewal provisions of the franchise contract.
B. requires franchisors to disclose the number of franchisees terminated in the last five years.
C. prohibits certain contract provisions and franchisee practices thought to be unfair to franchisors.
D. requires important restrictions on franchisees to be included in the agreement.
Q:
Explain the difference between a partnership and a limited partnership.
Q:
List the factors one should consider in choosing a form of business organization.
Q:
What are some of the strategies a corporation can employ to minimize taxation disadvantages?
Q:
Which of the following is a franchisor problem?
A. Attempts to require franchisees to buy products exclusively from the franchisor may violate the Sherman Act.
B. Attempts to require adherence to prices set by the franchisor may violate the Sherman Act.
C. Cannot use insurance to cover risks due to torts committed by the franchisee.
D. The franchisee has to be made an employee of the franchisor.
Q:
A "turnkey operation" refers to:
A. a franchise in which the franchisor builds and equips the place of business and leases it to the franchisee.
B. a limited liability partnership in which partners frequently rotate in and out.
C. a franchise operated by a person as his/her own personal property.
D. a franchise in which the franchisee carries out the advertisement campaigns.
Q:
One of the major advantages of franchising for the franchisor is:
A. the absence of state or federal regulations governing this form of business conduct.
B. the ability to exert considerable control over the distribution of its products without owning the retail outlets.
C. the enhancement of competition among the retail outlets.
D. is the right to share a trade mark with the franchisee that is well known and/or highly advertised.
Q:
Franchising:
A. can be conducted as a sole proprietorship or a corporation but not as a partnership.
B. typically involves a corporation as a franchisor.
C. does not include the risk of violating federal and state antitrust laws under any circumstances.
D. is not contractual.
Q:
McDonald's runs its business through ____.
A. limited partnership
B. sole proprietorship
C. S corporation
D. franchising
Q:
Attempts to require franchisees to buy products, equipment, and supplies exclusively from the franchisor may violate the prohibition in the ____.
A. Sherman Act
B. Franchising Act
C. Clayton Act
D. Federal Trade Commission Act
Q:
In the management of an LLP:
A. only some partners have a say in its management.
B. management decisions cannot be altered even by agreement.
C. new partners can join without the consent of the other partners.
D. new partners cannot join without the unanimous consent of all partners.
Q:
Creating an LLP:
A. doesn't require the partners to file an LLP form with the state.
B. requires that partners maintain an adequate amount of professional liability insurance.
C. is relatively difficult to organize around an existing partnership.
D. necessitates that all existing partnerships be dissolved.
Q:
If a business involves high risk, a single factor such as _____ will be so important as to outweigh other factors.
A. limited liability
B. taxation
C. formalities
D. financing
Q:
Which of the following is true of an LLC?
A. It cannot sue or be sued in its own name.
B. Members of an LLC often share management power.
C. Members are personally liable for the wrongful acts of other members.
D. It cannot have more than 120 members.
Q:
When it comes to tax liability, LLCs:
A. are required to file annual reports with the secretary of state.
B. are taxed as partnerships.
C. do not require partners to report their share of the LLC's profits on personal tax returns.
D. are taxed as corporations.
Q:
Which of the following is true for the dissolution of an LLC?
A. The remaining members cannot avoid liquidation even by unanimously agreeing to continue the business operations.
B. Dissolution can only be caused by bankruptcy.
C. The LLC must be set up so that it can be easily dissolved.
D. The act of dissolution terminates the LLC's business.
Q:
Title VII prohibits quid pro quo sexual harassment involving some express or implied connection between the employee's submission to sexually-oriented behavior and job benefits. What other type of sexual harassment does Title VII prohibit?
Q:
How does the Americans with Disabilities Act of 1990 define disability? Who is excluded from this definition?
Q:
Smiley is heavily involved in the management of a certain business. If Smiley dies, under which of the following circumstances would the business entity be considered legally dissolved as a result of Smiley's death?
A. If the business is a corporation.
B. If the business is a partnership and Smiley is a partner in it.
C. If the business is either a partnership (and Smiley is a partner in it) or a close corporation.
D. If the business is a Subchapter S corporation.
Q:
Publicly offered partnership interests:
A. are tax shelters for the original purchasers during the early years of ownership.
B. are of vital interest to persons hoping to actively manage a business.
C. are the primary method of creating general partnerships.
D. are generally unattractive to investors in the early years of ownership.
Q:
Perry became a CPA in 2002. After working as a staff auditor and accountant for other companies, she was hired as an auditor by Big Firm in 2003. When she was hired, there were four male auditors in her area who had been with the company for several years and were classified as senior auditors. In 2004, Perry complained that she was receiving the same salary as a new male senior auditor, Bradshaw, even though she was doing the same work. When Bradshaw was brought in, Big Firm was in the process of divestiture and its policy was to fill positions with lateral transfers from other areas because of a promotion and hiring freeze. In 2005, Perry filed a complaint with the EEOC claiming that she was not being paid equally for equal work. Did Big Firm violate the Equal Pay Act by paying Perry less than the male accountants?
Q:
Describe Title VII of the Civil Rights Act of 1964. Discuss the purpose and coverage of the provision.
Q:
Which of the following groups are covered under ADA?
A. People with AIDS or AIDS-related conditions
B. Transvestites
C. People with a substance-abuse addiction
D. Bisexuals
Q:
Which of the following statements is true of the doctrine of employment-at-will?
A. It requires certain reports to the secretary of labor which should disclose a great deal about the financial situation of the union.
B. It has been reinforced in the past 50 years by statues such as Title VII, the NLRA, and the ADEA.
C. It is based on the laissez-faire values of the 19th century, for it leaves both the employer and employee with maximum freedom.
D. It gives workers the right to organize and bargain collectively.
Q:
Which of the following is least likely to make the employer liable for unjust dismissal or wrongful discharge under the public policy exception to the employment-at-will doctrine?
A. Firing an employee because his religious convictions cause him to refuse to work on a contract for the Department of Defense.
B. Firing an employee for refusing to commit perjury in a million-dollar product liability suit against the employer.
C. Firing a middle-level manager for refusing to violate Title VII by faking an African-American subordinate's job evaluation to prevent promotion of the African-American.
D. Firing an employee for filing a workers' compensation claim against the employer.
Q:
Which of the following statements is true of the Employee Polygraph Protection Act?
A. If the state law regarding the use of lie detector tests is stricter than the federal law, it is preempted.
B. The act permits private employers to use mechanical lie detector tests for the purpose of screening applicants.
C. The act allows manufacturers and distributors of controlled substances wider use of mechanical lie detector tests.
D. It permits the employer to use lie detector tests on employees only if the employer is engaged in an investigation of theft.
Q:
(p. 458; 463; 464) Drucker Manufacturing's payroll records revealed that during June, all employees worked an average of 48 hours. Each worker received $7.20 an hour for the first 40 hours per week and $10.80 for the eight hours overtime. In May, some employees had been paid as much as $8.00 per hour for the first 40 hours, but the company reduced the scale when female employees complained that men were being paid more for the same work. The records also revealed that the plant manager and personnel manager worked as many as 60 hours per week but did not receive overtime pay. Discuss any legal problems that may exist.