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Business Law
Q:
If a partnership is called Golden Consultants, then the partners would need to comply with any applicable assumed-name statute.
Q:
Ownership of a sole proprietorship can be transferred.
Q:
A sole proprietor has limited liability for the obligations of a proprietorship.
Q:
If a sole proprietorship retains its profits for business expansion purposes instead of distributing the money to a proprietor, that owner still must pay taxes on the income made by the proprietorship.
Q:
When two or more persons with a common interest in business share profits and losses, a partnership exists.
Q:
Partnership is the most easily formed business organization compared to other forms of business organizations.
Q:
The creation of a partnership requires permission from each state in which it does business.
Q:
Jacob and his family own and operate a publishing firm. This is an example of a publicly held organization.
Q:
Examples of publicly held businesses include those whose stock is traded on a public exchange.
Q:
The failure to consider how to overcome disputes involving managerial control can cause business activities to suffer and an organization to fail.
Q:
Although expensive to create in comparison with other forms of businesses, the use of sole proprietorships is becoming all the more common.
Q:
A business is likely to shift away from the proprietorship form as it becomes more successful.
Q:
Family-owned and family-operated businesses are common examples of publicly held organizations.
Q:
When a business is publicly held by a large number of owners, the form of organization usually is a corporation.
Q:
Usually, the cost of creation of a business entity is not a major factor in considering which form of business organization a person will choose to operate a business.
Q:
The three basic forms of business organizations are limited partnerships, S corporations, and limited liability companies.
Q:
List the actions by a limited partner that are not considered participation in management.
Q:
Briefly discuss the advantages of an S corporation.
Q:
State the degrees of liability and taxation faced by a limited liability corporation.
Q:
Where does the impetus for creating the benefit corporation structure come from?
Q:
What are some of the criticisms of benefit corporations?
Q:
What are the drawbacks of the corporate form of organization?
Q:
Steve has been asked to join a partnership. What must Steve consider when choosing to become a general or limited partner?
Q:
Briefly explain how publicly held corporations are controlled by management.
Q:
What are the advantages of the corporate form of organization?
Q:
What are the techniques employed by corporations to avoid double taxation?
Q:
Mention two advantages and two disadvantages of a partnership.
Q:
Partnerships generally are subject to less regulation and less governmental supervision than are corporations.
Q:
How is a corporation form of organization identified depending on where it has been incorporated?
Q:
Briefly describe the steps involved in the creation of a corporation.
Q:
What must a corporation do if it wishes to conduct business in states other than the state of incorporation?
Q:
How is the taxation aspect of a partnership both an advantage and a disadvantage?
Q:
Why are general partnerships considered to be easily dissolvable?
Q:
Does the dissolution of a partnership destroy its business? Explain briefly.
Q:
To what extent are partners in a general partnership liable for an organizations debts?
Q:
What is the purpose of a buy and sell agreement and when is it needed?
Q:
Are partnerships taxable entities? Briefly explain.
Q:
In the context of organizational forms, what is a partnership?
Q:
What is key to a partnerships existence?
Q:
Briefly explain sole proprietorship in terms of its continuity.
Q:
Briefly explain the degree of control held by a sole proprietor.
Q:
How is the liability factor a disadvantage of sole proprietorship?
Q:
Which of the following is a criticism of benefit corporations?
A. They are the only type of corporation not treated as individuals.
B. They are not treated as taxable entities even though they have shareholders.
C. They place too much emphasis on profit maximization.
D. They may be less accountable to shareholders.
E. They are exempt from all forms of taxation.
Q:
How can business organizations be classified based on the number of persons who own them? Give one example of each.
Q:
What are some of the significant factors to consider when choosing a form of business?
Q:
Explain the term creation as a factor to be considered when selecting a business organizational form.
Q:
Which of the following statements is true of benefit corporations?
A. They are the only type of corporation not treated as individuals.
B. They are not treated as taxable entities even though they have shareholders.
C. They are formed through the use of deferred prosecution agreements.
D. They combine the positive aspects of a limited liability company and a partnership to form an organization that is designed to give the maximum profits to the owners of the organization.
E. They combine aspects of non-profit and profit organizations in a way intended to permit a business to make a profit while pursuing explicit, socially oriented goals.
Q:
Which of the following statements is true of the trends in operating business organizations?
A. Public attention is moving away from the formation of benefit corporations.
B. Shareholders are losing interest and are becoming less active.
C. In comparison to corporations, sole proprietorships are becoming harder to create.
D. In many cases, corporations and individuals reasonably have an equal claim to rights and protections under the law.
E. Sole proprietorships and partnerships are now being treated as a taxable entity if they generate more than $100,000 in revenue.
Q:
Despite the advantages, there is some concern that the overuse of deferred prosecution agreements could
A. restrict the rights of minority shareholders in limited liability companies.
B. reduce the attractiveness of forming a limited liability partnership.
C. reduce the number of sole proprietorships formed in the country.
D. lead to an environment where corporations are treated unfairly.
E. lead to an overly lenient environment for addressing corporate malfeasance.
Q:
A deferred prosecution agreement is used to encourage
A. more derivative suits against majority shareholders who misuse company funds.
B. the reduction in the number of limited liability partnerships formed.
C. self-reporting and remediation of illegal acts before a criminal case is commenced.
D. an environment where corporations are easier to form than sole proprietorships.
E. the use of benefit organization as a corporate form.
Q:
Which of the following is a significant trend in corporate organization and control?
A. the inclusion of personal privacy rights for corporations
B. the emergence of benefit corporations
C. a decline in the use of deferred prosecution agreements by the federal government
D. an increase in the restrictions on sole proprietorships
E. an increase in managerial control for limited partners
Q:
A limited liability company is created through filing the ______ with a state official.
A. articles of confederation
B. articles of incorporation
C. articles of organization
D. articles of association
E. articles of integration
Q:
The owners of limited liability companies are called ______.
A. shareholders
B. partners
C. proprietors
D. members
E. directors
Q:
In the context of the continuity of limited liability companies (LLCs), which of the following statements is true?
A. Membership in LLCs is limited to individuals.
B. In an LLC, a business organization can be an owner.
C. An LLC dissolves when the number of shareholders falls below 100.
D. LLCs cannot be dissolved unless the owner of the LLC dies.
E. In an LLC, only the government can dictate when the company can be dissolved.
Q:
In a limited liability company, the transferability of a members interest
A. is restricted in the fashion of a partner.
B. is not subject to any restrictions.
C. depends on the number of shareholders in the company.
D. depends on the profitability of the company.
E. is similar to the free transferability of a corporate shareholder.
Q:
Under the Revised Uniform Limited Partnership Act (RULPA), if a limited partners name is used in a firms name, that partner
A. does not get his or her contribution returned when the partnership dissolves.
B. cannot advise the general partner.
C. will become personally liable to unsuspecting creditors.
D. must actively participate in management activities to retain his or her status of limited liability.
E. cannot receive any of the partnerships profits.
Q:
Which of the following statements is true of an S corporation?
A. It cannot have more than 100 shareholders.
B. It is the official designation for a corporation with less than 500 employees.
C. It is the least expensive form of organization to create.
D. It does not have shareholders.
E. It need not file an information return with the Internal Revenue Services since it does not pay any taxes.
Q:
Which of the following organizations is equally managed by the members unless a manager is designated?
A. l partnership
B. corporation
C. limited liability company
D. sole proprietorship
E. S corporation
Q:
Which of the following has a perpetual existence so long as the number of shareholders is limited?
A. limited partnership
B. partnership
C. limited liability company
D. sole proprietorship
E. S corporation
Q:
Which of the following is required to have its organizers file articles of organization with state official for formation?
A. limited partnership
B. partnership
C. limited liability company
D. sole proprietorship
E. limited liability partnership
Q:
Which of the following is essential if limited partners are to be assured of their limited liability?
A. substantial compliance with all the technical requirements of the limited partnership law
B. signing an agreement according to the limited liability law to dissolve a partnership whenever a member withdraws
C. using a limited partners surname in a partnerships name
D. inclusion of a limited commerce clause in the partnership agreement
E. participation in an organizations management
Q:
Which of the following statements is true of limited partners?
A. They cannot act as an agent of the partnership.
B. They can control operations of the limited partnership.
C. They cannot vote on the change of the partnerships name.
D. They can have their surnames used in the partnerships name.
E. They can act as a guarantor of the partnerships obligations.
Q:
The ______, by which the corporate veil can be pierced, may also be used to impose personal liability upon corporate officers, directors, and stockholders.
A. alter-ego theory
B. negligent conduct theory
C. Med-Arb theory
D. corporate envelopment theory
E. corporate doppelganger theory
Q:
Which of the following is a taxable entity?
A. a partnership
B. a limited liability partnership
C. a limited liability company
D. a corporation
E. a sole proprietorship
Q:
Which of the following is an advantage of the corporate form of organization?
A. License fees and franchise taxes are not assessed against corporations.
B. Control of a corporation may be held by those with a minority of the investment.
C. The cost of forming and maintaining a corporation is minimal.
D. A corporation need not be qualified in all states where it is conducting local or intrastate business.
E. Corporate income is not subject to double taxation.
Q:
Which of the following is the disadvantage of the corporate form of organization?
A. Control of a corporation may be held by those with a minority of the investment.
B. Ownership may be divided into many unequal shares.
C. Shareholders liabilities are limited to their investments.
D. The organization cannot have perpetual existence.
E. Corporate income may be subject to double taxation.
Q:
In a closely held corporation, the majority shareholders
A. have no influence on management.
B. can control election of a board of directors.
C. cannot be employed by the corporation.
D. have the same impact on policy as minority stockholders.
E. bring derivative suits on behalf of the corporation.
Q:
In a closely held corporation, which of the following lawsuits is likely to be brought by a minority shareholder on behalf of a corporation if the majority is acting illegally or oppresses the rights of the minority shareholders?
A. a derivative suit
B. a preemption suit
C. a petit suit
D. a dissolution suit
E. a termination suit
Q:
When organizations are owned by only a few persons, they are said to be ______.
A. publicly held
B. legally held
C. closely held
D. openly held
E. overtly held
Q:
When courts find that a corporate organization is being misused, the corporate entity can be disregarded. This has been called
A. cracking the corporate shell.
B. piercing the corporate veil.
C. breaking the corporate shield.
D. breaching the corporate defense.
E. rupturing the corporate law.
Q:
The formal application for a corporate charter is called the ______.
A. articles of confederation
B. articles of incorporation
C. articles of partnership
D. articles of application
E. articles of integration
Q:
Which of the following is a characteristic of partnerships?
A. They cannot operate in more than one state without obtaining a license to do so.
B. They are generally subject to more regulation and governmental supervision than a corporation.
C. They may not use any word in the name that would imply the existence of a corporation.
D. They are the least expensive form of business organization.
E. They allow unlimited number of people to become partners.
Q:
A corporation created under the authority of a foreign country may be called a(n) ______.
A. imported corporation
B. offshore corporation
C. alien corporation
D. distant corporation
E. external corporation
Q:
Which of the following statements is true of corporations?
A. Corporations do not have to pay income taxes on their profits.
B. In comparison with partnerships, corporations are more costly to form.
C. A corporations organizational structure changes whenever a shareholder sells his or her stock.
D. In comparison with proprietorships, corporations are easier to form.
E. The law treats a corporations existence in tandem with its owners status as shareholders.
Q:
As a creature of state legislative bodies, a ______ is much more complex to create and to operate than other forms of businesses.
A. sole proprietorship
B. partnership
C. limited partnership
D. corporation
E. limited liability partnership
Q:
A corporate charter is issued following an application made by individuals known as ______.
A. incorporators
B. arbitrators
C. mediators
D. officers
E. directors
Q:
Which of the following statements is true of liability of partners in a general partnership?
A. Partners have limited liability for an organizations debts.
B. Partners personal assets, which are not associated with the partnership, may not be claimed by the creditors.
C. From a creditors perspective, the liability of each partner extends only to a pro rata share.
D. A partner who has to pay beyond his pro rata share will have to make use of his future buyout interest.
E. A partner having unlimited liability will be jointly and severally liable for the partnerships obligations.
Q:
Which of the following is a disadvantage of partnerships?
A. They have a high cost of formation.
B. They are tax-paying entities.
C. They are subject to more governmental supervision than corporations.
D. They need to obtain a license if they wish to operate in more than one state.
E. They will be dissolved any time a partner leaves the partnership.
Q:
Which of the following statements is true of a general partnership?
A. A general partnership is dissolved any time there is a change in the partners.
B. A general partnership must have at least one controlling partner.
C. A dissolution does not necessarily destroy the business of a partnership.
D. Unlike proprietorships, partnerships are taxable entities.
E. All partners in a general partnership have only limited liability for their organizations debts.
Q:
To prevent problems that may arise when a partner dies or withdraws from a partnership, the articles of partnership should include a(n) ______.
A. buy and sell agreement
B. escrow instruction
C. establishment clause
D. commerce clause
E. interest agreement