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Q:
Ron, Sue, and Tom form a syndicate to buy a professional football team. This syndicate could be set up as
a. a corporation only.
b. a corporation or a partnership.
c. a partnership only.
d. neither a corporation nor a partnership.
Q:
Macro Transport, Inc., and Micro Trucking Company form a joint stock company. Its owners are
a. agents of each other and shareholders in the company.
b. agents of each other only.
c. neither agents of each other nor shareholders in the company.
d. shareholders in the company only.
Q:
Fact Pattern 37-1
Ad Services, Inc., and Best Promotions, Inc., agree to complete a marketing survey for Consumer Sales Corporation (CSC). Their representatives sign a letter headed "Ad/Best for One Survey." The title of Ad and Best's report is "Joint Study by Ad/Best." When CSC's payment is not forthcoming, Ad negotiates a settlement and signs it "on behalf of Ad and Best."Refer to Fact Pattern 37-1. Suppose that Ad refuses to share CSC's payment with Best, and Best files a suit against Ad. According to the reasoning of the court in Case 37.3, PGI, Inc. v. Rathe Productions, Inc., to rule in Best's favor under these circumstances requires a finding that Ad and Best are engaged in
a. a cooperative.
b. a joint venture.
c. a partnership.
d. no specific form of business entity.
Q:
Fact Pattern 37-1
Ad Services, Inc., and Best Promotions, Inc., agree to complete a marketing survey for Consumer Sales Corporation (CSC). Their representatives sign a letter headed "Ad/Best for One Survey." The title of Ad and Best's report is "Joint Study by Ad/Best." When CSC's payment is not forthcoming, Ad negotiates a settlement and signs it "on behalf of Ad and Best."Refer to Fact Pattern 37-1. According to the decision in Case 37.3, PGI, Inc. v. Rathe Productions, Inc., Ad and Best are engaged in
a. a cooperative.
b. a joint venture.
c. a partnership.
d. no specific form of business entity.
Q:
Best Construction, Inc., and General Real Estate Corporation form a joint venture. A joint venture is usually formed for
a. an implied duration of not more than six months.
b. a single activity or transaction.
c. a stated duration of not more than one year.
d. perpetual existence.
Q:
Kris is a member of Liberty Services, LLC, a limited liability company. Kris can participate in the firm's management
a. only to the extent that she assumes liability for the firm's debts.
b. only to the extent of her investment in the firm.
c. to any extent.
d. to no extent.
Q:
Computer Games, LLC, is a limited liability company. Among the members, a dispute arises that their operating agreement does not cover. No statute applies. The dispute is governed by the principles of
a. corporate law.
b. partnership law.
c. sole proprietorship law.
d. syndicate law.
Q:
American Products, LLC, is a limited liability company. Rather than distribute its profits to its members, American wants to reinvest the profits in its business. For this reason, American may prefer to be taxed as
a. a corporation.
b. a partnership.
c. a sole proprietorship.
d. a syndicate.
Q:
Accounting Applications, LLC, is a limited liability company. Unless indicated otherwise on Accounting's federal tax form, the firm will be taxed as
a. a corporation.
b. a partnership.
c. a sole proprietorship.
d. a syndicate.
Q:
Dan is considering forms of business organization for his financial advisory firm. Like most states, Dan's state requires that to form a limited liability company, he must file with a central state agency
a. articles of certification.
b. articles of formation.
c. articles of organization.
d. no specific documents.
Q:
Nina is considering forms of business organization for her construction-equipment business. For purposes of owning property and being a party to litigation, forms that are legal entities separate from their owners include
a. corporations and limited liability companies.
b. corporations only.
c. limited liability companies only.
d. neither corporations nor limited liability companies.
Q:
Most cooperatives are governed by federal, not state, statutes.
Q:
An unincorporated cooperative is often treated like a partnership.
Q:
In some states, business trusts pay corporate taxes.
Q:
A joint stock company is usually treated like a partnership.
Q:
A group of individuals getting together to finance a particular project may form a syndicate.
Q:
A syndicate may exist in the form of a corporation.
Q:
A cooperative may take the form of a corporation.
Q:
A joint venture normally terminates on the completion of the project for which the venture was formed.
Q:
Giving exclusive control of a joint venture to one of its members undercuts the status of the relationship.
Q:
The participants in a joint venture have the same power as partners in a partnership to manage the activities of the enterprise.
Q:
In some states, in the absence of an agreement to the contrary, each member of a limited liability company has one vote.
Q:
In a limited liability company, members do not have to participate in its management.
Q:
Most limited liability company statutes have strict provisions regulating members' meetings.
Q:
An operating agreement for a limited liability company need not be in writing.
Q:
With respect to state taxes on limited liability companies, most states follow the federal tax rules.
Q:
For federal jurisdictional purposes, a limited liability company is treated like a corporation.
Q:
Forming a limited liability company requires filing articles of organization in a state office.
Q:
A limited liability company is a legal entity apart from its owners.
Q:
A limited liability company is operated in compliance with state law.
Q:
A limited liability company offers the tax advantages of a partnership.
Q:
Alpha Communications, a partnership, publishes consumer periodicals, including Science Today. Beta Publications, also a partnership, publishes professional periodicals, including Technology Review. Alpha and Beta agree to pool their resources in a one-time deal to print and market a book, Unlimited Future. In contracting with Gamma Printing Supplies, Inc., for paper to print the book, Alpha commits fraud. In contracting with Delta Literary Agency for articles to use in Technology Review, Beta commits fraud. Gamma and Delta file suits against Alpha and Beta. What type of business organization has Alpha and Beta formed? To whom, if anyone, is Alpha liable? To whom, if anyone, is Beta liable?
Q:
Jill. Kyle, and Laura want to form Marketing Specialties, LLC (limited liability company). What should they provide in their operating agreement? If they fail to include some important operating details, what determines these details?
Q:
Buyers Club is an incorporated cooperative. Like other incorporated cooperatives, Buyers Club distributes profits to its owners on the basis of
a. the amount of capital they contribute.
b. the degree to which they participate in the management of the cooperative.
c. their transactions with the cooperative.
d. none of the above.
Q:
Resource Development Company and Western Mining Corporation form a joint stock company. Like most joint stock companies, it is managed by
a. directors and officers.
b. general partners.
c. managing members.
d. trustees.
Q:
Victor and other farmers in Washington County form a business organization to provide, without profit, an economic service to its members. This is
a. a business trust.
b. a cooperative.
c. a corporation.
d. a joint stock company.
Q:
Best Value Grocery Stores is an unincorporated cooperative. Best Value and other unincorporated cooperatives are generally treated like
a. business trusts.
b. corporations.
c. joint stock companies.
d. partnerships.
Q:
Interstate Transport, Inc., and Nationwide Trucking Company form a joint stock company. Its owners are
a. agents of each other only.
b. shareholders only.
c. agents of each other and shareholders.
d. neither agents nor shareholders.
Q:
Delta Music Company and Eagle Tech Corporation form a joint stock company. A joint stock company can be formed for, at the most,
a. an implied duration of not more than six months.
b. a perpetual existence.
c. a single activity or transaction.
d. a stated duration of not more than one year.
Q:
National Capital Corporation and International Investments, Inc., form a joint stock company. The ownership of a joint stock company is represented by
a. partnership certificates.
b. shares of stock.
c. title documents.
d. trust certificates.
Q:
Downwind Properties Corporation and Eastern Investments Company transfer their property to Financial Management, Inc., which manages the property and distributes the profits to Downwind and Eastern. This form of a business organization is
a. a business trust.
b. a joint stock company.
c. a joint venture.
d. a syndicate.
Q:
Owen, Paula, Quinn, and Rita combine to finance the building of Super Stores, a shopping mall. Their selected form of business organization is an investment group, or
a. a business trust.
b. a joint stock company.
c. a joint venture.
d. a syndicate.
Q:
Mighty Products, Inc., and New Capital Corporation form a joint venture. A joint venture is similar to
a. a corporation.
b. a partnership.
c. a sole proprietorship.
d. a syndicate.
Q:
Ace Property, Inc., and Build-Rite Construction Corporation combine their efforts to build an office and warehouse complex. Their form of business organization is
a. a business trust.
b. a joint stock company.
c. a joint venture.
d. a syndicate.
Q:
Omega Corporation and Peak Code, Inc., two software firms, wish to combine their research and development capabilities to make a special, limited edition computer game. The most appropriate legal entity for this project might be
a. a business trust.
b. a joint stock company.
c. a joint venture.
d. a syndicate.
Q:
Web Services, LLC, is a member-managed limited liability company. If the law in Web's state is like the law in most states, unless the members have agreed otherwise, decisions are made by
a. majority vote.
b. minority vote.
c. plurality vote.
d. seniority vote.
Q:
CPA Accounting, LLC, is a limited liability company. If the law in CPA's state is like the law in most states, unless the members have agreed otherwise, participants in the firm's management will be considered to include
a. all members.
b. no member.
c. one member.
d. two members, including at least one general partner.
Q:
Jay is a member of Kappa, LLC, a limited liability company. Jay is liable for Kappa's debts
a. in proportion to the total number of members.
b. to the extent of his capital contribution.
c. to the extent that the other members do not pay the debts.
d. to the full extent.
Q:
B2B, LLC, is a limited liability company. Among its members, a dispute arises that the operating agreement does not cover. The dispute is governed by
a. the applicable state LLC statute.
b. the federal Uniform LLC Law.
c. the principles of partnership law.
d. the state corporation statute.
Q:
Fred is considering forms of business organization for his chain of general-merchandise retail stores. One advantage of the limited liability company form, with respect to tax options, is its
a. flexibility.
b. lack of accountability.
c. limited liability.
d. rigidity.
Q:
Bill is considering forms of business organization for his Web site consulting firm. Most states require that a limited liability company have at least
a. no members.
b. one member.
c. two members.
d. three members, including at least one general partner.
Q:
Quad-State Sales, LLC, is a limited liability company. Rita, a Quad-State salesperson, is in an accident in South Dakota with Tim, a citizen of Montana. Tim files a suit against Quad-State in a federal district court. For purposes of federal court jurisdiction, the citizenship of the firm is the same as the citizenship of
a. Quad-State's members.
b. Rita.
c. the state in which the accident occurred.
d. the state of Quad-State's formation.
Q:
Beth and Carl want to form a limited liability company (LLC) to manage their seven Movie Time Video stores. LLC statutes have been adopted in
a. all states.
b. a majority of states.
c. only foreign countries.
d. only Wyoming.
Q:
Most cooperatives are governed under state statutes.
Q:
Members of an incorporated cooperative have limited liability.
Q:
A joint stock company is normally not treated as a legal entity for purposes of a lawsuit.
Q:
A syndicate is also known as an "investment group."
Q:
Unincorporated cooperatives are often treated like partnerships.
Q:
A cooperative is an association organized to provide an economic service to its members.
Q:
As a form of business organization, a business trust resembles a corporation.
Q:
A joint venture does not terminate until the business organizations of its members are dissolved.
Q:
Unless otherwise agreed, the members of a joint venture share profits and losses equally.
Q:
A joint venture always resembles the organizations of the entities that constitute its members.
Q:
A joint venture is taxed like a partnership.
Q:
In a limited liability company, members cannot participate in its management.
Q:
In a limited liability company, members must participate in the management of the company.
Q:
Most limited liability company (LLC) statutes provide that unless the members agree otherwise, all profits of the LLC will be divided equally.
Q:
A limited liability company must have an operating agreement.
Q:
For federal income tax purposes, a limited liability company can choose to be taxed like a corporation.
Q:
A limited liability company is a citizen of every state of which its members are citizens.
Q:
Most states do not permit one-member limited liability companies.
Q:
A limited liability company must be formed in compliance with federal law.
Q:
A limited liability company offers the limited liability of a corporation.
Q:
Ron is a limited partner, and Steve is a general partner of Total Financial Management, a limited partnership. Steve manages the firm. Ron has some expertise in the area and believes that he could do a better job than Steve at managing, but he abstains from becoming actively involved. Why might he choose to keep away from management activities?
Q:
Don and Eve form a partnership. Eve's capital contribution is $10,000, and Don's is $15,000. The partnership agreement provides that profits are to be shared, with 40 percent for Eve and 60 percent for Don. Later, Eve makes a $10,000 loan to the partnership when it needs working capital. When the partnership is dissolved, its assets are $50,000, and its debts are $8,000. How should the assets be distributed?
Q:
Bruce is a general partner in Capitol Realty, LLLP, a limited liability limited partnership, which cannot pay its debts. Bruce is personally liable for the debts
a. in proportion to the number of partners in the firm.
b. to no extent.
c. to the extent of his capital contribution.
d. to the full extent.
Q:
Connie, Drew, and Ellen are the general partners of Foreign Auto Repair, a limited partnership. Connie dies. The partnership can
a. continue only after a distribution of its assets.
b. continue only as a general partnership.
c. continue only if Drew and Ellen consent.
d. not continue because Connie's death dissolves the firm.
Q:
Rick and Sandy are limited partners in Total Enterprises, a limited partnership. To avoid personal liability for partnership obligations, they must not
a. acquire an interest in the firm.
b. contribute property to the firm.
c. engage in activities independent of the firm's business.
d. participate in the firm's management.
Q:
Don and Elaine are limited partners in Great Stores, a limited partnership. In terms of the firm's books, Don and Elaine are entitled to
a. access in proportion to their participation in the management of the firm.
b. access to those parts that directly relate to their capital contributions.
c. no access.
d. total access.
Q:
Rob, Sue, and Tim agree to form a computer peripherals mail-order business. Rob agrees to manage the business and to assume full personal liability. Sue and Tim agree to invest in the firm but to be liable only to that extent. These three have formed
a. a general partnership.
b. a limited liability limited partnership.
c. a limited liability partnership.
d. a limited partnership.