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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:
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:
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:
Like limited partnerships, all of the investors in an LLC are able to share in management.
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:
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:
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:
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:
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:
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:
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:
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:
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:
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:
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:
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:
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:
(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.
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:
Mandatory employment arbitration agreements:
A. keep employees from suing about workplace disputes.
B. do not apply to claims of discrimination.
C. are disfavored by the U.S. Supreme Court.
D. are supported by the EEOC.
Q:
The Civil Rights Act of 1991:
A. provides Title VII coverage only to U.S. citizens working in the U.S.
B. curbed remedies for people harmed by discrimination thereby prohibiting claimants from suing for damages.
C. provides Title VII coverage to persons of all nationalities working in the U.S.
D. established that an employment decision based partly on discriminatory motives and partly on legitimate reasons is still illegal discrimination.
Q:
Under the ADEA and its amendments:
A. employers of 10 or more people are prohibited from discriminating against their employees on the basis of age.
B. it is permissible for employees to take early retirement on the grounds of inability to do work.
C. it is legal for employees less than 70 years of age to retire under a mandatory pension plan.
D. a BFOQ exemption is not provided.
Q:
Which of the following statements is true of the ADA?
A. The ADA protects a qualified individual with a disability from discrimination on the basis of that disability.
B. Most of the provisions of the ADA are very different to those of the Rehabilitation Act.
C. The ADA makes clear that the ADAA should be interpreted in favor of broad coverage.
D. "Reasonable accommodation" under the ADA includes providing quality treatment for drug and alcohol dependency.
Q:
The major piece of legislation outlawing discrimination in employment prohibiting discrimination on the basis of race, color, religion, sex, or national origin is the:
A. FLSA.
B. ERISA.
C. Age Discrimination in Employment Act.
D. Title VII of the Civil Rights Act of 1964.
Q:
Which of the following is a true statement about the Civil Rights Act of 1964?
A. The act applies to employers engaged in an industry affecting interstate commerce that have at least 10 employees.
B. Affirmative action is made illegal by the Act because it involves reverse discrimination.
C. Discrimination based on religion is permitted where religion is a BFOQ.
D. Discrimination based on race is permitted where race is a BFOQ.
Q:
Quid pro quo harassment involves:
A. insulting an employee by calling names or playing jokes to degrade someone that can take place at even those places where you least expect them to take place.
B. demeaning, offensive, and inappropriate conduct against an employee based on their racial identification.
C. some express or implied connection between the employee's submission to sexually oriented behavior and job benefits.
D. an employee being subjected to demeaning and inappropriate conduct based on their religious practices or a disability.
Q:
Which of the following statements about the EEOC is true?
A. It protects workers from retaliation if they refuse to do work that they reasonably believe might cause serious injury.
B. It prohibits employers from using lie detector tests on employees unless the employer is engaged in an investigation of economic losses due to theft.
C. It objects to mandatory binding arbitration as a condition of employment because it denies employees the right to bring independent discrimination claims.
D. It provides skilled people to help unions and employers in their bargaining so as to prevent strikes.
Q:
The Equal Employment Opportunity Commission:
A. permits mandatory binding arbitration as a condition of employment.
B. can initiate action under Title VII on its own.
C. is not supportive of alternative dispute resolution.
D. is based on the laissez-faire values of the 19th century.
Q:
The Labor-Management Reporting and Disclosure Act:
A. requires employers to disclose the wages of their employees.
B. requires a union to have a constitution and bylaws.
C. requires employers to disclose their meeting minutes taken in any union negotiation.
D. requires that manufacturing workers be informed of hazardous chemicals in the workplace.
Q:
According to the LMRA, which of the following is an example of unfair labor practices by the employer?
A. Setting excessive initiation fees under a union shop agreement.
B. Coercing an employee to join a union.
C. Coercing an employee in the selection of representatives for collective bargaining.
D. Establishing or dominating a labor union.
Q:
Which of the following statements about the Equal Pay Act is true?
A. The Equal Pay Act was passed as an amendment to the ERISA, prohibiting sex discrimination in pay.
B. It requires that both sexes have equal pay for jobs that require equal responsibility and which are performed under similar working conditions.
C. Equal rates of pay are permitted under seniority and merit systems as well as other incentive systems.
D. It is designed to prevent problems such as underfunding and careless management of funds.
Q:
The Equal Pay Act of 1963 was passed as an amendment to the:
A. Employment Retirement Income Security Act.
B. Labor-Management Relations Act.
C. Fair Labor Standards Act.
D. National Labor Relations Act.
Q:
A contract between an employer and the union, which requires the employer to refrain from dealing in the products of another employer who is considered to be unfair to the union, is called a:
A. collective bargaining agreement.
B. competitive-hit agreement.
C. hot-cargo agreement.
D. union shop agreement.
Q:
In terms of labor law, "garnishment":
A. processes unfair practice charges brought against unions and employers.
B. occurs when the employer discontinues operations during a labor dispute.
C. is a court order that makes money or property held by a debtor subject to the claim of a creditor.
D. refers to plans for increasing the proportion of minorities or women in an employer's workforce.
Q:
The Employment Retirement Income Security Act of 1974:
A. primarily requires employers to establish pension plans.
B. primarily regulates the management and vesting of established plans.
C. covers only union-sponsored pension plans but not employer-sponsored pension plans.
D. processes unfair practice charges brought against unions and employers.
Q:
This act established the Pension Benefit Guaranty Corporation to provide insurance for plans whose total assets were insufficient to pay promised benefits.
A. ADA
B. FLSA
C. ERISA
D. EPPA
Q:
A "yellow-dog contract":
A. required an employee to remain a member of the union at all times in order to remain employed.
B. was widely used by employers to encourage the formation of unions.
C. required a worker taking a job to promise not to join a union.
D. specified that a worker's employment will not be affected by his union membership.
Q:
One of the major functions of NLRB is to conduct elections for employees. Identify the correct statement regarding the election process.
A. An election is held after a petition is filed with the NLRB only by the employer.
B. More than one union must always be present on the ballot for the election to take place.
C. The group of employees allowed to vote by the board is called the bargaining unit.
D. The exclusive bargaining representative for the unit represents only the employees of the unit who voted for them.
Q:
The FLSA requires:
A. covered employers to pay their professional staff time and a half for hours worked in excess of 45 in one week.
B. covered employers to pay their employees a minimum hourly wage.
C. covered employers to pay their employees double time.
D. covered employers to pay employees of both sexes equally for jobs that require equal skill, effort, and responsibility.
Q:
Generally, employers covered under the FLSA are:
A. those engaged in interstate commerce.
B. those whose annual gross sales exceed $1 million.
C. those whose business affects intrastate commerce.
D. those whose annual gross sales exceed $10 million.
Q:
The Occupational Safety and Health Act of 1970:
A. requires employers to establish pension plans or to meet specific benefit levels.
B. requires covered employers to pay their employees time and a half for hours worked in excess of 40 in one week.
C. is designed to provide reasonable leave periods for family-related health issues.
D. permits its inspectors to enter the workplace at any reasonable time and without advance notice.
Q:
The Family and Medical Leave Act:
A. covers birth but not adoption of a child.
B. covers employees the moment they begin work.
C. requires employers with 50 or more employees to give covered employees up to 12 paid workweeks of leave per year to deal with the care of themselves.
D. provides job security to employees with serious health conditions.
Q:
Under the GINA, genetic information includes family medical history.
Q:
Private employees cannot challenge drug testing under tort theories such as invasion of privacy or infliction of emotional distress.
Q:
Under workers' compensation:
A. the employer is not liable for injuries that occur as the result of negligence by another worker.
B. the employer is liable for injuries occurring within the scope of employment without regard to fault.
C. the injuries occurring on the way to and from the job are within the course of employment, for which damages may be recovered.
D. general damages for pain and suffering, and punitive damages for employer negligence, are also available.
Q:
In terms of workers' compensation:
A. "work-related injuries" implies injuries arising out of employment or those which are related to the type of employment involved.
B. employers are required to report on-the-job fatalities and injuries that require hospitalization within 72 hours.
C. the secretary of labor authority is delegated to establish detailed health and safety standards that must be complied with by employers.
D. injuries occurring on the way to and from the job are considered to be within the course of employment.
Q:
OSHA imposes on employers a general duty to:
A. prevent workplace hazards that may cause death or serious injury.
B. provide reasonable leave periods for family-related health issues.
C. develop and enforce their own health and safety programs.
D. make the workplace more accommodating to women and families.
Q:
The Congress amended the ADA with the passage of the Americans with Disability Amendments Act (ADAA) to overturn decisions of the Supreme Court that severely limited the coverage of the ADA.
Q:
Union membership and union power have dramatically increased over the past decade.