Question 1

Small corporations can avoid double taxation by electing to be treated as a(n)

Accepted Answer

A) C corporation 
B) S corporation 
C) Close corporation 
D) LLC. 
A) C corporation 
B) S corporation 
C) Close corporation 
D) LLC.

Question 2

Which of the following statements is not true regarding the characteristics of a general partnership?

Accepted Answer

A) No minimum amount of capital is required. 
B) The partners must share in profits. 
C) There must be a written partnership agreement. 
D) It may acquire property in its own name. 
A) No minimum amount of capital is required. 
B) The partners must share in profits. 
C) There must be a written partnership agreement. 
D) It may acquire property in its own name.

Question 3

A shareholder's right of appraisal only applies to transactions that were initially subject to shareholder approval.

Accepted Answer

A) True 
 B)False

Question 4

Partners owe each other a duty of care but not a duty of loyalty.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is not true regarding limited partnerships?

Accepted Answer

A) General partners of a limited partnership remain jointly and severally liable for partnership obligations. 
B) Limited partners assume no liability for partnership debts beyond the amount of capital they have contributed. 
C) Limited partners are responsible for the management of the partnership. 
D) Limited partnerships are often used to raise capital. 
A) General partners of a limited partnership remain jointly and severally liable for partnership obligations. 
B) Limited partners assume no liability for partnership debts beyond the amount of capital they have contributed. 
C) Limited partners are responsible for the management of the partnership. 
D) Limited partnerships are often used to raise capital.

Question 6

General partners of a limited partnership remain jointly and severally liable for partnership obligations.

Accepted Answer

A) True 
 B)False

Question 7

Compare and contrast a general partnership with a corporation.Explain the advantages and disadvantages of both forms of business ownership.Discuss fully.

Accepted Answer

A general partnership is created when tw

Question 8

A ________ combines the tax advantages of a pass-through entity with the limited liability advantages of a corporation

Accepted Answer

A) limited liability company 
B) de jure corporation 
C) joint venture 
D) general partnership 
A) limited liability company 
B) de jure corporation 
C) joint venture 
D) general partnership

Question 9

Which of the following is false regarding decision making in a partnership?

Accepted Answer

A) Each partner's assets are vulnerable to the poor business decisions of the fellow partners. 
B) A partnership is prohibited from placing managerial control of the business in one partner. 
C) Unless the partners expressly agree otherwise,partnership law requires unanimous agreement of all partners on all but the most ordinary matters. 
D) If the partners in an informal partnership cannot agree on a decision,they may disband the partnership,distribute its assets,and terminate it. 
A) Each partner's assets are vulnerable to the poor business decisions of the fellow partners. 
B) A partnership is prohibited from placing managerial control of the business in one partner. 
C) Unless the partners expressly agree otherwise,partnership law requires unanimous agreement of all partners on all but the most ordinary matters. 
D) If the partners in an informal partnership cannot agree on a decision,they may disband the partnership,distribute its assets,and terminate it.

Question 10

When directors on a board serve for a fixed term but are not elected all at once it is known as a ________ board.

Accepted Answer

A) cumulative 
B) staggered 
C) proxy 
D) inside 
A) cumulative 
B) staggered 
C) proxy 
D) inside

Question 11

Set forth four of the shareholder proposals that must be included in proxy materials according to the Securities and Exchange Commission.

Accepted Answer

Following is the list of proposals that

Question 12

Mike owns a small but successful coffee house.He has decided to incorporate.Should Mike form a C corporation or a subChapter S corporation? Discuss taxation under both forms and explain requirements for formation of an S corporation.

Accepted Answer

Any corporation not meeting the requirem

Question 13

A joint venture is a perpetual partnership of two or more persons for a specific purpose.

Accepted Answer

A) True 
 B)False

Question 14

In a ______________,one person owns all of the assets of the business and is liable for all of its debts.

Accepted Answer

A) sole proprietorship 
B) general partnership 
C) limited partnership 
D) C corporation 
A) sole proprietorship 
B) general partnership 
C) limited partnership 
D) C corporation

Question 15

Fact pattern 20-1
Joan decides to enter into a franchise agreement with Great Burgers to sell their burgers in her town.The franchise agreement she entered into with Great Burgers did not prohibit Great Burgers from granting other franchises in the area,but that did not concern Joan because she thought Great Burgers would treat her fairly.She did not bother to read the franchise papers,contracts,and disclosures she was provided.Joan's business went very well for the six months.Then,however,another Great Burgers franchise opened just down the street from Joan's restaurant.She was very upset and called Great Burgers to complain.They brushed off her concerns and told her that there was enough business for everyone.Joan,however,is interested in suing Great Burgers.
-Refer to fact pattern 20-1.What is the position of the Federal Trade Commission regarding a franchisor selling a franchise very near to an existing franchise?

Accepted Answer

A) That the practice is illegal. 
B) That the practice is illegal unless the first franchisee provides specific permission for the sale to the second franchisee. 
C) That the practice is legal and that no disclosures are required. 
D) That the practice is legal but that certain disclosures must be made to the first franchisee when that agreement is made. 
A) That the practice is illegal. 
B) That the practice is illegal unless the first franchisee provides specific permission for the sale to the second franchisee. 
C) That the practice is legal and that no disclosures are required. 
D) That the practice is legal but that certain disclosures must be made to the first franchisee when that agreement is made.

Question 16

Sarah Smith works as a laser technician for a local dermatology center consisting of physicians operating under a partnership agreement.Sarah purchased supplies through the mail from a medical supply facility totaling $5,000.She signed the contract agreeing to pay for the supplies in her name,Sarah Smith.A few weeks later the dermatologists became embroiled in a bitter dispute regarding profits and terminated the partnership.Unfortunately,the partners were not aware of the debt owed to the medical supply facility; and the bill remained unpaid.Sarah received a bill form the supply company for $5,000.Is she liable to the medical supply company,and why or why not?

Accepted Answer

A) No,because she was only employed as a technician. 
B) No,because the medical supply facility should have asked for proper identification. 
C) Yes,because she signed in her own name. 
D) Yes,because she signed in her own name and the partnership has terminated. 
A) No,because she was only employed as a technician. 
B) No,because the medical supply facility should have asked for proper identification. 
C) Yes,because she signed in her own name. 
D) Yes,because she signed in her own name and the partnership has terminated.

Question 17

A corporation that is technically defective but that is formed in good faith and exercises corporate power is known as a de jure corporation.

Accepted Answer

A) True 
 B)False

Question 18

In what five categories does the Franchise Rule require a franchisor to make material disclosures?

Accepted Answer

The categories are as follows: (1)the na

Question 19

States may not impose a higher fiduciary duty upon partners than that set forth in the Revised Uniform Partnership Act.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is true regarding incorporation?

Accepted Answer

A) A corporation must be incorporated in the state in which it has its principal place of business. 
B) Laws regarding incorporation are uniform from state to state. 
C) Since the mid-1930's,Delaware has been considered the preeminent state for incorporation. 
D) Incorporation may be done pursuant to common law as well as statute. 
A) A corporation must be incorporated in the state in which it has its principal place of business. 
B) Laws regarding incorporation are uniform from state to state. 
C) Since the mid-1930's,Delaware has been considered the preeminent state for incorporation. 
D) Incorporation may be done pursuant to common law as well as statute.

Exam 20: Forms of business organizations

Small corporations can avoid double taxation by electing to be treated as a(n)

Which of the following statements is not true regarding the characteristics of a general partnership?

A shareholder's right of appraisal only applies to transactions that were initially subject to shareholder approval.

Partners owe each other a duty of care but not a duty of loyalty.

Which of the following is not true regarding limited partnerships?

General partners of a limited partnership remain jointly and severally liable for partnership obligations.

Compare and contrast a general partnership with a corporation.Explain the advantages and disadvantages of both forms of business ownership.Discuss fully.

A ________ combines the tax advantages of a pass-through entity with the limited liability advantages of a corporation

Which of the following is false regarding decision making in a partnership?

When directors on a board serve for a fixed term but are not elected all at once it is known as a ________ board.

Set forth four of the shareholder proposals that must be included in proxy materials according to the Securities and Exchange Commission.

Mike owns a small but successful coffee house.He has decided to incorporate.Should Mike form a C corporation or a subChapter S corporation? Discuss taxation under both forms and explain requirements for formation of an S corporation.

A joint venture is a perpetual partnership of two or more persons for a specific purpose.

In a ______________,one person owns all of the assets of the business and is liable for all of its debts.

A corporation that is technically defective but that is formed in good faith and exercises corporate power is known as a de jure corporation.

In what five categories does the Franchise Rule require a franchisor to make material disclosures?

States may not impose a higher fiduciary duty upon partners than that set forth in the Revised Uniform Partnership Act.

Which of the following is true regarding incorporation?

law, value creation, and risk management

Ethics ant the law

Courts, sources of law, and dispute resolution

Constitutional bases for business regulation

Agency

Administrative Law

Contracts

sales, licensing, and e-commerce

Torts and Privacy protection

product liability

Intellectual property

The employment agreement

civil rights and employment discrimination

executive compensation and employee benefits

Criminal law

Environmental law

Antitrust

Consumer Protection

real property and land use

Directors, Officers, and Controlling Shareholders

Public and Private Offerings of Securities

Securities Fraud and insider trading

Debtor-Creditor Relations and Bankruptcy

International Business

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