Question 1

A nonprofit corporation must establish a board of directors or trustees to oversee its operations.

Accepted Answer

A) True 
 B)False

Question 2

Jane and Randy have a partnership with their company, JR Enterprises. Which of the following statements reflects how the partnership pays taxes?

Accepted Answer

A)  JR Enterprises does not pay any taxes. 
B)  JR Enterprises pays taxes only as a partnership. 
C)  Jane and Randy each pay taxes on the total income. 
D)  Jane and Randy do not pay taxes since they are married. 
A)  JR Enterprises does not pay any taxes. 
B)  JR Enterprises pays taxes only as a partnership. 
C)  Jane and Randy each pay taxes on the total income. 
D)  Jane and Randy do not pay taxes since they are married.

Question 3

Explain the difference between a board of directors and an advisory council.

Accepted Answer

Many small companies use an advisory boa

Question 4

Which of the following entities is liable for a corporation's debts?

Accepted Answer

A)  Stockholders 
B)  Board of directors 
C)  The corporation itself 
D)  The corporation's president 
A)  Stockholders 
B)  Board of directors 
C)  The corporation itself 
D)  The corporation's president

Question 5

In what situations would it be best for a company to be formed as a C corporation as opposed to a limited liability company?

Accepted Answer

•	The company wants to provide extensive

Question 6

An advisory board functions like a board of directors does, except that the members are compensated for their services and the company must have directors and officers liability insurance.

Accepted Answer

A) True 
 B)False

Question 7

The board of directors is elected by the stockholders of a corporation.

Accepted Answer

A) True 
 B)False

Question 8

A basic legal principle involving stockholders is that

Accepted Answer

A)  an ownership interest in a corporation does not confer a legal right to manage the firm. 
B)  the board of directors cannot elect the principal owner as president. 
C)  all dividends are nontaxable. 
D)  stockholders cannot buy new stock until it is offered for public sale. 
A)  an ownership interest in a corporation does not confer a legal right to manage the firm. 
B)  the board of directors cannot elect the principal owner as president. 
C)  all dividends are nontaxable. 
D)  stockholders cannot buy new stock until it is offered for public sale.

Question 9

Match the term with its definition.
-A form of corporation that shields owners from one another's liability and is set up for individuals in certain professional practices

Accepted Answer

A) advisory board 
B) B corporation 
C) C corporation 
D) corporate charter 
E) joint and several liability
F)partnership
G)professional corporation
H)S corporation (Subchapter S corporation)
I)unlimited liability 
A) advisory board 
B) B corporation 
C) C corporation 
D) corporate charter 
E) joint and several liability
F)partnership
G)professional corporation
H)S corporation (Subchapter S corporation)
I)unlimited liability

Question 10

Discuss the benefits of a social network to a small business owner.

Accepted Answer

A social network is the web of relations

Question 11

Match the term with its definition.
-A business organization that exists as a legal entity and provides limited liability to its owners

Accepted Answer

A) corporation 
B) limited partnership 
C) management team 
D) organizational test 
E) piercing the corporate veil
F)preemptive right
G)reciprocation
H)social capital
I)strategic alliance 
A) corporation 
B) limited partnership 
C) management team 
D) organizational test 
E) piercing the corporate veil
F)preemptive right
G)reciprocation
H)social capital
I)strategic alliance

Question 12

Which of the following is the preferred form of organization with regards to transferability of ownership?

Accepted Answer

A)  Sole proprietorship 
B)  General partnership 
C)  C corporation 
D)  It depends on the circumstances. 
A)  Sole proprietorship 
B)  General partnership 
C)  C corporation 
D)  It depends on the circumstances.

Question 13

Partners must contribute capital or assets to form a partnership.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following legal forms has the smallest percentage of new businesses?

Accepted Answer

A)  Sole proprietorship 
B)  Partnership 
C)  C corporation 
D)  S corporation 
A)  Sole proprietorship 
B)  Partnership 
C)  C corporation 
D)  S corporation

Question 15

Match the term with its definition.
-A type of corporation that offers limited liability to its owners and passes taxable income or losses on to the stockholders

Accepted Answer

A) advisory board 
B) B corporation 
C) C corporation 
D) corporate charter 
E) joint and several liability
F)partnership
G)professional corporation
H)S corporation (Subchapter S corporation)
I)unlimited liability 
A) advisory board 
B) B corporation 
C) C corporation 
D) corporate charter 
E) joint and several liability
F)partnership
G)professional corporation
H)S corporation (Subchapter S corporation)
I)unlimited liability

Question 16

Emile has very little money with which to start his business so he wants to keep the cost of forming his company as low as possible. Which of the following forms of ownership would you recommend for Emile?

Accepted Answer

A)  Sole proprietorship 
B)  Partnership 
C)  C corporation 
D)  S corporation 
A)  Sole proprietorship 
B)  Partnership 
C)  C corporation 
D)  S corporation

Question 17

Large manufacturers have been known to form strategic alliances with small manufacturers in order to benefit from the smaller firms'

Accepted Answer

A)  financial resources. 
B)  operational expertise. 
C)  research. 
D)  product development efforts. 
A)  financial resources. 
B)  operational expertise. 
C)  research. 
D)  product development efforts.

Question 18

If partners cannot resolve disputes between themselves, they may be wise to hire a(n)

Accepted Answer

A)  business mediator. 
B)  arbitrator. 
C)  business judge. 
D)  business attorney. 
A)  business mediator. 
B)  arbitrator. 
C)  business judge. 
D)  business attorney.

Question 19

Match the term with its definition.
-Verification of whether a nonprofit organization is staying true to its stated purpose

Accepted Answer

A) corporation 
B) limited partnership 
C) management team 
D) organizational test 
E) piercing the corporate veil
F)preemptive right
G)reciprocation
H)social capital
I)strategic alliance 
A) corporation 
B) limited partnership 
C) management team 
D) organizational test 
E) piercing the corporate veil
F)preemptive right
G)reciprocation
H)social capital
I)strategic alliance

Question 20

Stockholders have limited liability unless they

Accepted Answer

A)  are active in the management of the corporation. 
B)  assume personal liability for debt. 
C)  own preferred stock. 
D)  convert their shares to partnership status. 
A)  are active in the management of the corporation. 
B)  assume personal liability for debt. 
C)  own preferred stock. 
D)  convert their shares to partnership status.

Exam 8: The Organizational Plan: Teams, Legal Structures, Alliances, and Directors

A nonprofit corporation must establish a board of directors or trustees to oversee its operations.

Jane and Randy have a partnership with their company, JR Enterprises. Which of the following statements reflects how the partnership pays taxes?

Explain the difference between a board of directors and an advisory council.

Which of the following entities is liable for a corporation's debts?

In what situations would it be best for a company to be formed as a C corporation as opposed to a limited liability company?

An advisory board functions like a board of directors does, except that the members are compensated for their services and the company must have directors and officers liability insurance.

The board of directors is elected by the stockholders of a corporation.

A basic legal principle involving stockholders is that

Match the term with its definition. -A form of corporation that shields owners from one another's liability and is set up for individuals in certain professional practices

Discuss the benefits of a social network to a small business owner.

Match the term with its definition. -A business organization that exists as a legal entity and provides limited liability to its owners

Which of the following is the preferred form of organization with regards to transferability of ownership?

Partners must contribute capital or assets to form a partnership.

Which of the following legal forms has the smallest percentage of new businesses?

Match the term with its definition. -A type of corporation that offers limited liability to its owners and passes taxable income or losses on to the stockholders

Emile has very little money with which to start his business so he wants to keep the cost of forming his company as low as possible. Which of the following forms of ownership would you recommend for Emile?

Large manufacturers have been known to form strategic alliances with small manufacturers in order to benefit from the smaller firms'

If partners cannot resolve disputes between themselves, they may be wise to hire a(n)

Match the term with its definition. -Verification of whether a nonprofit organization is staying true to its stated purpose

Stockholders have limited liability unless they

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