Exam 12: Business Organizations

The income of proprietorships is often treated as personal income of the owner.

California was the first state to:

In general, if a partnership agreement does not specify what happens in case of the death or departure of a partner, one looks to:

Limited partners are similar to corporate shareholders in that:

A disadvantage of the sole proprietorship form is often:

A disadvantage of the sole proprietorship form is often:

The offering circular that franchisors must produce contains information about the financial details of all existing franchises.

Most limited liability companies have statues that state that:

A franchise agreement may not include:

The ____ provides "default rules" that determine the operation of partnerships when the partnership agreement is silent or where there is no formal agreement among the partners.

Davidson was barred from being in the nursing home business in New Mexico. His partner Krystopowicz knew that, but he agreed to be the front man for a nursing home business. They would split the profits from ten nursing homes 50-50. Each home existed under its own LLC. Morrissey sued the LLC that owned the home where her mother had died, claiming wrongful death due to negligence. The jury awarded $4.8 million but the LLC was worth nothing, so Morrissey could not collect on the judgment. She sued Krystopowicz, the owner of the LLC, personally. The appeals court held that:

Which of the following statements about a corporation is true? Corporations are not entitled to:

Under traditional common law rules, a partnership:

Most franchisors provide trade name, but are not allowed to detail operations.

The sale of shares in a closed corporation is similar to the sale of a sole proprietorship because:

In most states, limited partnerships must file certificates of limited partnership with the state.

The ____ refers to the ability of an owner in a business venture to sell or pass that interest to others.

With respect to transferability of ownership interests, a sole proprietor may:

Shareholders in corporations and limited partners in limited partnerships have liability limited to the sum they invested in the business, even for tort liability.

Refer to Fact Pattern 13-1. If Richard creates a formal partnership for Jeanette and Maia, it will probably be governed by: