Question 1

A franchise agreement may not include:

Accepted Answer

A)  restrictions on territorial rights 
B)  controls on the use of the trade name or trademarks involved 
C)  a fixed payment up front (all payments must be royalties based on sales) 
D)  a manual that controls the details of business operations 
E)  all of the other choices may be included 
A)  restrictions on territorial rights 
B)  controls on the use of the trade name or trademarks involved 
C)  a fixed payment up front (all payments must be royalties based on sales) 
D)  a manual that controls the details of business operations 
E)  all of the other choices may be included

Question 2

Which of the following are not required to be in a certificate of limited partnership:

Accepted Answer

A)  the type or character of the business 
B)  the business positions to be held by each partner 
C)  the proportion of profits to be earned by each partner 
D)  the business positions to be held by each partner and the proportion of profits to be earned by each partner 
E)  the business positions to be held by each partner and the proportion of profits to be earned by each partner and the proportion of profits to be earned by each partner 
A)  the type or character of the business 
B)  the business positions to be held by each partner 
C)  the proportion of profits to be earned by each partner 
D)  the business positions to be held by each partner and the proportion of profits to be earned by each partner 
E)  the business positions to be held by each partner and the proportion of profits to be earned by each partner and the proportion of profits to be earned by each partner

Question 3

Directors of a corporation may be removed from office for cause, such as a breach of duty.

Accepted Answer

A) True 
 B)False

Question 4

The Franchise Rule requires which of the following:

Accepted Answer

A)  franchisees have the right to have their money returned within 30 days 
B)  franchisees must be given the offering circular at least 10 days before purchase 
C)  franchisors must be registered with the FTC before selling franchises 
D)  franchisees have the right to have their money returned within 30 days and must be given the offering circular at least 10 days before purchase 
E)  franchisees have the right to have their money returned within 30 days and given the offering circular at least 10 days before purchase and franchisors must be registered with the FTC before selling franchises 
A)  franchisees have the right to have their money returned within 30 days 
B)  franchisees must be given the offering circular at least 10 days before purchase 
C)  franchisors must be registered with the FTC before selling franchises 
D)  franchisees have the right to have their money returned within 30 days and must be given the offering circular at least 10 days before purchase 
E)  franchisees have the right to have their money returned within 30 days and given the offering circular at least 10 days before purchase and franchisors must be registered with the FTC before selling franchises

Question 5

The relation of the parties taking part in a limited liability company are:

Accepted Answer

A)  there are two or more members 
B)  members have unlimited liability for business debts 
C)  the parties have a membership interest in the business 
D)  there are two or more members and the parties have a membership interest in the business 
E)  there are two or more members, members have unlimited liability for business debts, and the parties have a membership interest in the business 
A)  there are two or more members 
B)  members have unlimited liability for business debts 
C)  the parties have a membership interest in the business 
D)  there are two or more members and the parties have a membership interest in the business 
E)  there are two or more members, members have unlimited liability for business debts, and the parties have a membership interest in the business

Question 6

Corporate directors have a legal obligation to always preserve the corporation.

Accepted Answer

A) True 
 B)False

Question 7

The duty of partners to a partnership is:

Accepted Answer

A)  to elect one partner as managing partner 
B)  to place the assets in a blind trust 
C)  based on extraordinary trust and loyalty to the partnership 
D)  to elect one partner as managing partner and is based on extraordinary trust and loyalty to the partnership 
E)  to elect one partner as managing partner and to place the assets in a blind trust and is based on extraordinary trust and loyalty to the partnership 
A)  to elect one partner as managing partner 
B)  to place the assets in a blind trust 
C)  based on extraordinary trust and loyalty to the partnership 
D)  to elect one partner as managing partner and is based on extraordinary trust and loyalty to the partnership 
E)  to elect one partner as managing partner and to place the assets in a blind trust and is based on extraordinary trust and loyalty to the partnership

Question 8

Under the Uniform Franchise Act, franchisors have the right to terminate franchisees that are found to be in "serious violation" of the terms of the franchise agreement.

Accepted Answer

A) True 
 B)False

Question 9

Gary and Sue start a consulting firm. They are co-owners of it and have joint control over its operation and the right to share in its profits. Their organization is most likely a:

Accepted Answer

A)  proprietorship 
B)  partnership 
C)  business trust 
D)  corporation 
E)  syndicate 
A)  proprietorship 
B)  partnership 
C)  business trust 
D)  corporation 
E)  syndicate

Question 10

In a limited partnership the ____ are investors who may not participate in managing the business.

Accepted Answer

A)  restricted partners 
B)  general partners 
C)  limited partners 
D)  nonvoting partners 
E)  real partners 
A)  restricted partners 
B)  general partners 
C)  limited partners 
D)  nonvoting partners 
E)  real partners

Question 11

Limited liability companies are guided by an operating agreement.

Accepted Answer

A) True 
 B)False

Question 12

A ____ terminates with the death or incapacity of the proprietor.

Accepted Answer

A)  sole proprietorship 
B)  double corporation 
C)  limited liability corporation 
D)  corporate corporation 
E)  partnership 
A)  sole proprietorship 
B)  double corporation 
C)  limited liability corporation 
D)  corporate corporation 
E)  partnership

Question 13

Directors of a corporation may be:

Accepted Answer

A)  removed for cause 
B)  reprimanded but not removed during term in office 
C)  liable for a breach of duty 
D)  reprimanded but not removed during term in office but held liable for breach of duty 
E)  removed for cause and be liable for a breach of duty 
A)  removed for cause 
B)  reprimanded but not removed during term in office 
C)  liable for a breach of duty 
D)  reprimanded but not removed during term in office but held liable for breach of duty 
E)  removed for cause and be liable for a breach of duty

Question 14

A change in the relationship of the partners that shows an unwillingness or an inability to continue with business may bring about ____ of the partnership.

Accepted Answer

A)  finalization 
B)  termination 
C)  composition 
D)  revitalization 
E)  retaliation 
A)  finalization 
B)  termination 
C)  composition 
D)  revitalization 
E)  retaliation

Question 15

To create a corporation:

Accepted Answer

A)  articles of incorporation and an application must first be filed with the federal government 
B)  the federal government issues a certificate of incorporation, which must be filed with an application to do business in the relevant states 
C)  the incorporators must hold a public organization meeting, then file articles of incorporation 
D)  the corporation's articles of incorporation are filed with the appropriate officer of the state 
E)  none of the other choices 
A)  articles of incorporation and an application must first be filed with the federal government 
B)  the federal government issues a certificate of incorporation, which must be filed with an application to do business in the relevant states 
C)  the incorporators must hold a public organization meeting, then file articles of incorporation 
D)  the corporation's articles of incorporation are filed with the appropriate officer of the state 
E)  none of the other choices

Question 16

Limited liability companies, like corporations, are presumed to have perpetual life.

Accepted Answer

A) True 
 B)False

Question 17

Directors of a corporation are held to a duty of care to make decisions in a prudent business manner.

Accepted Answer

A) True 
 B)False

Question 18

To hold a shareholder meeting, which criteria must be met?

Accepted Answer

A)  a quorum of shareholders must be represented 
B)  advance notice of the meeting must be given 
C)  a state representative must be in attendance 
D)  a quorum of shareholders must be represented and advance notice of the meeting must be given 
E)  all of the other choices 
A)  a quorum of shareholders must be represented 
B)  advance notice of the meeting must be given 
C)  a state representative must be in attendance 
D)  a quorum of shareholders must be represented and advance notice of the meeting must be given 
E)  all of the other choices

Question 19

A partnership can begin with:

Accepted Answer

A)  an implied agreement that can be inferred from the conduct of the parties doing business 
B)  a written agreement 
C)  an oral agreement 
D)  a written agreement or an oral agreement only 
E)  a written agreement or an oral agreement or an implied agreement that can be inferred from the conduct of the parties doing business 
A)  an implied agreement that can be inferred from the conduct of the parties doing business 
B)  a written agreement 
C)  an oral agreement 
D)  a written agreement or an oral agreement only 
E)  a written agreement or an oral agreement or an implied agreement that can be inferred from the conduct of the parties doing business

Question 20

In Japan small businesses are:

Accepted Answer

A)  greatly favored by the government 
B)  exempt from most taxes 
C)  considered very desirable places to work 
D)  discriminated against by government policy 
E)  formed at a much faster rate than in the United States 
A)  greatly favored by the government 
B)  exempt from most taxes 
C)  considered very desirable places to work 
D)  discriminated against by government policy 
E)  formed at a much faster rate than in the United States

Exam 12: Business Organizations

A franchise agreement may not include:

Which of the following are not required to be in a certificate of limited partnership:

Directors of a corporation may be removed from office for cause, such as a breach of duty.

The Franchise Rule requires which of the following:

The relation of the parties taking part in a limited liability company are:

Corporate directors have a legal obligation to always preserve the corporation.

The duty of partners to a partnership is:

Under the Uniform Franchise Act, franchisors have the right to terminate franchisees that are found to be in "serious violation" of the terms of the franchise agreement.

Gary and Sue start a consulting firm. They are co-owners of it and have joint control over its operation and the right to share in its profits. Their organization is most likely a:

In a limited partnership the ____ are investors who may not participate in managing the business.

Limited liability companies are guided by an operating agreement.

A ____ terminates with the death or incapacity of the proprietor.

Directors of a corporation may be:

A change in the relationship of the partners that shows an unwillingness or an inability to continue with business may bring about ____ of the partnership.

To create a corporation:

Limited liability companies, like corporations, are presumed to have perpetual life.

Directors of a corporation are held to a duty of care to make decisions in a prudent business manner.

To hold a shareholder meeting, which criteria must be met?

A partnership can begin with:

In Japan small businesses are:

Todays Business Environment: Law and Ethics

The Court Systems

Trials and Resolving Disputes

The Constitution: Focus on Application to Business

Criminal Law and Business

Elements of Torts

Business Torts and Product Liability

Real and Personal Property

Intellectual Property

Contracts

Domestic and International Sales

Negotiable Instruments, Credit, and Bankruptcy

Agency and the Employment Relationship

Employment and Labor Regulations

Employment Discrimination

The Regulatory Process

Securities Regulation

Consumer Protection

Antitrust Law

Environmental Law

The International Legal Environment of Business

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