Question 1

The income from a partnership is taxed as the personal income of the partners.

Accepted Answer

A) True 
 B)False

Question 2

A person doing business for himself or herself is a:

Accepted Answer

A)  registered proprietor 
B)  manager 
C)  corporate proprietor 
D)  partner 
E)  none of the other choices are correct 
A)  registered proprietor 
B)  manager 
C)  corporate proprietor 
D)  partner 
E)  none of the other choices are correct

Question 3

The governing committee of a corporation is the:

Accepted Answer

A)  board of presidents 
B)  president 
C)  board of directors 
D)  board of shareholders 
E)  board of managers 
A)  board of presidents 
B)  president 
C)  board of directors 
D)  board of shareholders 
E)  board of managers

Question 4

A reason the corporate status is often chosen is:

Accepted Answer

A)  corporations have the status of a legal person 
B)  the Civil Rights Act of 1964 does not apply to corporations 
C)  shareholders have the right to instruct management 
D)  directors are immune from liability suits 
E)  none of the other choices are true 
A)  corporations have the status of a legal person 
B)  the Civil Rights Act of 1964 does not apply to corporations 
C)  shareholders have the right to instruct management 
D)  directors are immune from liability suits 
E)  none of the other choices are true

Question 5

Which of the following is not true about a partnership?

Accepted Answer

A)  it must be owned by two or more people 
B)  it is always an independent legal entity 
C)  partners co-own the business 
D)  partners share control over the business operation 
E)  all of the other choices are true 
A)  it must be owned by two or more people 
B)  it is always an independent legal entity 
C)  partners co-own the business 
D)  partners share control over the business operation 
E)  all of the other choices are true

Question 6

A corporation in which the shares are held by one shareholder or a small group of shareholders and the stock is not actively traded is a:

Accepted Answer

A)  nonprofit corporation 
B)  small corporation 
C)  limited corporation 
D)  shared corporation 
E)  none of the other choices are correct 
A)  nonprofit corporation 
B)  small corporation 
C)  limited corporation 
D)  shared corporation 
E)  none of the other choices are correct

Question 7

The business judgment rule:

Accepted Answer

A)  is applied when directors of a corporation act negligently 
B)  protects directors and managers of a corporation who have made honest mistakes in judgment 
C)  is used by courts to impose strict liability on directors and managers when violated 
D)  protects directors and managers of a corporation who have made honest mistakes in judgment and is used by courts to impose strict liability on directors and managers when violated 
E)  none of the other choices 
A)  is applied when directors of a corporation act negligently 
B)  protects directors and managers of a corporation who have made honest mistakes in judgment 
C)  is used by courts to impose strict liability on directors and managers when violated 
D)  protects directors and managers of a corporation who have made honest mistakes in judgment and is used by courts to impose strict liability on directors and managers when violated 
E)  none of the other choices

Question 8

Limited liability companies have been popular since the late 1800s.

Accepted Answer

A) True 
 B)False

Question 9

A public corporation is one that trades shares on stock markets.

Accepted Answer

A) True 
 B)False

Question 10

The Franchise Rule requires franchisors to produce a detailed disclosure document before any money is paid by franchisees.

Accepted Answer

A) True 
 B)False

Question 11

Refer to Fact Pattern 13-1. For Jeanette to create a corporation, she needs to do what after she receives her certificate of incorporation?

Accepted Answer

A)  elect a board of directors 
B)  enact bylaws 
C)  issue stock 
D)  all of the other specific choices 
E)  none of the other choices because these things will have all been done before the certificate was issued 
A)  elect a board of directors 
B)  enact bylaws 
C)  issue stock 
D)  all of the other specific choices 
E)  none of the other choices because these things will have all been done before the certificate was issued

Question 12

A corporation consists of legally distinct groups, not including:

Accepted Answer

A)  shareholders 
B)  stakeholders 
C)  directors 
D)  managers 
E)  all of the other choices are included 
A)  shareholders 
B)  stakeholders 
C)  directors 
D)  managers 
E)  all of the other choices are included

Question 13

Offshore businesses are usually involved in money laundering operations.

Accepted Answer

A) True 
 B)False

Question 14

When a limited partnership dissolves, the general partner receives his share of the profits and capital contributions before the limited partners are paid.

Accepted Answer

A) True 
 B)False

Question 15

Franchise operators usually pay a franchise fee to buy the franchise.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is not true about corporate directors?

Accepted Answer

A)  the initial board is often specified in the articles of incorporation 
B)  directors are subject to a fiduciary duty of loyalty 
C)  directors must always act to preserve the corporation 
D)  directors may be removed from office for breach of duty 
E)  all of the other choices are true 
A)  the initial board is often specified in the articles of incorporation 
B)  directors are subject to a fiduciary duty of loyalty 
C)  directors must always act to preserve the corporation 
D)  directors may be removed from office for breach of duty 
E)  all of the other choices are true

Question 17

Typically, members of a limited liability company will enter into an operating agreement that is similar to corporate by-laws.

Accepted Answer

A) True 
 B)False

Question 18

The franchisee has the right to sell the product of the parent company in which category of franchise:

Accepted Answer

A)  product distributorship 
B)  trademark or trade-name licensing 
C)  business format franchising 
D)  sale format franchising 
E)  all of the other specific choices are correct 
A)  product distributorship 
B)  trademark or trade-name licensing 
C)  business format franchising 
D)  sale format franchising 
E)  all of the other specific choices are correct

Question 19

The rules that regulate and govern the internal operations of a corporation are known as:

Accepted Answer

A)  the certificate of incorporation 
B)  the bond 
C)  the bylaws 
D)  statutes of business 
E)  the corporate constitution 
A)  the certificate of incorporation 
B)  the bond 
C)  the bylaws 
D)  statutes of business 
E)  the corporate constitution

Exam 12: Business Organizations

The income from a partnership is taxed as the personal income of the partners.

A person doing business for himself or herself is a:

The governing committee of a corporation is the:

A reason the corporate status is often chosen is:

Which of the following is not true about a partnership?

A corporation in which the shares are held by one shareholder or a small group of shareholders and the stock is not actively traded is a:

The business judgment rule:

Limited liability companies have been popular since the late 1800s.

A public corporation is one that trades shares on stock markets.

The Franchise Rule requires franchisors to produce a detailed disclosure document before any money is paid by franchisees.

Refer to Fact Pattern 13-1. For Jeanette to create a corporation, she needs to do what after she receives her certificate of incorporation?

A corporation consists of legally distinct groups, not including:

Offshore businesses are usually involved in money laundering operations.

When a limited partnership dissolves, the general partner receives his share of the profits and capital contributions before the limited partners are paid.

Franchise operators usually pay a franchise fee to buy the franchise.

Which of the following is not true about corporate directors?

Typically, members of a limited liability company will enter into an operating agreement that is similar to corporate by-laws.

The franchisee has the right to sell the product of the parent company in which category of franchise:

The rules that regulate and govern the internal operations of a corporation are known as:

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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