Question 1

Which of the following statements is true of the trends in operating business organizations?

Accepted Answer

A)  Public attention is moving away from the formation of benefit corporations. 
B)  Shareholders are losing interest and are becoming less active. 
C)  In comparison to corporations, sole proprietorships are becoming harder to create. 
D)  In many cases, corporations and individuals reasonably have an equal claim to rights and protections under the law. 
E)  Sole proprietorships and partnerships are now being treated as a taxable entity if they generate more than $100,000 in revenue. 
A)  Public attention is moving away from the formation of benefit corporations. 
B)  Shareholders are losing interest and are becoming less active. 
C)  In comparison to corporations, sole proprietorships are becoming harder to create. 
D)  In many cases, corporations and individuals reasonably have an equal claim to rights and protections under the law. 
E)  Sole proprietorships and partnerships are now being treated as a taxable entity if they generate more than $100,000 in revenue. D

Question 2

When two or more persons with a common interest in business share profits and losses,a partnership exists.

Accepted Answer

A) True 
 B)False  True

Question 3

A(n)______ is any change in the ownership of an organization that changes the legal existence of the organization.

Accepted Answer

A)  arbitration 
B)  rescission 
C)  restitution 
D)  dissolution 
E)  extradition 
A)  arbitration 
B)  rescission 
C)  restitution 
D)  dissolution 
E)  extradition D

Question 4

The criteria used to select a form of organization needs to be reviewed periodically in consultation with close advisers.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is a taxable entity?

Accepted Answer

A)  a partnership 
B)  a limited liability partnership 
C)  a limited liability company 
D)  a corporation 
E)  a sole proprietorship 
A)  a partnership 
B)  a limited liability partnership 
C)  a limited liability company 
D)  a corporation 
E)  a sole proprietorship

Question 6

Which of the following is the disadvantage of the corporate form of organization?

Accepted Answer

A)  Control of a corporation may be held by those with a minority of the investment. 
B)  Ownership may be divided into many unequal shares. 
C)  Shareholders' liabilities are limited to their investments. 
D)  The organization cannot have perpetual existence. 
E)  Corporate income may be subject to double taxation. 
A)  Control of a corporation may be held by those with a minority of the investment. 
B)  Ownership may be divided into many unequal shares. 
C)  Shareholders' liabilities are limited to their investments. 
D)  The organization cannot have perpetual existence. 
E)  Corporate income may be subject to double taxation.

Question 7

A deferred prosecution agreement is used to encourage

Accepted Answer

A)  more derivative suits against majority shareholders who misuse company funds. 
B)  the reduction in the number of limited liability partnerships formed. 
C)  self-reporting and remediation of illegal acts before a criminal case is commenced. 
D)  an environment where corporations are easier to form than sole proprietorships. 
E)  the use of benefit organization as a corporate form. 
A)  more derivative suits against majority shareholders who misuse company funds. 
B)  the reduction in the number of limited liability partnerships formed. 
C)  self-reporting and remediation of illegal acts before a criminal case is commenced. 
D)  an environment where corporations are easier to form than sole proprietorships. 
E)  the use of benefit organization as a corporate form.

Question 8

Which of the following is an advantage of partnerships?

Accepted Answer

A)  A partnership is practical because only a limited number of persons can be partners. 
B)  A partnership is easily formed because it is based on a contract among persons. 
C)  Each partner's liability is unlimited. 
D)  Partners are taxed on their share of the partnership's profits, whether the profits are distributed or not. 
E)  A partnership is dissolved anytime a partner ceases to be a partner, regardless of whether the reason is withdrawal or death. 
A)  A partnership is practical because only a limited number of persons can be partners. 
B)  A partnership is easily formed because it is based on a contract among persons. 
C)  Each partner's liability is unlimited. 
D)  Partners are taxed on their share of the partnership's profits, whether the profits are distributed or not. 
E)  A partnership is dissolved anytime a partner ceases to be a partner, regardless of whether the reason is withdrawal or death.

Question 9

Even though a corporation is treated the same as an individual under most aspects of the law,there are some rights that only individuals can possess.

Accepted Answer

A) True 
 B)False

Question 10

In the context of factors to consider when selecting a business's organizational form,one of the most significant creation-related issues is

Accepted Answer

A)  the location of the business. 
B)  how much paperwork is involved. 
C)  how many people are recruited on average in a year by the organization. 
D)  the organization's policies. 
E)  the demographic to which the organization targets its services or products. 
A)  the location of the business. 
B)  how much paperwork is involved. 
C)  how many people are recruited on average in a year by the organization. 
D)  the organization's policies. 
E)  the demographic to which the organization targets its services or products.

Question 11

Which of the following is a significant trend in corporate organization and control?

Accepted Answer

A)  the inclusion of personal privacy rights for corporations 
B)  the emergence of benefit corporations 
C)  a decline in the use of deferred prosecution agreements by the federal government 
D)  an increase in the restrictions on sole proprietorships 
E)  an increase in managerial control for limited partners 
A)  the inclusion of personal privacy rights for corporations 
B)  the emergence of benefit corporations 
C)  a decline in the use of deferred prosecution agreements by the federal government 
D)  an increase in the restrictions on sole proprietorships 
E)  an increase in managerial control for limited partners

Question 12

The use of sole proprietorships is very limited because

Accepted Answer

A)  there is no formal documentation process for its creation. 
B)  it gives limited control to the proprietor. 
C)  it is the most expensive business organization to create. 
D)  multiple owners cannot create a proprietorship. 
E)  it is the hardest business organization to create. 
A)  there is no formal documentation process for its creation. 
B)  it gives limited control to the proprietor. 
C)  it is the most expensive business organization to create. 
D)  multiple owners cannot create a proprietorship. 
E)  it is the hardest business organization to create.

Question 13

Any operating loss suffered by an S corporation is shared and immediately deductible on the returns of its shareholders.

Accepted Answer

A) True 
 B)False

Question 14

What is the purpose of a buy and sell agreement and when is it needed?

Accepted Answer

The buy and sell agreement,which is ente

Question 15

The formal application for a corporate charter is called the ______.

Accepted Answer

A)  articles of confederation 
B)  articles of incorporation 
C)  articles of partnership 
D)  articles of application 
E)  articles of integration 
A)  articles of confederation 
B)  articles of incorporation 
C)  articles of partnership 
D)  articles of application 
E)  articles of integration

Question 16

Which of the following forms of organization requires no formal documentation but only business licenses for formation?

Accepted Answer

A)  l imited partnership 
B)  corporation 
C)  limited liability company 
D)  sole proprietorship 
E)  S corporation 
A)  l imited partnership 
B)  corporation 
C)  limited liability company 
D)  sole proprietorship 
E)  S corporation

Question 17

Which of the following statements is true of a general partnership?

Accepted Answer

A)  A general partnership is dissolved any time there is a change in the partners. 
B)  A general partnership must have at least one controlling partner. 
C)  A dissolution does not necessarily destroy the business of a partnership. 
D)  Unlike proprietorships, partnerships are taxable entities. 
E)  All partners in a general partnership have only limited liability for their organization's debts. 
A)  A general partnership is dissolved any time there is a change in the partners. 
B)  A general partnership must have at least one controlling partner. 
C)  A dissolution does not necessarily destroy the business of a partnership. 
D)  Unlike proprietorships, partnerships are taxable entities. 
E)  All partners in a general partnership have only limited liability for their organization's debts.

Question 18

It is not possible to change an existing corporate structure to a benefit corporation in any state.

Accepted Answer

A) True 
 B)False

Question 19

As a creature of state legislative bodies,a ______ is much more complex to create and to operate than other forms of businesses.

Accepted Answer

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

Question 20

The Internal Revenue Service treats limited liability companies as taxable entities.

Accepted Answer

A) True 
 B)False

Exam 14: Business Organizations

Which of the following statements is true of the trends in operating business organizations?

When two or more persons with a common interest in business share profits and losses,a partnership exists.

A(n)______ is any change in the ownership of an organization that changes the legal existence of the organization.

The criteria used to select a form of organization needs to be reviewed periodically in consultation with close advisers.

Which of the following is a taxable entity?

Which of the following is the disadvantage of the corporate form of organization?

A deferred prosecution agreement is used to encourage

Which of the following is an advantage of partnerships?

Even though a corporation is treated the same as an individual under most aspects of the law,there are some rights that only individuals can possess.

In the context of factors to consider when selecting a business's organizational form,one of the most significant creation-related issues is

Which of the following is a significant trend in corporate organization and control?

The use of sole proprietorships is very limited because

Any operating loss suffered by an S corporation is shared and immediately deductible on the returns of its shareholders.

What is the purpose of a buy and sell agreement and when is it needed?

The formal application for a corporate charter is called the ______.

Which of the following forms of organization requires no formal documentation but only business licenses for formation?

Which of the following statements is true of a general partnership?

It is not possible to change an existing corporate structure to a benefit corporation in any state.

As a creature of state legislative bodies,a ______ is much more complex to create and to operate than other forms of businesses.

The Internal Revenue Service treats limited liability companies as taxable entities.

Law As a Foundation for Business

The Role of Ethics in Decision Making

The Court System

Litigation

Alternative Dispute Resolution

The Constitution

The Property System

Contract Formation

Contractual Performance and Breach

Torts Affecting Business

Intellectual Property

International Law

Criminal Law and Business

The Regulatory Process

Regulating Competitionantitrust Laws

Financial and Securities Regulations

Regulations Protecting Consumer Purchases, privacy, and Financial Activities

Environmental Regulation

Discrimination in Employment

Employment Laws

Labormanagement Relationship

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