Question 1

Ownership of a sole proprietorship can be transferred.

Accepted Answer

A) True 
 B)False

Question 2

To prevent problems that may arise when a partner dies or withdraws from a partnership,the articles of partnership should include a(n)______.

Accepted Answer

A)  buy and sell agreement 
B)  escrow instruction 
C)  establishment clause 
D)  commerce clause 
E)  interest agreement 
A)  buy and sell agreement 
B)  escrow instruction 
C)  establishment clause 
D)  commerce clause 
E)  interest agreement

Question 3

Briefly explain the degree of control held by a sole proprietor.

Accepted Answer

The sole proprietor is in total control

Question 4

In a limited liability company (LLC),members act as agents of the LLC but are not personally liable to third parties.

Accepted Answer

A) True 
 B)False

Question 5

When courts find that a corporate organization is being misused,the corporate entity can be disregarded.This has been called

Accepted Answer

A)  cracking the corporate shell. 
B)  piercing the corporate veil. 
C)  breaking the corporate shield. 
D)  breaching the corporate defense. 
E)  rupturing the corporate law. 
A)  cracking the corporate shell. 
B)  piercing the corporate veil. 
C)  breaking the corporate shield. 
D)  breaching the corporate defense. 
E)  rupturing the corporate law.

Question 6

How is the liability factor a disadvantage of sole proprietorship?

Accepted Answer

A sole proprietor is personally obligate

Question 7

A limited partner,even if he or she participates in management,cannot be held liable as a general partner.

Accepted Answer

A) True 
 B)False

Question 8

A corporate charter is issued following an application made by individuals known as ______.

Accepted Answer

A)  incorporators 
B)  arbitrators 
C)  mediators 
D)  officers 
E)  directors 
A)  incorporators 
B)  arbitrators 
C)  mediators 
D)  officers 
E)  directors

Question 9

Which of the following is a criticism of benefit corporations?

Accepted Answer

A)  They are the only type of corporation not treated as individuals. 
B)  They are not treated as taxable entities even though they have shareholders. 
C)  They place too much emphasis on profit maximization. 
D)  They may be less accountable to shareholders. 
E)  They are exempt from all forms of taxation. 
A)  They are the only type of corporation not treated as individuals. 
B)  They are not treated as taxable entities even though they have shareholders. 
C)  They place too much emphasis on profit maximization. 
D)  They may be less accountable to shareholders. 
E)  They are exempt from all forms of taxation.

Question 10

The impetus for creating the benefit corporation structure comes from the perception that traditional corporate forms place less emphasis on shareholder rights.

Accepted Answer

A) True 
 B)False

Question 11

A sole proprietor has limited liability for the obligations of a proprietorship.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements is true of managerial control in a general partnership?

Accepted Answer

A)  It is mandatory for each partner to have equal voice in a firm's affairs. 
B)  Partners may agree to divide control in such a way as to make controlling partners and minority partners. 
C)  The differences in the degree of control do not affect a business's success. 
D)  The possibility of deadlock is higher when there is a greater number of partners and an odd number of them. 
E)  Language governing issues of managerial control need to be made orally clear to all partners. 
A)  It is mandatory for each partner to have equal voice in a firm's affairs. 
B)  Partners may agree to divide control in such a way as to make controlling partners and minority partners. 
C)  The differences in the degree of control do not affect a business's success. 
D)  The possibility of deadlock is higher when there is a greater number of partners and an odd number of them. 
E)  Language governing issues of managerial control need to be made orally clear to all partners.

Question 13

What are some of the criticisms of benefit corporations?

Accepted Answer

Benefit corporations are not without cri

Question 14

A limited liability company is created through filing the ______ with a state official.

Accepted Answer

A)  articles of confederation 
B)  articles of incorporation 
C)  articles of organization 
D)  articles of association 
E)  articles of integration 
A)  articles of confederation 
B)  articles of incorporation 
C)  articles of organization 
D)  articles of association 
E)  articles of integration

Question 15

In the context of organizational forms,what is a partnership?

Accepted Answer

Whenever two or more people wish to own

Question 16

Explain the term creation as a factor to be considered when selecting a business organizational form.

Accepted Answer

The word creation means the legal steps

Question 17

Which of the following statements is true of publicly held business organizations?

Accepted Answer

A)  Publicly held organizations are owned only by a few persons. 
B)  Publicly held organizations are only owned by the government. 
C)  Shareholders of publicly held organizations can transfer their ownership without interfering with the organization's management. 
D)  A family-operated business is an example of a publicly held business organization. 
E)  Publicly held organizations are free from all legal liabilities to its shareholders, which is the primary reason for this corporate form being used. 
A)  Publicly held organizations are owned only by a few persons. 
B)  Publicly held organizations are only owned by the government. 
C)  Shareholders of publicly held organizations can transfer their ownership without interfering with the organization's management. 
D)  A family-operated business is an example of a publicly held business organization. 
E)  Publicly held organizations are free from all legal liabilities to its shareholders, which is the primary reason for this corporate form being used.

Question 18

All partners in a general partnership have unlimited liability for their organization's debts.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is essential if limited partners are to be assured of their limited liability?

Accepted Answer

A)  substantial compliance with all the technical requirements of the limited partnership law 
B)  signing an agreement according to the limited liability law to dissolve a partnership whenever a member withdraws 
C)  using a limited partner's surname in a partnership's name 
D)  inclusion of a limited commerce clause in the partnership agreement 
E)  participation in an organization's management 
A)  substantial compliance with all the technical requirements of the limited partnership law 
B)  signing an agreement according to the limited liability law to dissolve a partnership whenever a member withdraws 
C)  using a limited partner's surname in a partnership's name 
D)  inclusion of a limited commerce clause in the partnership agreement 
E)  participation in an organization's management

Question 20

Which of the following statements is true of corporations?

Accepted Answer

A)  Corporations do not have to pay income taxes on their profits. 
B)  In comparison with partnerships, corporations are more costly to form. 
C)  A corporation's organizational structure changes whenever a shareholder sells his or her stock. 
D)  In comparison with proprietorships, corporations are easier to form. 
E)  The law treats a corporation's existence in tandem with its owners' status as shareholders. 
A)  Corporations do not have to pay income taxes on their profits. 
B)  In comparison with partnerships, corporations are more costly to form. 
C)  A corporation's organizational structure changes whenever a shareholder sells his or her stock. 
D)  In comparison with proprietorships, corporations are easier to form. 
E)  The law treats a corporation's existence in tandem with its owners' status as shareholders.

Exam 14: Business Organizations

Ownership of a sole proprietorship can be transferred.

To prevent problems that may arise when a partner dies or withdraws from a partnership,the articles of partnership should include a(n)______.

Briefly explain the degree of control held by a sole proprietor.

In a limited liability company (LLC),members act as agents of the LLC but are not personally liable to third parties.

When courts find that a corporate organization is being misused,the corporate entity can be disregarded.This has been called

How is the liability factor a disadvantage of sole proprietorship?

A limited partner,even if he or she participates in management,cannot be held liable as a general partner.

A corporate charter is issued following an application made by individuals known as ______.

Which of the following is a criticism of benefit corporations?

The impetus for creating the benefit corporation structure comes from the perception that traditional corporate forms place less emphasis on shareholder rights.

A sole proprietor has limited liability for the obligations of a proprietorship.

Which of the following statements is true of managerial control in a general partnership?

What are some of the criticisms of benefit corporations?

A limited liability company is created through filing the ______ with a state official.

In the context of organizational forms,what is a partnership?

Explain the term creation as a factor to be considered when selecting a business organizational form.

Which of the following statements is true of publicly held business organizations?

All partners in a general partnership have unlimited liability for their organization's debts.

Which of the following is essential if limited partners are to be assured of their limited liability?

Which of the following statements is true of corporations?

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