Question 1

A cooperative consists of a group of two (2)or more independent persons or enterprises that cooperate for a common objective or function.

Accepted Answer

A) True 
 B)False  True

Question 2

A limited liability company is treated like a partnership under federal tax law and has the limited liability feature of corporations.

Accepted Answer

A) True 
 B)False  True

Question 3

Government grants create:

Accepted Answer

A)  sole proprietorships. 
B)  corporations. 
C)  partnerships. 
D)  unincorporated associations. 
A)  sole proprietorships. 
B)  corporations. 
C)  partnerships. 
D)  unincorporated associations. B

Question 4

Sally Gomez is interested in starting a new business.Although Gomez has developed her business plan and is ready to implement her ideas,she lacks the necessary finances to begin her new business.Along with a lack of finances,Gomez worries about the potential liability involved with starting a new business.Gomez would hate to lose all that she has personally accumulated to date in the event of a successful lawsuit against her.She is considering a sole proprietorship,a partnership,or a corporation as the organizing structure of her new venture.Which type of business would best serve Gomez's needs at this given time?

Accepted Answer

Gomez would like to operate a business e

Question 5

A franchise agreement in which the franchisor grants the franchisee authority to manufacture and sell products under the trademark(s)of the franchisor is known as a manufacturing or processing franchise.

Accepted Answer

A) True 
 B)False

Question 6

Unincorporated associations are generally formed to further a common purpose.

Accepted Answer

A) True 
 B)False

Question 7

Under which organizational structure would the death of the owner have no legal effect?

Accepted Answer

A)  a partnership 
B)  a corporation 
C)  a sole proprietorship 
D)  all of the above 
A)  a partnership 
B)  a corporation 
C)  a sole proprietorship 
D)  all of the above

Question 8

A sole proprietorship is taxed:

Accepted Answer

A)  only on a personal. 
B)  only on the corporate level. 
C)  on a personal and a corporate level. 
D)  none of the above. 
A)  only on a personal. 
B)  only on the corporate level. 
C)  on a personal and a corporate level. 
D)  none of the above.

Question 9

A parents' group in a small town formed an association to run a little league baseball team.Tom and Mary were members of the association,which was never incorporated.Tom was elected president of the association and ordered some uniforms for the team.When the uniforms were not paid for,the baseball supply company sued Tom and Mary for the contract price.Regarding the liability of Mary:

Accepted Answer

A)  Mary is liable because she is a member of an unincorporated association. 
B)  Mary is not liable because members of an unincorporated association have no personal liability. 
C)  Mary is liable if she authorized or ratified the purchase. 
D)  Mary is liable but only for 50% of the outstanding debt. 
A)  Mary is liable because she is a member of an unincorporated association. 
B)  Mary is not liable because members of an unincorporated association have no personal liability. 
C)  Mary is liable if she authorized or ratified the purchase. 
D)  Mary is liable but only for 50% of the outstanding debt.

Question 10

Louise Feldspar obtained the exclusive right to sell TastyCrunchy Chicken in a specified area.Under the agreement,Feldspar was permitted to use the TastyCrunchy name and logo for her restaurant and she agreed to comply with TastyCrunchy's restaurant requirements.She purchased her equipment,as well as the chicken she served,from the firm.She agreed to devote a certain percentage of her revenues to promoting the TastyCrunchy operation in local media.The operation was successful from the start,and Feldspar has had no problem meeting the sales quotas imposed by TastyCrunchy.The past year TastyCrunchy informed Feldspar that it intended to open a new restaurant on an interstate highway that had just been completed in her exclusive area of trade.Because her operation would be competition for the new store,Feldspar's right to sell TastyCrunchy products and use the name TastyCrunchy was revoked.What can Louise do?

Accepted Answer

Feldspar was operating under a franchise

Question 11

Holders of automobile dealership franchises are protected from bad faith termination of their dealerships by the:

Accepted Answer

A)  Sherman Antitrust Act. 
B)  Robinson-Patman Franchise Act. 
C)  Automobile Dealers' Day in Court Act. 
D)  Franchise Holder Protection Act. 
A)  Sherman Antitrust Act. 
B)  Robinson-Patman Franchise Act. 
C)  Automobile Dealers' Day in Court Act. 
D)  Franchise Holder Protection Act.

Question 12

The Petroleum Marketing Practices Act gives gas station __________ the opportunity to continue in business by purchasing the entire premises used in selling motor fuel when the franchisor decides to sell the property and not renew a lease.

Accepted Answer

A)  franchisees 
B)  licensors 
C)  joint venturers 
D)  partners 
A)  franchisees 
B)  licensors 
C)  joint venturers 
D)  partners

Question 13

In a joint venture,the parties:

Accepted Answer

A)  combine their labor or property for a single undertaking and share profits and losses equally. 
B)  combine their labor or property for a continuing business and share profits and losses equally. 
C)  assume no personal liability beyond the risk of losing their initial investment. 
D)  none of the above. 
A)  combine their labor or property for a single undertaking and share profits and losses equally. 
B)  combine their labor or property for a continuing business and share profits and losses equally. 
C)  assume no personal liability beyond the risk of losing their initial investment. 
D)  none of the above.

Question 14

A joint venture typically relates to the carrying out of a single enterprise or transaction.

Accepted Answer

A) True 
 B)False

Question 15

A franchisor is the person to whom the franchise is granted.

Accepted Answer

A) True 
 B)False

Question 16

A sole proprietor must file a certificate indicating that he or she is commencing operations and pay a single organizational fee.

Accepted Answer

A) True 
 B)False

Question 17

Normally in a franchise operation:

Accepted Answer

A)  both the franchiser and the franchisee will be liable to third persons for contracts that are breached by the franchisee. 
B)  only the franchisor will be liable to third persons for contracts that are breached by the franchisee. 
C)  only the franchisee will be liable to third persons for contracts that are breached by the franchisee. 
D)  neither the franchisor nor the franchisee will be liable to third persons for contracts that are breached by the franchisee. 
A)  both the franchiser and the franchisee will be liable to third persons for contracts that are breached by the franchisee. 
B)  only the franchisor will be liable to third persons for contracts that are breached by the franchisee. 
C)  only the franchisee will be liable to third persons for contracts that are breached by the franchisee. 
D)  neither the franchisor nor the franchisee will be liable to third persons for contracts that are breached by the franchisee.

Question 18

The FTC franchise disclosure statement must contain:

Accepted Answer

A)  the business experience of the franchisor and its brokers. 
B)  any current and past litigation against the franchisor. 
C)  the grounds for termination of the franchise. 
D)  all of the above. 
A)  the business experience of the franchisor and its brokers. 
B)  any current and past litigation against the franchisor. 
C)  the grounds for termination of the franchise. 
D)  all of the above.

Question 19

A franchisor or franchisee could be a sole proprietor,a partnership,a limited liability company,or a corporation.

Accepted Answer

A) True 
 B)False

Question 20

The principal forms of business organization are:

Accepted Answer

A)  sole proprietorships,joint ventures,and corporations. 
B)  unincorporated associations,partnerships,and corporations. 
C)  unincorporated associations,limited partnerships,and corporations. 
D)  sole proprietorships,partnerships,and corporations. 
A)  sole proprietorships,joint ventures,and corporations. 
B)  unincorporated associations,partnerships,and corporations. 
C)  unincorporated associations,limited partnerships,and corporations. 
D)  sole proprietorships,partnerships,and corporations.

Exam 41: Types of Business Organizations

A cooperative consists of a group of two (2)or more independent persons or enterprises that cooperate for a common objective or function.

A limited liability company is treated like a partnership under federal tax law and has the limited liability feature of corporations.

Government grants create:

A franchise agreement in which the franchisor grants the franchisee authority to manufacture and sell products under the trademark(s)of the franchisor is known as a manufacturing or processing franchise.

Unincorporated associations are generally formed to further a common purpose.

Under which organizational structure would the death of the owner have no legal effect?

A sole proprietorship is taxed:

Holders of automobile dealership franchises are protected from bad faith termination of their dealerships by the:

The Petroleum Marketing Practices Act gives gas station __________ the opportunity to continue in business by purchasing the entire premises used in selling motor fuel when the franchisor decides to sell the property and not renew a lease.

In a joint venture,the parties:

A joint venture typically relates to the carrying out of a single enterprise or transaction.

A franchisor is the person to whom the franchise is granted.

A sole proprietor must file a certificate indicating that he or she is commencing operations and pay a single organizational fee.

Normally in a franchise operation:

The FTC franchise disclosure statement must contain:

A franchisor or franchisee could be a sole proprietor,a partnership,a limited liability company,or a corporation.

The principal forms of business organization are:

The Nature and Sources of Law

The Court System and Dispute Resolution

Business Ethics, Social Forces, and the Law

The Constitution As the Foundation of the Legal Environment

Government Regulation of Competition and Prices

Administrative Agencies

The Legal Environment of International Trade

Crimes

Torts

Intellectual Property Rights

Cyberlaw

Nature and Classes of Contracts: Contracting on the Internet

Formation of Contracts: Offer and Acceptance

Capacity and Genuine Assent

Consideration

Legality and Public Policy

Writing, Electronic Forms, and Interpretation of Contracts

Third Persons and Contracts

Discharge of Contracts

Breach of Contract and Remedies

Personal Property and Bailments

Legal Aspects of Supply Chain Management

Nature and Form of Sales

Title and Risk of Loss

Product Liability: Warranties and Torts

Obligations and Performance

Remedies for Breach of Sales Contracts

Kinds of Instruments, parties, and Negotiability

Transfers of Negotiable Instruments and Warranties of Parties

Liability of the Parties Under Negotiable Instruments

Checks and Funds Transfers

Nature of the Debtor-Creditor Relationship

Consumer Protection

Secured Transactions in Personal Property

Bankruptcy

Insurance

Agency

Third Persons in Agency

Regulation of Employment

Equal Employment Opportunity Law

Partnerships

LPs, LLCs, and LLPs

Corporate Formation

Shareholder Rights in Corporations

Securities Regulation

Accountants Liability and Malpractice

Management of Corporations

Real Property

Environmental Law and Land Use Controls

Leases

Decedents Estates and Trusts

Filters