Question 1

A corporation will be dissolved upon the death or insolvency of a shareholder.

Accepted Answer

A) True 
 B)False  False

Question 2

Pelican Inc.,a multinational oil corporation headquartered in Denmark,conducts its operations in various nations by establishing an outlet in different locations.Each outlet creates a separate corporation to own and perform the functions of Pelican Inc.Given this scenario,we can conclude that Pelican Inc.operates through _____.

Accepted Answer

A)  joint venture 
B)  merger 
C)  strategic alliance 
D)  franchising 
A)  joint venture 
B)  merger 
C)  strategic alliance 
D)  franchising D

Question 3

Which of the following run the risk of unlimited personal liability?

Accepted Answer

A)  Partners in a limited partnership 
B)  Partners in a general partnership 
C)  Shareholders in S Corporations 
D)  Corporate shareholders 
A)  Partners in a limited partnership 
B)  Partners in a general partnership 
C)  Shareholders in S Corporations 
D)  Corporate shareholders B

Question 4

Which of the following is true of a limited liability company (LLC)?

Accepted Answer

A)  It cannot sue or be sued in its own name. 
B)  Investors of an LLC are able to share in management. 
C)  Members are personally liable for the wrongful acts of other members. 
D)  It cannot have more than 100 members. 
A)  It cannot sue or be sued in its own name. 
B)  Investors of an LLC are able to share in management. 
C)  Members are personally liable for the wrongful acts of other members. 
D)  It cannot have more than 100 members.

Question 5

Which of the following is true of the dissolution of a limited liability company (LLC)?

Accepted Answer

A)  The remaining members cannot avoid liquidation even by unanimously agreeing to continue the business operations. 
B)  Dissolution can only be caused by bankruptcy. 
C)  An LLC must be set up so that it can be easily dissolved. 
D)  The act of dissolution terminates an LLC's business. 
A)  The remaining members cannot avoid liquidation even by unanimously agreeing to continue the business operations. 
B)  Dissolution can only be caused by bankruptcy. 
C)  An LLC must be set up so that it can be easily dissolved. 
D)  The act of dissolution terminates an LLC's business.

Question 6

Through franchising,a franchisor can gain considerable control over the distribution of its products or services without owning the retail outlets.

Accepted Answer

A) True 
 B)False

Question 7

In a general partnership,each partner is an owner and has a right to share in the profits of the business.

Accepted Answer

A) True 
 B)False

Question 8

Publicly offered partnership interests are:

Accepted Answer

A)  generally tax shelters for the original purchasers during the early years of ownership. 
B)  of vital interest to persons hoping to actively manage a business. 
C)  the primary method of creating general partnerships. 
D)  generally unattractive to investors in the early years of ownership. 
A)  generally tax shelters for the original purchasers during the early years of ownership. 
B)  of vital interest to persons hoping to actively manage a business. 
C)  the primary method of creating general partnerships. 
D)  generally unattractive to investors in the early years of ownership.

Question 9

What are the factors to be considered in the creation of a limited liability company (LLC)?

Accepted Answer

Limited liability companies (LLCs)are si

Question 10

Partnerships:

Accepted Answer

A)  are not required to pay corporate franchise taxes. 
B)  need to pay privilege taxes to do intrastate business in another state. 
C)  are taxed on their operations at the same level as corporations. 
D)  cannot save income tax even if losses are anticipated in the early years of business. 
A)  are not required to pay corporate franchise taxes. 
B)  need to pay privilege taxes to do intrastate business in another state. 
C)  are taxed on their operations at the same level as corporations. 
D)  cannot save income tax even if losses are anticipated in the early years of business.

Question 11

A limited liability partnership (LLP)pays income taxes.

Accepted Answer

A) True 
 B)False

Question 12

The formation of a general partnership requires:

Accepted Answer

A)  filing appropriate paperwork with the secretary of state. 
B)  a formal certificate of cancellation when the partnership is terminated. 
C)  no express agreement. 
D)  that each partner be liable for losses depending on the individual partner's contribution to the enterprise. 
A)  filing appropriate paperwork with the secretary of state. 
B)  a formal certificate of cancellation when the partnership is terminated. 
C)  no express agreement. 
D)  that each partner be liable for losses depending on the individual partner's contribution to the enterprise.

Question 13

Which of the following is a taxable entity?

Accepted Answer

A)  Corporation 
B)  Sole proprietorship 
C)  General partnership 
D)  S Corporation 
A)  Corporation 
B)  Sole proprietorship 
C)  General partnership 
D)  S Corporation

Question 14

Identify the correct statement about sole proprietorship.

Accepted Answer

A)  The owner shares responsibility with the agents and employees. 
B)  It may be operated under an assumed or trade name. 
C)  Employees of the business are not the personal employees of the owner. 
D)  The salaries paid to the employees are not deductible in determining taxable income. 
A)  The owner shares responsibility with the agents and employees. 
B)  It may be operated under an assumed or trade name. 
C)  Employees of the business are not the personal employees of the owner. 
D)  The salaries paid to the employees are not deductible in determining taxable income.

Question 15

By forming a limited liability partnership (LLP),the personal assets of partners not involved in wrongdoing by other members of the firm will be sheltered from malpractice claims against the firm.

Accepted Answer

A) True 
 B)False

Question 16

A major advantage of franchising for the franchisor is the:

Accepted Answer

A)  absence of state or federal regulations governing this form of business conduct. 
B)  ability to gain considerable control over the distribution of its products without owning the retail outlets. 
C)  enhancement of competition among the retail outlets. 
D)  right to share a trade mark with the franchisee that is well known and/or highly advertised. 
A)  absence of state or federal regulations governing this form of business conduct. 
B)  ability to gain considerable control over the distribution of its products without owning the retail outlets. 
C)  enhancement of competition among the retail outlets. 
D)  right to share a trade mark with the franchisee that is well known and/or highly advertised.

Question 17

When a general partner sells his or her partnership interests,the purchaser:

Accepted Answer

A)  is granted automatic partnership by operation of law. 
B)  is granted partnership only after he divests all interests in other general partnerships. 
C)  does not become a partner until he or she is nominated by the director and unanimously accepted by other members. 
D)  does not become a partner until he or she is unanimously accepted by the other partners. 
A)  is granted automatic partnership by operation of law. 
B)  is granted partnership only after he divests all interests in other general partnerships. 
C)  does not become a partner until he or she is nominated by the director and unanimously accepted by other members. 
D)  does not become a partner until he or she is unanimously accepted by the other partners.

Question 18

Which of the following statements is true of limited liability companies (LLPs)?

Accepted Answer

A)  The partners are not required to file an LLP form with the state. 
B)  The partners maintain an adequate amount of professional liability insurance. 
C)  They are relatively difficult to organize around an existing partnership. 
D)  They necessitate that all existing partnerships be dissolved. 
A)  The partners are not required to file an LLP form with the state. 
B)  The partners maintain an adequate amount of professional liability insurance. 
C)  They are relatively difficult to organize around an existing partnership. 
D)  They necessitate that all existing partnerships be dissolved.

Question 19

A partner cannot terminate an ordinary partnership at will.

Accepted Answer

A) True 
 B)False

Question 20

In the management of a limited liability partnership,_____.

Accepted Answer

A)  the LLP pays income taxes 
B)  management decisions cannot be altered even by agreement 
C)  only some partners have a say in its management 
D)  new partners cannot join without the unanimous consent of the current partners 
A)  the LLP pays income taxes 
B)  management decisions cannot be altered even by agreement 
C)  only some partners have a say in its management 
D)  new partners cannot join without the unanimous consent of the current partners

Exam 26: Which Form of Business Organization

A corporation will be dissolved upon the death or insolvency of a shareholder.

Which of the following run the risk of unlimited personal liability?

Which of the following is true of a limited liability company (LLC)?

Which of the following is true of the dissolution of a limited liability company (LLC)?

Through franchising,a franchisor can gain considerable control over the distribution of its products or services without owning the retail outlets.

In a general partnership,each partner is an owner and has a right to share in the profits of the business.

Publicly offered partnership interests are:

What are the factors to be considered in the creation of a limited liability company (LLC)?

Partnerships:

A limited liability partnership (LLP)pays income taxes.

The formation of a general partnership requires:

Which of the following is a taxable entity?

Identify the correct statement about sole proprietorship.

By forming a limited liability partnership (LLP),the personal assets of partners not involved in wrongdoing by other members of the firm will be sheltered from malpractice claims against the firm.

A major advantage of franchising for the franchisor is the:

When a general partner sells his or her partnership interests,the purchaser:

Which of the following statements is true of limited liability companies (LLPs)?

A partner cannot terminate an ordinary partnership at will.

In the management of a limited liability partnership,_____.

Law, Legal Reasoning, and the Legal Profession

Dispute Settlement

Business Ethics and Corporate Social Responsibility

Business and the Constitution

Crimes

Intentional Torts

Negligence and Strict Liability

Licensing and Intellectual Propertypart Two Contracts

The Nature and Origins of Contracts

Creating a Contract: Offers

Creating a Contract: Acceptances

Consideration

Capacity to Contract

Voluntary Consent

Illegality

The Form and Meaning of Contracts

Third Parties Contract Rights

Performance and Remediespart Three Sales

Formation and Terms of Sales Contracts

Warranties and Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contractspart Four Agency and Employment

The Agency Relationship-Creation, duties, and Termination

Liability of Principals and Agents to Third Parties

Employment Laws-Part Five Business Organizations

Partnerships

Formation and Termination of Corporations

Management of the Corporate Business

Financing the Corporation and the Role of the Shareholders

Securities Regulation

Legal Liability of Accountantspart Six Property

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance-Part Seven Commercial Paper

Negotiable Instruments

Negotiation and Holder in Due Course

Liability of Parties

Checks and Electronic Fund Transfers-Part Eight Credit Transactions

Introduction to Security

Security Interests in Personal Property

Bankruptcy-Part Nine Government Regulation

The Antitrust Laws

Consumer Protection Laws

Environmental Regulation

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