Question 1

Explain the difference between a partnership and a limited partnership.

Accepted Answer

A partnership is a voluntary association

Question 2

Which of the following is true about franchising?

Accepted Answer

A)  It can be conducted as a sole proprietorship or a corporation but not as a partnership. 
B)  It typically involves a corporation as a franchisor. 
C)  It does not include the risk of violating federal and state antitrust laws under any circumstances. 
D)  It is not contractual. 
A)  It can be conducted as a sole proprietorship or a corporation but not as a partnership. 
B)  It typically involves a corporation as a franchisor. 
C)  It does not include the risk of violating federal and state antitrust laws under any circumstances. 
D)  It is not contractual.

Question 3

The advantages of sole proprietorship and partnership taxation include the:

Accepted Answer

A)  lessening of tax burden if the shareholders are active in the operation of the business. 
B)  reduction of tax burden experienced by shareholders by keeping the dividend rate constant. 
C)  reduction of the tax liability on the owners' other income by the amount of their individual losses. 
D)  exemption of privilege taxes for doing intrastate business in another state. 
A)  lessening of tax burden if the shareholders are active in the operation of the business. 
B)  reduction of tax burden experienced by shareholders by keeping the dividend rate constant. 
C)  reduction of the tax liability on the owners' other income by the amount of their individual losses. 
D)  exemption of privilege taxes for doing intrastate business in another state.

Question 4

What are the advantages of franchising?

Accepted Answer

Franchising affords multiple advantages

Question 5

William and Nigel decide to start a partnership business.They ask their friend Sophia to become a limited partner in order to help them with additional funds to get the business started.Which of the following statements about Sophia would be correct if she becomes and remains a limited partner in this scenario?

Accepted Answer

A)  She may be involved in management of the business but to a rather limited degree. 
B)  She cannot be entitled to any share in the profits of the business. 
C)  She may lose her investment if the business fails, but she will have no personal liability for partnership debts. 
D)  She may be considered an employee and therefore will be entitled to wages for the services she renders to the partnership. 
A)  She may be involved in management of the business but to a rather limited degree. 
B)  She cannot be entitled to any share in the profits of the business. 
C)  She may lose her investment if the business fails, but she will have no personal liability for partnership debts. 
D)  She may be considered an employee and therefore will be entitled to wages for the services she renders to the partnership.

Question 6

List the factors one should consider in choosing a form of business organization.

Accepted Answer

Each type of business structure possesse

Question 7

A partnership can be changed to a corporation later,when profits are assured.

Accepted Answer

A) True 
 B)False

Question 8

The Federal Trade Commission:

Accepted Answer

A)  requires franchisors to explain the termination, cancellation, and renewal provisions of the franchise contract. 
B)  requires franchisors to disclose the number of franchisees terminated in the last five years. 
C)  prohibits certain contract provisions and franchisee practices thought to be unfair to franchisors. 
D)  prohibits the inclusion of restrictions on franchisees in the agreement. 
A)  requires franchisors to explain the termination, cancellation, and renewal provisions of the franchise contract. 
B)  requires franchisors to disclose the number of franchisees terminated in the last five years. 
C)  prohibits certain contract provisions and franchisee practices thought to be unfair to franchisors. 
D)  prohibits the inclusion of restrictions on franchisees in the agreement.

Question 9

In a(n)______,shareholders directly report their share of the corporation's losses or earnings on their individual tax returns.

Accepted Answer

A)  S corporation 
B)  trust 
C)  franchising agreement 
D)  corporation 
A)  S corporation 
B)  trust 
C)  franchising agreement 
D)  corporation

Question 10

A person's status as a shareholder in a corporation automatically gives such person a right to be an employee of the corporation.

Accepted Answer

A) True 
 B)False

Question 11

States generally permit limited liability companies to have an indefinite duration.

Accepted Answer

A) True 
 B)False

Question 12

When it comes to tax liability,limited liability companies (LLCs):

Accepted Answer

A)  in all states are required to file annual reports with the secretary of state. 
B)  are taxed as partnerships. 
C)  do not require partners to report their share of the LLC's profits on personal tax returns. 
D)  are taxed as corporations. 
A)  in all states are required to file annual reports with the secretary of state. 
B)  are taxed as partnerships. 
C)  do not require partners to report their share of the LLC's profits on personal tax returns. 
D)  are taxed as corporations.

Question 13

A corporation pays income taxes on its own income,and its shareholders generally must pay income taxes on dividends from the corporation.

Accepted Answer

A) True 
 B)False

Question 14

S Corporations are similar to partnerships in that corporate tax is paid.

Accepted Answer

A) True 
 B)False

Question 15

Anyone who buys the interest of a limited liability partnership (LLP)partner is automatically a partner.

Accepted Answer

A) True 
 B)False

Question 16

A turnkey operation can be best described as a:

Accepted Answer

A)  franchise in which the franchisor builds and equips the place of business and leases it to the franchisee. 
B)  limited liability partnership in which partners frequently rotate in and out. 
C)  franchise operated by a person as his or her own personal property. 
D)  franchise in which the franchisee carries out the advertisement campaigns. 
A)  franchise in which the franchisor builds and equips the place of business and leases it to the franchisee. 
B)  limited liability partnership in which partners frequently rotate in and out. 
C)  franchise operated by a person as his or her own personal property. 
D)  franchise in which the franchisee carries out the advertisement campaigns.

Question 17

Ira is deeply involved in the management of a certain business.If Ira dies,the business entity would be considered legally dissolved as a result of Ira's death if:

Accepted Answer

A)  she was a shareholder of a corporation. 
B)  the business is a partnership and Ira is a partner in it. 
C)  the business is a corporation. 
D)  the business is a Subchapter S corporation. 
A)  she was a shareholder of a corporation. 
B)  the business is a partnership and Ira is a partner in it. 
C)  the business is a corporation. 
D)  the business is a Subchapter S corporation.

Question 18

The _____ form of business organization most limits personal liability for its shareholders.

Accepted Answer

A)  sole proprietorship 
B)  cooperative society 
C)  corporation 
D)  general partnership 
A)  sole proprietorship 
B)  cooperative society 
C)  corporation 
D)  general partnership

Question 19

The difficulty of selling one's investment in a publicly held corporation is one of the major disadvantages of the corporate form.

Accepted Answer

A) True 
 B)False

Question 20

"Piercing the corporate veil" implies that:

Accepted Answer

A)  a corporation is held liable for money laundering. 
B)  corporate shareholders are stripped of their limited liability to prevent unfair results. 
C)  an entity is treated as one and the same as its owners. 
D)  members will not be personally liable for the debts. 
A)  a corporation is held liable for money laundering. 
B)  corporate shareholders are stripped of their limited liability to prevent unfair results. 
C)  an entity is treated as one and the same as its owners. 
D)  members will not be personally liable for the debts.

Exam 26: Which Form of Business Organization

Explain the difference between a partnership and a limited partnership.

Which of the following is true about franchising?

The advantages of sole proprietorship and partnership taxation include the:

What are the advantages of franchising?

List the factors one should consider in choosing a form of business organization.

A partnership can be changed to a corporation later,when profits are assured.

The Federal Trade Commission:

In a(n)______,shareholders directly report their share of the corporation's losses or earnings on their individual tax returns.

A person's status as a shareholder in a corporation automatically gives such person a right to be an employee of the corporation.

States generally permit limited liability companies to have an indefinite duration.

When it comes to tax liability,limited liability companies (LLCs):

A corporation pays income taxes on its own income,and its shareholders generally must pay income taxes on dividends from the corporation.

S Corporations are similar to partnerships in that corporate tax is paid.

Anyone who buys the interest of a limited liability partnership (LLP)partner is automatically a partner.

A turnkey operation can be best described as a:

Ira is deeply involved in the management of a certain business.If Ira dies,the business entity would be considered legally dissolved as a result of Ira's death if:

The _____ form of business organization most limits personal liability for its shareholders.

The difficulty of selling one's investment in a publicly held corporation is one of the major disadvantages of the corporate form.

"Piercing the corporate veil" implies that:

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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