Question 1

What are some of the strategies a corporation can employ to minimize taxation disadvantages?

Accepted Answer

When the corporation is involved in a bu

Question 2

A freeze-out:

Accepted Answer

A)  occurs when a majority shareholder is "frozen out" by the management regarding such issues as a reduction or elimination of dividends. 
B)  can be easily reversed in court. 
C)  results in the minority shareholder having little influence in important corporate issues such as loss of employment. 
D)  occurs mostly in S corporations. 
A)  occurs when a majority shareholder is "frozen out" by the management regarding such issues as a reduction or elimination of dividends. 
B)  can be easily reversed in court. 
C)  results in the minority shareholder having little influence in important corporate issues such as loss of employment. 
D)  occurs mostly in S corporations.

Question 3

When a general business partnership fails,the partners:

Accepted Answer

A)  lose only their investment. 
B)  may be required to pay partnership debts from personal assets. 
C)  can waive their limited liability. 
D)  are liable for losses equivalent to their own individual contributions. 
A)  lose only their investment. 
B)  may be required to pay partnership debts from personal assets. 
C)  can waive their limited liability. 
D)  are liable for losses equivalent to their own individual contributions.

Question 4

A limited liability company (LLC)is generally liable for its own obligations due to its separate legal identity.

Accepted Answer

A) True 
 B)False

Question 5

From a risk standpoint,a shareholder or limited partner is better off than a general partner.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is a franchisor problem?

Accepted Answer

A)  Attempts to require franchisees to buy products exclusively from the franchisor may violate the Sherman Act. 
B)  Attempts to require adherence to prices set by the franchisor may violate the Sherman Act. 
C)  Insurance cannot be used to cover risks due to torts committed by the franchisee. 
D)  The franchisee has to be made an employee of the franchisor. 
A)  Attempts to require franchisees to buy products exclusively from the franchisor may violate the Sherman Act. 
B)  Attempts to require adherence to prices set by the franchisor may violate the Sherman Act. 
C)  Insurance cannot be used to cover risks due to torts committed by the franchisee. 
D)  The franchisee has to be made an employee of the franchisor.

Question 7

A _____ provides the greatest ease of management.

Accepted Answer

A)  close corporation 
B)  sole proprietorship 
C)  general partnership 
D)  limited partnership 
A)  close corporation 
B)  sole proprietorship 
C)  general partnership 
D)  limited partnership

Question 8

If a business involves high risk,a single factor such as _____ will be so important as to outweigh other factors.

Accepted Answer

A)  limited liability 
B)  taxation 
C)  formalities 
D)  financing 
A)  limited liability 
B)  taxation 
C)  formalities 
D)  financing

Question 9

In terms of an S corporation,which of the following is a requirement that must be maintained so that the corporation does not lose its tax status?

Accepted Answer

A)  There can be no more than 80 shareholders in an S corporation. 
B)  The shareholders must all be corporate shareholders or partnerships. 
C)  The losses and earnings are not to be reported on the shareholders' individual tax returns. 
D)  Shareholders must consent in writing to having the corporation taxed as a partnership. 
A)  There can be no more than 80 shareholders in an S corporation. 
B)  The shareholders must all be corporate shareholders or partnerships. 
C)  The losses and earnings are not to be reported on the shareholders' individual tax returns. 
D)  Shareholders must consent in writing to having the corporation taxed as a partnership.

Question 10

Attempts to require franchisees to buy products,equipment,and supplies exclusively from the franchisor may violate the prohibition in the _____ against tie-in sales.

Accepted Answer

A)  Sherman Act 
B)  USA PATRIOT Act 
C)  Clayton Act 
D)  Small Business Act 
A)  Sherman Act 
B)  USA PATRIOT Act 
C)  Clayton Act 
D)  Small Business Act

Exam 26: Which Form of Business Organization

What are some of the strategies a corporation can employ to minimize taxation disadvantages?

A freeze-out:

When a general business partnership fails,the partners:

A limited liability company (LLC)is generally liable for its own obligations due to its separate legal identity.

From a risk standpoint,a shareholder or limited partner is better off than a general partner.

Which of the following is a franchisor problem?

A _____ provides the greatest ease of management.

If a business involves high risk,a single factor such as _____ will be so important as to outweigh other factors.

In terms of an S corporation,which of the following is a requirement that must be maintained so that the corporation does not lose its tax status?

Attempts to require franchisees to buy products,equipment,and supplies exclusively from the franchisor may violate the prohibition in the _____ against tie-in sales.

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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