Question 1

Which of the following forms of organization requires no formal documentation but only business licenses for formation?

Accepted Answer

A)  Limited partnership 
B)  Corporation 
C)  Limited liability company 
D)  Sole proprietorship 
E)  S corporation 
A)  Limited partnership 
B)  Corporation 
C)  Limited liability company 
D)  Sole proprietorship 
E)  S corporation

Question 2

Which of the following is true about liability of partners in a general partnership?

Accepted Answer

A)  Partners have limited liability for the organization's debts. 
B)  Partners personal assets, which are not associated with the partnership, may not be claimed by the creditors. 
C)  From a creditor's perspective, the liability of each partner extends only to a pro rata share. 
D)  Any partner who has to pay beyond his pro rata share will have to make use of his future buyout interest. 
E)  A partner having unlimited liability will be jointly and severally liable for the partnership's obligations. 
A)  Partners have limited liability for the organization's debts. 
B)  Partners personal assets, which are not associated with the partnership, may not be claimed by the creditors. 
C)  From a creditor's perspective, the liability of each partner extends only to a pro rata share. 
D)  Any partner who has to pay beyond his pro rata share will have to make use of his future buyout interest. 
E)  A partner having unlimited liability will be jointly and severally liable for the partnership's obligations.

Question 3

Family-owned and family-operated businesses are common examples of publicly held organizations.

Accepted Answer

A) True 
 B)False

Question 4

While selecting a name for the partnership, if the name is other than that of the partners, the partners must give notice as to their actually identity under the state's:

Accepted Answer

A)  fictitious-name certification law. 
B)  annexed-name statute. 
C)  suppositious-name law. 
D)  fictive-name rule. 
E)  assumed-name statute. 
A)  fictitious-name certification law. 
B)  annexed-name statute. 
C)  suppositious-name law. 
D)  fictive-name rule. 
E)  assumed-name statute.

Question 5

Which of the following qualifies a sole proprietorship?

Accepted Answer

A)  Owned by one person 
B)  Owned by one family 
C)  Has only one location 
D)  Activities in only one state 
E)  Has only one activity 
A)  Owned by one person 
B)  Owned by one family 
C)  Has only one location 
D)  Activities in only one state 
E)  Has only one activity

Question 6

Which of the following is a taxable entity?

Accepted Answer

A)  A partnership 
B)  An S corporation 
C)  A limited liability company 
D)  A corporation 
E)  A sole proprietorship 
A)  A partnership 
B)  An S corporation 
C)  A limited liability company 
D)  A corporation 
E)  A sole proprietorship

Question 7

Corporate form of organizations enables shareholders to transfer their ownership without interfering with the organization's management.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following makes sole proprietorship a less desirable form of organization?

Accepted Answer

A)  Creation of sole proprietorship is expensive and requires formal documentation. 
B)  Proprietorship's business activity may be more stable than the proprietor's willingness to remain actively involved in the business. 
C)  Proprietor may have to share his/her voice of control and responsibility for the business' success with the other acting members of the organization. 
D)  The business is always held liable for 100 percent of the debts. 
E)  The proprietorship is a victim of double taxation. 
A)  Creation of sole proprietorship is expensive and requires formal documentation. 
B)  Proprietorship's business activity may be more stable than the proprietor's willingness to remain actively involved in the business. 
C)  Proprietor may have to share his/her voice of control and responsibility for the business' success with the other acting members of the organization. 
D)  The business is always held liable for 100 percent of the debts. 
E)  The proprietorship is a victim of double taxation.

Question 9

Which of the following organizations is equally managed by the members unless a manager is designated?

Accepted Answer

A)  Limited partnership 
B)  Corporation 
C)  Limited liability company 
D)  Sole proprietorship 
E)  S corporation 
A)  Limited partnership 
B)  Corporation 
C)  Limited liability company 
D)  Sole proprietorship 
E)  S corporation

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

How is control decided in publicly held and closely held corporations?

Accepted Answer

In large publicly held corporations, con

Question 12

Which of the following is a basic form of business organization?

Accepted Answer

A)  LLC 
B)  Limited partnership 
C)  LLP 
D)  Sole proprietorship 
E)  S corporation 
A)  LLC 
B)  Limited partnership 
C)  LLP 
D)  Sole proprietorship 
E)  S corporation

Question 13

Which of the following is an advantage of the corporate organization?

Accepted Answer

A)  License fees and franchise taxes are rarely assessed against corporations. 
B)  Control of a corporation may be held by those with a minority of the investment. 
C)  The cost of forming and maintaining a corporation is minimal. 
D)  Once a corporation is properly formed, it becomes automatically eligible to do business in all 50 states. 
E)  Ownership must be divided into three or more equal shares. 
A)  License fees and franchise taxes are rarely assessed against corporations. 
B)  Control of a corporation may be held by those with a minority of the investment. 
C)  The cost of forming and maintaining a corporation is minimal. 
D)  Once a corporation is properly formed, it becomes automatically eligible to do business in all 50 states. 
E)  Ownership must be divided into three or more equal shares.

Question 14

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

Accepted Answer

A)  These organizations are owned only by a few persons. 
B)  Decisions regarding selection of appropriate organizational forms are usually limited to these organizations. 
C)  Shareholders of such organizations can transfer their ownership without interfering with the organization's management. 
D)  A family-operated business is a classic example of a publicly held business organization. 
E)  The status of a shareholder in these organizations limits their liability for torts and shareholders mostly forgo their limited liability for cosigning contracts. 
A)  These organizations are owned only by a few persons. 
B)  Decisions regarding selection of appropriate organizational forms are usually limited to these organizations. 
C)  Shareholders of such organizations can transfer their ownership without interfering with the organization's management. 
D)  A family-operated business is a classic example of a publicly held business organization. 
E)  The status of a shareholder in these organizations limits their liability for torts and shareholders mostly forgo their limited liability for cosigning contracts.

Question 15

The creation of a partnership requires permission from each state in which it does business.

Accepted Answer

A) True 
 B)False

Question 16

Factor continuity refers to the legal steps necessary to form a particular business organization.

Accepted Answer

A) True 
 B)False

Question 17

A partnership must have:

Accepted Answer

A)  one or more people. 
B)  no personal liability. 
C)  a nonprofit focus. 
D)  a common interest in business. 
E)  a taxability factor built within. 
A)  one or more people. 
B)  no personal liability. 
C)  a nonprofit focus. 
D)  a common interest in business. 
E)  a taxability factor built within.

Question 18

A common interest in business is one of the satisfying definitional elements of partnership existence.

Accepted Answer

A) True 
 B)False

Question 19

When a court finds that the shareholders of a corporation are using the corporate structure to shield themselves from liability when acting for purely personal purposes, the court may disregard the corporate structure and impose personal liability on the shareholders treating them like partners. This is 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 20

Explain the possible organizational form that occurs when two or more people wish to own a business together.

Accepted Answer

Whenever two or more people wish to own

Exam 14: Business Organizations

Which of the following forms of organization requires no formal documentation but only business licenses for formation?

Which of the following is true about liability of partners in a general partnership?

Family-owned and family-operated businesses are common examples of publicly held organizations.

While selecting a name for the partnership, if the name is other than that of the partners, the partners must give notice as to their actually identity under the state's:

Which of the following qualifies a sole proprietorship?

Which of the following is a taxable entity?

Corporate form of organizations enables shareholders to transfer their ownership without interfering with the organization's management.

Which of the following makes sole proprietorship a less desirable form of organization?

Which of the following organizations is equally managed by the members unless a manager is designated?

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

How is control decided in publicly held and closely held corporations?

Which of the following is a basic form of business organization?

Which of the following is an advantage of the corporate organization?

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

The creation of a partnership requires permission from each state in which it does business.

Factor continuity refers to the legal steps necessary to form a particular business organization.

A partnership must have:

A common interest in business is one of the satisfying definitional elements of partnership existence.

Explain the possible organizational form that occurs when two or more people wish to own a business together.

Law As a Foundation for Business

The Role of Ethics in Decision Making

The Court System

Litigation

Alternative Dispute Resolution

The Constitution

The Property System

Contract Formation

Contractual Performance and Breach

Torts Affecting Business

Intellectual Property

International Law

Criminal Law and Business

The Regulatory Process

Regulating Competition_Antitrust Laws

Financial and Securities Regulations

Privacy and Consumer Protection

Environmental Regulation and Resource Sustainability

Discrimination in Employment

Employment Laws

Labor-Management Relationship

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