Question 1

Identify the correct statement about a 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 2

The stock of a close corporation is held by the municipality in which the corporation is headquartered.

Accepted Answer

A) True 
 B)False

Question 3

Most franchise contracts are typical "contracts of adhesion."

Accepted Answer

A) True 
 B)False

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 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 6

Explain the legal status of a limited liability company (LLC).

Accepted Answer

Like a corporation, a limited liability

Question 7

A limited partnership permits investors who do not engage in management to share in the profits of the business without becoming personally liable for its debts.

Accepted Answer

A) True 
 B)False

Question 8

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 9

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

Accepted Answer

A) True 
 B)False

Question 10

Like a corporation, a limited liability company is a separate entity with a legal existence apart from its individual owners.

Accepted Answer

A) True 
 B)False

Exam 26: Which Form of Business Organization

Identify the correct statement about a sole proprietorship.

The stock of a close corporation is held by the municipality in which the corporation is headquartered.

Most franchise contracts are typical "contracts of adhesion."

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

Which of the following is a franchisor problem?

Explain the legal status of a limited liability company (LLC).

A limited partnership permits investors who do not engage in management to share in the profits of the business without becoming personally liable for its debts.

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?

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

Like a corporation, a limited liability company is a separate entity with a legal existence apart from its individual owners.

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 Property

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 Remedies

Formation and Terms of Sales Contracts

Warranties and Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contracts

The Agency Relationship-Creation, Duties, and Termination

Liability of Principals and Agents to Third Parties

Employment Laws

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 Accountants

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance

Negotiable Instruments

Negotiation and Holder in Due Course

Liability of Parties

Checks and Electronic Fund Transfers

Introduction to Security

Security Interests in Personal Property

Bankruptcy

The Antitrust Laws

Consumer Protection Laws

Environmental Regulation

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