Exam 19: Forms Of Business Organizations

When directors on a board serve for a fixed term but are not elected all at once it is known as a(n)__________ board.

__________ of a general partnership occurs when all the affairs are wound up and the partners' authority to act for the partnership is completely extinguished.

In most corporations a director could be elected as long as he or she received a __________ of the votes cast for any nominee,without regard to the number of votes withheld; but more recently,the process in which a director must receive a __________ of the shares voted to be elected has become more prevalent.

Corporations must incorporate in the state where their headquarters are located.

If a sole proprietorship operates under a fictitious business name,then that name must be registered with the state.

In a(n)__________ a stock purchase is financed by debt.

When a third party,based on all of its transactions with the enterprise,acts as if it were doing business with a corporation,the third party is prevented from claiming that the enterprise is not a corporation because a __________ has been formed.

A corporation can conduct business as a(n)__________ in states other than its state of incorporation.

Duty of care and duty of loyalty are known as shareholder duties.

Any corporation not meeting the requirements for an S corporation is automatically a C corporation.

The main function of an LLP is to insulate its partners from vicarious liability for certain partnership obligations.

Which of the following statements is true regarding the advantages and disadvantages of a sole proprietorship?

Partnerships and LLCs are taxed at the firm level unless they elect to be taxed at the individual level.

Sage Smith works as a laser technician for a local dermatology center consisting of physicians operating under a partnership agreement.Sage purchased supplies through the mail from a medical supply facility totaling $5,000,signing the contract agreeing to pay for the supplies under the name,Sage Smith.A few weeks later the dermatologists became embroiled in a bitter dispute regarding profits and terminated the partnership.Unfortunately,the partners were not aware of the debt owed to the medical supply facility; and the bill remained unpaid.Sage received a bill from the supply company for $5,000.Is Sage liable to the medical supply company,and why or why not?

C corporations are taxed as a pass-through entity.

Which of the following refers to a merger in which some shareholders are required to surrender their shares in the disappearing corporation in exchange for cash?

A __________ is a public offer to all the shareholders of a target corporation to buy their shares at a stated price,usually __________ the market price.

Five accountants have formed an organization within which they will provide their services.What type of organization have they most likely chosen and why?

A partnership may acquire property in the individual partners' names.

In CASE 19.2 Holmes v.Lerner (1999),Lerner (a wealthy entrepreneur)talked to Holmes about setting up a cosmetics business called Urban Decay.Holmes received assurances from Lerner about finances and setting up the business.Later Lerner negotiated a separate deal for Urban Decay without including Holmes,and drafted articles of incorporation which gave Holmes only a 1 percent interest in Urban Decay.Holmes sued,insisting that even though they had no written agreement,she should have been a full and equal partner.How did the court rule and why?