Question 1

Craig, Donna, and Eve do business as FasTrak Career Consultants. Eve's relationship to FasTrak ends, but the firm continues to do business. The termination of Eve's relationship to FasTrak is

Accepted Answer

A) dissociation. 
B) dissolution. 
C) disestablishment. 
D) disrespectful.

Question 2

In a general partnership, the senior partner manages the partnership.

Accepted Answer

A) True 
 B)False

Question 3

A partnership is a voluntary association of individuals.

Accepted Answer

A) True 
 B)False

Question 4

Narib and Olivia are limited partners in Physicians Medical Center, a limited partnership. As in a general partnership, in terms of the firm's books and information regarding partnership business, Narib and Olivia are entitled to

Accepted Answer

A) access in proportion to their participation in management of the firm. 
B) access to the parts that directly relate to their capital contributions. 
C) no access. 
D) complete access.

Question 5

A partnership is a pass-through entity and a taxpaying entity.

Accepted Answer

A) True 
 B)False

Question 6

In a limited liability company, the management may consist of members or nonmembers, but not both.

Accepted Answer

A) True 
 B)False

Question 7

Global Shipping Corporation and Harbor Warehouse Company transfer their property to Investment Managers, Inc., which manages and owns the property and distributes the profits to Global Shipping and Harbor Warehouse. This form of a business organization is

Accepted Answer

A) a business trust. 
B) a joint stock company. 
C) a joint venture. 
D) a syndicate.

Question 8

Licensed fishing outfits in Bayou City form a business organization to provide an economic service to its members. This is

Accepted Answer

A) a business trust. 
B) a cooperative. 
C) a corporation. 
D) a joint stock company.

Question 9

A joint stock company is usually treated like a partnership.

Accepted Answer

A) True 
 B)False

Question 10

Oberon buys a Pro Club Health & Fitness, Inc., franchise, which the franchisor later terminates. In determining whether a franchisor has acted in good faith when terminating a franchise agreement, a court will generally

Accepted Answer

A) balance the rights of both parties. 
B) emphasize the right of Pro Club to its business operation. 
C) focus on the right of Oberon to be dealt with fairly. 
D) underscore the interest of consumers in affordability.

Question 11

Mucho Tacos, Inc., sells franchises. Mucho Tacos imposes on its franchisees standards of operation and personnel training methods. What is the potential pitfall to Mucho Tacos if it exercises too much control over its franchisees?

Accepted Answer

The answer of Mucho Tacos, Inc., sells franchises. Mucho Tacos...

Question 12

Sweet Selections, a general partnership, operates as a gift shop. Sweet Selections has ten partners. Jill and Amy each have a 25 percent interest in the partnership. All the other members have a 10 percent interest. Unless the partners otherwise agree, with respect to management decisions

Accepted Answer

A) a majority of the partners must agree. 
B) both Jill and Amy must agree. 
C) the senior partner decides. 
D) 30 percent of the partners must agree.

Question 13

The day-to-day operation of the franchise business normally is under the control of the franchisor.

Accepted Answer

A) True 
 B)False

Question 14

Dana is a member of Earthground Coffee, LLC, a limited liability company. Dana is liable for Earthground's debts

Accepted Answer

A) in proportion to the total number of members. 
B) to the extent of her investment in the company. 
C) in proportion to her profit derived from the company. 
D) to the full extent.

Question 15

Jeri and Knute are members of Lighthouse Tours LLC, a limited liability company. With respect to Lighthouse Tours's liabilities, as members, Jeri and Knute are shielded from

Accepted Answer

A) all liability. 
B) no liability. 
C) personal liability. 
D) "alter ego" liability.

Question 16

Smith & Jones, Accountants, is a limited liability partnership (LLP). The major features of an LLP are that it limits the personal liability of the partners and

Accepted Answer

A) it allows the partnership to continue as a pass-through tax entity. 
B) LLP statutes do not vary from state to state. 
C) it can only do business in the state in which it was formed. 
D) only a few states have enacted LLP statutes.

Question 17

A partner is liable to the partnership for honest errors in judgment in conducting partnership business.

Accepted Answer

A) True 
 B)False

Question 18

Bob is the sole proprietor of ClamBooks, an electronic book subscription service. As a sole proprietor, on the business's profits, Bob pays

Accepted Answer

A) no income taxes. 
B) only personal income taxes. 
C) only business income taxes. 
D) both personal and business income taxes.

Question 19

Jeremy is considering forms of business organizations, including the limited liability company (LLC), for his concessions business-Kettle Popt-Korn. Most states require that an LLC have

Accepted Answer

A) no minimum number of participants. 
B) at least one member. 
C) at least two members. 
D) at least one non-member manager.

Question 20

IT Apps, LLC, is a limited liability company. Among its members, a dispute arises that the operating agreement does not cover. The dispute is governed by

Accepted Answer

A) the applicable state LLC statute. 
B) the Uniform Limited Liability Company Act. 
C) the principles of partnership law. 
D) the federal LLC statutes.

Exam 19: The Entrepreneurs Options

Craig, Donna, and Eve do business as FasTrak Career Consultants. Eve's relationship to FasTrak ends, but the firm continues to do business. The termination of Eve's relationship to FasTrak is

In a general partnership, the senior partner manages the partnership.

A partnership is a voluntary association of individuals.

Narib and Olivia are limited partners in Physicians Medical Center, a limited partnership. As in a general partnership, in terms of the firm's books and information regarding partnership business, Narib and Olivia are entitled to

A partnership is a pass-through entity and a taxpaying entity.

In a limited liability company, the management may consist of members or nonmembers, but not both.

Global Shipping Corporation and Harbor Warehouse Company transfer their property to Investment Managers, Inc., which manages and owns the property and distributes the profits to Global Shipping and Harbor Warehouse. This form of a business organization is

Licensed fishing outfits in Bayou City form a business organization to provide an economic service to its members. This is

A joint stock company is usually treated like a partnership.

Oberon buys a Pro Club Health & Fitness, Inc., franchise, which the franchisor later terminates. In determining whether a franchisor has acted in good faith when terminating a franchise agreement, a court will generally

Mucho Tacos, Inc., sells franchises. Mucho Tacos imposes on its franchisees standards of operation and personnel training methods. What is the potential pitfall to Mucho Tacos if it exercises too much control over its franchisees?

Sweet Selections, a general partnership, operates as a gift shop. Sweet Selections has ten partners. Jill and Amy each have a 25 percent interest in the partnership. All the other members have a 10 percent interest. Unless the partners otherwise agree, with respect to management decisions

The day-to-day operation of the franchise business normally is under the control of the franchisor.

Dana is a member of Earthground Coffee, LLC, a limited liability company. Dana is liable for Earthground's debts

Jeri and Knute are members of Lighthouse Tours LLC, a limited liability company. With respect to Lighthouse Tours's liabilities, as members, Jeri and Knute are shielded from

Smith & Jones, Accountants, is a limited liability partnership (LLP) . The major features of an LLP are that it limits the personal liability of the partners and

A partner is liable to the partnership for honest errors in judgment in conducting partnership business.

Bob is the sole proprietor of ClamBooks, an electronic book subscription service. As a sole proprietor, on the business's profits, Bob pays

Jeremy is considering forms of business organizations, including the limited liability company (LLC) , for his concessions business-Kettle Popt-Korn. Most states require that an LLC have

IT Apps, LLC, is a limited liability company. Among its members, a dispute arises that the operating agreement does not cover. The dispute is governed by