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Exam 35: Forms of Business Organization

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Question 21

Multiple Choice

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Trampoline Park, Inc. is licensed to sell the new Tramp-o-matic trampoline that is manufactured by SMPB Manufacturing. What type of arrangement is this?

A) distributorship
B) manufacturing arrangement
C) chain-style business operation
D) franchise
E) operational surplus agreement

F) A) and C)
G) B) and E)

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Question 22

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[R&R Landscaping, LLC] R&R Landscaping, LLC, is registered as a limited liability company in Illinois. R&R provides corporate landscape design and maintenance. During a large corporate project near Chicago, the driver of R&R's bulldozer lost control, went into oncoming traffic, and caused injuries to Viktor. Viktor wants to file a lawsuit and, after research, learns that R&R is owned by Rohan, an Illinois resident, and Roland, an Indiana resident, and that R&R filed articles of organization in Illinois and a certificate of authority in Indiana. -In which state(s) can Viktor file suit against R&R?

A) Only Illinois, because that is the state of incorporation.
B) Only Illinois, because that is the state of registration.
C) Only Illinois, because that is that state where the LLC's articles of organization are filed.
D) Either Indiana or Illinois, as long as the proper documentation was filed in those states.
E) Either Indiana or Illinois, which are the states in which the LLC's members reside.

F) A) and D)
G) B) and D)

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Question 23

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________ are responsible for running the day-to-day business of a corporation.

[Tutoring Concerns] André and Sasha want to go into business together and plan on offering a tutoring service to high school and college students. André proposes that they share control of the business and split profits equally and not bother with a written agreement. Sasha, however, is concerned about being able to pay their debts, since they will have to rent tutoring space, and purchase computers and supplies. She is also concerned about parents and students who may sue if their test scores do not improve. She tells André that she just bought a new boat and car, and that she does not want her assets to be in jeopardy. She tells André that they should form a corporation to shield their personal assets. André, however, tells Sasha that their personal assets are not in danger with his proposal because they are a business and that, furthermore, forming a corporation would result in a tax being imposed twice. -Which of the following is true regarding André's assertion regarding taxes?

Which of the following statements is correct about the requirements of an LLP?

[Car Repair] Gordon and Leo are partners in SafeT Car, a full service automotive repair company. Leo does nearly all of the day-to-day work as Gordon is thinking about retiring. When Leo was moving a customer's car last week, he accidentally collided with the garage door, and the door had to be replaced at a cost of $6,000. Leo recently met with BigBox stores about a potential deal by which BigBox would set up a SafeT Car shop in every BigBox store nationwide. Leo signed an agreement to open a "test" store in one BigBox store. Leo hasn't told Gordon yet, because Gordon hasn't been in the office in a month. Gordon opens The Oil Place, an express oil change company, which he plans to have his sons operate in his retirement. When Leo learns about The Oil Place, he threatens to sue Gordon for breach of duty because Leo is sick of doing all the work at SafeT Car while Gordon was apparently opening a competing business. Gordon tells Leo that he hasn't breached any duty and they don't have a written agreement that restricts Gordon from opening his own store with his sons. Gordon also tells Leo that the $6,000 for the damaged door is coming out of Leo's pocket. Leo, who's thinking about the potential deal about BigBox, tells Gordon he wants to split up the partnership. -In the absence of an express agreement, which act governs partnerships in most states?

[Language-Science Kits] The president of Kool Science, Inc., which makes educational science kits for children, calls the president of Language Fun, Inc., which makes foreign language learning materials for children. They discuss production of three educational toys which teach both science and foreign language to children. They agree that Kool will work with Language to create and market the three toys, and that they will use Kool's manufacturer to produce the product. -What type of business organization is best suited for the situation of Kool Science and Language Fun?

[Car Repair] Gordon and Leo are partners in SafeT Car, a full service automotive repair company. Leo does nearly all of the day-to-day work as Gordon is thinking about retiring. When Leo was moving a customer's car last week, he accidentally collided with the garage door, and the door had to be replaced at a cost of $6,000. Leo recently met with BigBox stores about a potential deal by which BigBox would set up a SafeT Car shop in every BigBox store nationwide. Leo signed an agreement to open a "test" store in one BigBox store. Leo hasn't told Gordon yet, because Gordon hasn't been in the office in a month. Gordon opens The Oil Place, an express oil change company, which he plans to have his sons operate in his retirement. When Leo learns about The Oil Place, he threatens to sue Gordon for breach of duty because Leo is sick of doing all the work at SafeT Car while Gordon was apparently opening a competing business. Gordon tells Leo that he hasn't breached any duty and they don't have a written agreement that restricts Gordon from opening his own store with his sons. Gordon also tells Leo that the $6,000 for the damaged door is coming out of Leo's pocket. Leo, who's thinking about the potential deal about BigBox, tells Gordon he wants to split up the partnership. -Which of the following statements is false regarding a sole proprietorship?

[R&R Landscaping, LLC] R&R Landscaping, LLC, is registered as a limited liability company in Illinois. R&R provides corporate landscape design and maintenance. During a large corporate project near Chicago, the driver of R&R's bulldozer lost control, went into oncoming traffic, and caused injuries to Viktor. Viktor wants to file a lawsuit and, after research, learns that R&R is owned by Rohan, an Illinois resident, and Roland, an Indiana resident, and that R&R filed articles of organization in Illinois and a certificate of authority in Indiana. -In Indiana, where R&R filed its certificate of authority, what term would be used to identify R&R's type of company?

Elias and his rich friends want to purchase a professional baseball team and need to raise a large amount of money in a short time. Which of the following forms of business organization is often used in Elias' situation?

[Car Repair] Gordon and Leo are partners in SafeT Car, a full service automotive repair company. Leo does nearly all of the day-to-day work as Gordon is thinking about retiring. When Leo was moving a customer's car last week, he accidentally collided with the garage door, and the door had to be replaced at a cost of $6,000. Leo recently met with BigBox stores about a potential deal by which BigBox would set up a SafeT Car shop in every BigBox store nationwide. Leo signed an agreement to open a "test" store in one BigBox store. Leo hasn't told Gordon yet, because Gordon hasn't been in the office in a month. Gordon opens The Oil Place, an express oil change company, which he plans to have his sons operate in his retirement. When Leo learns about The Oil Place, he threatens to sue Gordon for breach of duty because Leo is sick of doing all the work at SafeT Car while Gordon was apparently opening a competing business. Gordon tells Leo that he hasn't breached any duty and they don't have a written agreement that restricts Gordon from opening his own store with his sons. Gordon also tells Leo that the $6,000 for the damaged door is coming out of Leo's pocket. Leo, who's thinking about the potential deal about BigBox, tells Gordon he wants to split up the partnership. -Which of the following statements is false regarding a general partnership?

[Car Repair] Gordon and Leo are partners in SafeT Car, a full service automotive repair company. Leo does nearly all of the day-to-day work as Gordon is thinking about retiring. When Leo was moving a customer's car last week, he accidentally collided with the garage door, and the door had to be replaced at a cost of $6,000. Leo recently met with BigBox stores about a potential deal by which BigBox would set up a SafeT Car shop in every BigBox store nationwide. Leo signed an agreement to open a "test" store in one BigBox store. Leo hasn't told Gordon yet, because Gordon hasn't been in the office in a month. Gordon opens The Oil Place, an express oil change company, which he plans to have his sons operate in his retirement. When Leo learns about The Oil Place, he threatens to sue Gordon for breach of duty because Leo is sick of doing all the work at SafeT Car while Gordon was apparently opening a competing business. Gordon tells Leo that he hasn't breached any duty and they don't have a written agreement that restricts Gordon from opening his own store with his sons. Gordon also tells Leo that the $6,000 for the damaged door is coming out of Leo's pocket. Leo, who's thinking about the potential deal about BigBox, tells Gordon he wants to split up the partnership. -When a person decides to go into business on his or her own without further formality, what do they form?

DirtyBike Manufacturer manufactures dirt bikes in Cleveland, Ohio. DirtyBike gives an exclusive license to Paul's Dirt Bikes in Oklahoma City, Oklahoma to sell the bikes. This is an example of:

What was the result in Meyer v. Christie, the case in the text involving whether an agreement to enter into a joint venture existed?

Kendra and Amelia operate an art gallery, owned as a partnership. Kendra disappeared. A few days later, Amelia learned that Kendra embezzled $75,000 of government grant money through the company. Is Amelia responsible for the $75,000?

Which of the following establishes how a franchise agreement will be terminated?

Which of the following statements is true regarding joint ventures?

[Car Repair] Gordon and Leo are partners in SafeT Car, a full service automotive repair company. Leo does nearly all of the day-to-day work as Gordon is thinking about retiring. When Leo was moving a customer's car last week, he accidentally collided with the garage door, and the door had to be replaced at a cost of $6,000. Leo recently met with BigBox stores about a potential deal by which BigBox would set up a SafeT Car shop in every BigBox store nationwide. Leo signed an agreement to open a "test" store in one BigBox store. Leo hasn't told Gordon yet, because Gordon hasn't been in the office in a month. Gordon opens The Oil Place, an express oil change company, which he plans to have his sons operate in his retirement. When Leo learns about The Oil Place, he threatens to sue Gordon for breach of duty because Leo is sick of doing all the work at SafeT Car while Gordon was apparently opening a competing business. Gordon tells Leo that he hasn't breached any duty and they don't have a written agreement that restricts Gordon from opening his own store with his sons. Gordon also tells Leo that the $6,000 for the damaged door is coming out of Leo's pocket. Leo, who's thinking about the potential deal about BigBox, tells Gordon he wants to split up the partnership. -Shareholders elect the members of the board of directors of a corporation.

A(n) ________ is an organization formed by individuals who usually pool their resources to gain an advantage in the market.

What is the term used for the process under which an LLC must register in every additional state in which it intends to operate?