Question 1

Who is responsible for managing the business of a corporation?

Accepted Answer

A)  Investors
B)  Shareholders
C)  Administrators
D)  Officers
E)  Members of the board of directorsF) A) and C)
G) B) and E)

Question 2

Would Rohan and Roland likely be held liable for Viktor's injuries?

Accepted Answer

A)  LLC members are akin to limited partners,which can be liable for business debts.
B)  Like a corporation,LLC members' liability is limited to his or her capital investment.
C)  LLC members are similar to partners in an LLP,who can be personally liable for business debts
D)  Like a joint venture,each LLC member is equally liable for business debts.
E)  Like a partnership,LLC members can be personally liable for business debts.F) B) and C)
G) None of the above

Question 3

A limited liability company is incorporated in the state in which it does business.

Accepted Answer

A) True 
 B)False

Question 4

[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 states) can Viktor file suit against R&R?

Accepted Answer

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

Question 5

[Daria's Bakery] Daria decided to open her own bakery.She decided she did not need a lawyer to advise her on different forms of ownership.Unfortunately,Daria had not paid attention in business law class.She proceeded to simply open her business called Daria's Bakery.Eli told Daria that he wanted to order some cookies for his girlfriend,Kirsten,but that Kirsten had allergies to peanuts.Daria told him not to worry because she would make up a special batch just for him.Daria had hired some assistants because she was so busy.She told an assistant,Kate,to make up several batches of cookies for different customers including Eli and told her to leave out the peanuts in Eli's batch because of the allergy.Kate,however,forgot about the peanut allergy and proceeded to make Eli's cookies with peanuts.Eli picked up the cookies and gave one to Kirsten in the car.Kirsten became violently ill,vomited in Eli's car,and had to have her stomach pumped.Eli and Kirsten sought recovery from Daria who told them that Kirsten's doctor bill and Eli's car cleaning bill were business debts,that the business was new and not making any money at the moment,and that she had no personal liability.Following the incident involving Eli and Kirsten,Daria discussed her problems with the bakery with her parents.Daria's parents would like to invest in her business and share in any profits,but they do not want to share in the management responsibilities.
-Daria initially set up which type of business?

Accepted Answer

A)  An individual proprietorship
B)  A franchise
C)  An S corporation
D)  A general company
E)  A sole proprietorshipF) A) and B)
G) A) and C)

Question 6

What is the most popular form of business ownership in the U.S.?

Accepted Answer

A)  Limited liability company
B)  Limited liability partnership
C)  Sole proprietorship
D)  Limited partnership
E)  CorporationF) C) and E)
G) All of the above

Question 7

Which of the following statements is false regarding franchises?

Accepted Answer

A)  The franchisor has the legal authority to ensure that the franchisee maintains the quality of goods and services associated with the franchise.
B)  The UCC does not apply in the realm of disputes between franchisors and franchisees.
C)  If a franchisor exercises too much authority in the day-to-day affairs of the franchisee's business,the franchisor could be held liable for the torts of the franchisee's employees.
D)  A franchise is a contractual relationship between the franchisor and the franchisee.
E)  The franchisor can set sales quotas and record-keeping requirements.F) A) and B)
G) C) and D)

Question 8

Which of the following is not a type of partnership?

Accepted Answer

A)  Cooperative
B)  Limited liability partnerships
C)  Limited partnerships
D)  Limited liability company
E)  General partnershipsF) C) and E)
G) B) and C)

Question 9

Which of the following statements is true about taxes in a limited partnership?

Accepted Answer

A)  Both limited partners and general partners are double taxed.
B)  Both limited partners and general partners pay taxes on their share of the profit.
C)  Both limited partners and general partners are double taxed,however,the amount of tax liability by limited partners is capped.
D)  Limited partners are not double taxed,but general partners are.
E)  General partners,but not limited partners,pay taxes for profits of the partnership.F) C) and D)
G) All of the above

Question 10

Which of the following offers the tax advantages of a partnership and the liability advantages similar to a corporation,while also allowing for unlimited shareholders?

Accepted Answer

A)  A joint partnership
B)  A limited partnership
C)  A limited liability company
D)  A corporate partnership
E)  A cooperativeF) C) and D)
G) B) and E)

Question 11

Winston wants to have an office in California and one in Atlanta.Lenita tells Winston that,if they form an LLC,they only need to file paperwork in one of those states.Is she correct?

Accepted Answer

A)  Yes,the state in which she registers will send copies to all other states in which the business intends to operate.
B)  Yes,by law,an LLC can only be registered in one state.
C)  No,LLCs usually need to register in every state in which they intend to operate.
D)  No,like a partnership,one of the advantages of an LLC is that they do need to file formal documents with the state in order to operate.
E)  Yes,an LLC only needs to file documents in one state,as there is now an online system that covers all states.F) C) and E)
G) B) and D)

Question 12

What type of agreement do owners of a limited liability company usually create when establishing their organization?

Accepted Answer

A)  Shareholders Agreement
B)  Partnership Agreement
C)  Operating Agreement
D)  Oral Agreement
E)  Member ContractF) A) and D)
G) A) and C)

Question 13

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

Accepted Answer

A)  The franchise agreement
B)  The Franchise Wrap-Up Act
C)  The Franchisor-Franchisee Protection Act
D)  The Franchise Termination Act
E)  The Franchisee Protection ActF) C) and E)
G) A) and E)

Question 14

Syndicates are usually considered a type of ________,thus they are almost always governed by ________ law.

Accepted Answer

A)  Joint stock company;partnership
B)  Business trust;corporate
C)  Cooperative;corporate
D)  Joint venture;partnership
E)  Limited liability company;corporateF) B) and E)
G) A) and C)

Question 15

Which of the following statements is false regarding a sole proprietorship?

Accepted Answer

A)  A sole proprietorship requires few legal formalities.
B)  A sole proprietor has complete control of the management of the business.
C)  The sole proprietor keeps all the profits from the business.
D)  A sole proprietor is not personally liable for obligations of the business.
E)  Profits are taxed as the personal income of the sole proprietor.F) B) and C)
G) A) and D)

Question 16

Which of the following statements is correct about the requirements to form a limited liability company?

Accepted Answer

A)  Articles of organization must be filed in the state in which members want to establish their LLC,but the LLC need not register in every additional state in which it will do business.
B)  Members must execute an operating agreement,and the LLC must register in every additional state in which it will do business.
C)  Members must execute an operating agreement,articles of organization must be filed in the state in which members want to establish their LLC,and the LLC must register in every additional state in which it will do business.
D)  Members must execute an operating agreement,and articles of organization must be filed in the state in which members want to establish their LLC.
E)  Articles of organization must be filed in the state in which members want to establish their LLC,and the LLC must register in every additional state in which it will do business.F) All of the above
G) D) and E)

Question 17

Which types of business organizations are terminated upon death of the owners?

Accepted Answer

A)  Sole proprietorships and partnerships,but not corporations.
B)  Sole proprietorships and corporations,but not partnerships.
C)  Sole proprietorships,partnerships,and corporations continue to exist after the death of any owner.
D)  Sole proprietorships,partnerships,and corporations.
E)  Corporations and partnerships,but not sole proprietorships.F) A) and E)
G) A) and C)

Question 18

[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.
-What type of arrangement did André propose when he suggested that they share control of the business and split profits equally,not bothering with a written agreement?

Accepted Answer

A)  A corporation
B)  A joint sole proprietorship
C)  A partnership
D)  A limited partnership
E)  An S corporationF) C) and D)
G) None of the above

Question 19

[Heart surgery invention] Winston and Noe patented a mechanism that will change open heart surgery forever.They are setting up a business to produce and sell their invention to hospitals and will take advantage of Noe's non-U.S.citizenship to help with sales in international markets.They hire Lenita,a corporate lawyer,to assist in setting up their business.Winston's largest concern is taxes.Noe,on the other hand,doesn't want to bother keeping corporate minutes and having board meetings as he is too busy.Both are concerned about being sued personally for products liability.
-Which of the following business organizations would best address Winston and Noe's concerns?

Accepted Answer

A)  General Partnership,as it is only taxed once,and has no requirement to hold meetings or follow corporate formalities.
B)  S Corporation or Corporation
C)  LLC,because it is not double taxed,members are not required to follow corporate formalities or hold annual meetings,and members have only limited liability.
D)  Corporation,because shareholders are not double taxed,are not required to follow corporate formalities,and are generally shielded from liability.
E)  S Corporation,because shareholders are not double taxed,are not required to follow corporate formalities,and are generally shielded from liability.F) None of the above
G) C) and E)

Question 20

Winston tells Lenita that he prefers to form an S corporation because he does not want to attach "LLC" to the name of the company.Lenita responds that the option of an S corporation is not available for their situation.Is she correct?

Accepted Answer

A)  No,because only one owner need be a U.S.citizenship for purposes of forming an S corporation.
B)  No,because the owners of an S corporation are not required to be U.S.citizens.
C)  Yes,because all the owners are not U.S.citizens and they do not have the appropriate number of shareholders for an S corporation.
D)  Yes,because all the owners are not U.S.citizens.
E)  Yes,because they do not have the appropriate number of shareholders for an S corporation.F) C) and E)
G) A) and E)

Exam 35: Forms of Business Organization

Winston tells Lenita that he prefers to form an S corporation because he does not want to attach "LLC" to the name of the company.Lenita responds that the option of an S corporation is not available for their situation.Is she correct?

Correct Answer
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Correct Answer
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Winston wants to have an office in California and one in Atlanta.Lenita tells Winston that,if they form an LLC,they only need to file paperwork in one of those states.Is she correct?

Correct Answer
verified

Correct Answer
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Correct Answer
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Which of the following is not a type of partnership?

Correct Answer
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What is the most popular form of business ownership in the U.S.?

Correct Answer
verified

A limited liability company is incorporated in the state in which it does business.

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Which types of business organizations are terminated upon death of the owners?

Correct Answer
verified

Which of the following statements is false regarding franchises?

Correct Answer
verified

Which of the following statements is correct about the requirements to form a limited liability company?

Correct Answer
verified

Syndicates are usually considered a type of ,thus they are almost always governed by law.

Correct Answer
verified

Which of the following statements is true about taxes in a limited partnership?

Correct Answer
verified

Which of the following offers the tax advantages of a partnership and the liability advantages similar to a corporation,while also allowing for unlimited shareholders?

Correct Answer
verified

Who is responsible for managing the business of a corporation?

Correct Answer
verified

What type of agreement do owners of a limited liability company usually create when establishing their organization?

Correct Answer
verified

Which of the following statements is false regarding a sole proprietorship?

Correct Answer
verified

Would Rohan and Roland likely be held liable for Viktor's injuries?

Correct Answer
verified

Exam 35: Forms of Business Organization

Winston tells Lenita that he prefers to form an S corporation because he does not want to attach "LLC" to the name of the company.Lenita responds that the option of an S corporation is not available for their situation.Is she correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Winston wants to have an office in California and one in Atlanta.Lenita tells Winston that,if they form an LLC,they only need to file paperwork in one of those states.Is she correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is not a type of partnership?

Correct AnswerverifiedShow Answer

What is the most popular form of business ownership in the U.S.?

Correct AnswerverifiedShow Answer

A limited liability company is incorporated in the state in which it does business.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which types of business organizations are terminated upon death of the owners?

Correct AnswerverifiedShow Answer

Which of the following statements is false regarding franchises?

Correct AnswerverifiedShow Answer

Which of the following statements is correct about the requirements to form a limited liability company?

Correct AnswerverifiedShow Answer

Syndicates are usually considered a type of ________,thus they are almost always governed by ________ law.

Correct AnswerverifiedShow Answer

Which of the following statements is true about taxes in a limited partnership?

Correct AnswerverifiedShow Answer

Which of the following offers the tax advantages of a partnership and the liability advantages similar to a corporation,while also allowing for unlimited shareholders?

Correct AnswerverifiedShow Answer

Who is responsible for managing the business of a corporation?

Correct AnswerverifiedShow Answer

What type of agreement do owners of a limited liability company usually create when establishing their organization?

Correct AnswerverifiedShow Answer

Which of the following statements is false regarding a sole proprietorship?

Correct AnswerverifiedShow Answer

Would Rohan and Roland likely be held liable for Viktor's injuries?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Syndicates are usually considered a type of ,thus they are almost always governed by law.

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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