Question 1

Identify the correct statement about an arm's-length transaction.

Accepted Answer

A) It is a transaction involving a party that is controlled by another entity and does not act on its own behalf. 
B) It is a transaction made by parties as if they were unrelated,in a free market system,each acting in its own best interest. 
C) It is a transactions in which one party sets aside independent interest so as to focus on the wishes of the controlling party. 
D) An arm's-length transaction should involve at least one interested party that is concerned about the probable consequences of the transaction. 
E) A transaction involving subsidiaries would not be considered an arm's-length transaction because the parties are acting independently. 
A) It is a transaction involving a party that is controlled by another entity and does not act on its own behalf. 
B) It is a transaction made by parties as if they were unrelated,in a free market system,each acting in its own best interest. 
C) It is a transactions in which one party sets aside independent interest so as to focus on the wishes of the controlling party. 
D) An arm's-length transaction should involve at least one interested party that is concerned about the probable consequences of the transaction. 
E) A transaction involving subsidiaries would not be considered an arm's-length transaction because the parties are acting independently. B

Question 2

Unlike sole proprietorships,corporations can be complicated to manage.

Accepted Answer

A) True 
 B)False  True

Question 3

The duty of loyalty,one of the fiduciary duties of board members,includes a duty not to take corporate opportunities for their own purposes and a duty not to self-deal.

Accepted Answer

A) True 
 B)False  True

Question 4

When a debtor is in bankruptcy,the creditors must choose which type of bankruptcy to file.

Accepted Answer

A) True 
 B)False

Question 5

As in a sole proprietorship,there is no _____ involvement in creating a general partnership because there is no separation from the business and the partners.

Accepted Answer

The answer of As in a sole proprietorship,there is no...

Question 6

The number of shareholders tends to be large in a closely held corporation.

Accepted Answer

A) True 
 B)False

Question 7

An)_____ agreement refers to an agreement usually written)among LLC members governing the LLC's management,rights,and duties.

Accepted Answer

A) license 
B) noncompete 
C) buy/sell 
D) operating 
E) binding 
A) license 
B) noncompete 
C) buy/sell 
D) operating 
E) binding

Question 8

_____ results when a corporation issues additional shares,resulting in a reduction of percentage of the corporation owned by shareholders.

Accepted Answer

A) Preemption 
B) Novation 
C) Dilution 
D) Accretion 
E) Restitution 
A) Preemption 
B) Novation 
C) Dilution 
D) Accretion 
E) Restitution

Question 9

A limited liability company LLC)cannot choose how it wishes to be taxed.

Accepted Answer

A) True 
 B)False

Question 10

_____ is a portion of a corporation's net income designated by the board of directors and returned to shareholders on a per share basis.

Accepted Answer

A) Compensation 
B) Retained earnings 
C) Share 
D) Dividend 
E) Corporate bond 
A) Compensation 
B) Retained earnings 
C) Share 
D) Dividend 
E) Corporate bond

Question 11

Limited partners are generally prohibited from participating in day-to-day management of the business.

Accepted Answer

A) True 
 B)False

Question 12

An order entered by the bankruptcy judge to discharge all dischargeable debts of the debtors is known as an)_____.

Accepted Answer

The answer of An order entered by the bankruptcy judge...

Question 13

A nonprofit that is a "501c)3)" organization does not have to pay taxes.

Accepted Answer

A) True 
 B)False

Question 14

What are the factors that business professionals must consider when choosing a business organization?

Accepted Answer

When choosing which form of business org

Question 15

Limited partnerships have to be formed in compliance with _____ law.

Accepted Answer

The answer of Limited partnerships have to be formed in...

Question 16

Sole proprietors may carry on business operations under a fictitious name by applying for an)_____.

Accepted Answer

The answer of Sole proprietors may carry on business operations...

Question 17

Limited liability partnerships:

Accepted Answer

A) contain the same level of tax liability as that of corporations. 
B) do not retain limited liability for all partners. 
C) are especially popular with accountants and lawyers. 
D) are designed for professionals who do business as owners. 
E) cannot avoid the problem of double taxation. 
A) contain the same level of tax liability as that of corporations. 
B) do not retain limited liability for all partners. 
C) are especially popular with accountants and lawyers. 
D) are designed for professionals who do business as owners. 
E) cannot avoid the problem of double taxation.

Question 18

Venture capital firms combine funds from institutional investors and _____ to identify promising start-ups.

Accepted Answer

A) personal investors 
B) HYPERLINK "http://en.wikipedia.org/wiki/Sweat_equity" \o "Sweat equity" sweat equity investors 
C) turbo capitalists 
D) angel investors 
E) venture capitalists 
A) personal investors 
B) HYPERLINK "http://en.wikipedia.org/wiki/Sweat_equity" \o "Sweat equity" sweat equity investors 
C) turbo capitalists 
D) angel investors 
E) venture capitalists

Question 19

A true statement about D&O insurance is that:

Accepted Answer

A) it usually insures a business for losses caused by competitors. 
B) it is extremely cost prohibitive and should be avoided unless required by contractual needs. 
C) it is business liability insurance for professionals. 
D) it is usually paid by the board members. 
E) it protects board members of corporations from liability arising from their actions. 
A) it usually insures a business for losses caused by competitors. 
B) it is extremely cost prohibitive and should be avoided unless required by contractual needs. 
C) it is business liability insurance for professionals. 
D) it is usually paid by the board members. 
E) it protects board members of corporations from liability arising from their actions.

Question 20

Limited liability company LLC)members can be real persons or they can be other LLCs.

Accepted Answer

A) True 
 B)False

Identify the correct statement about an arm's-length transaction.

Unlike sole proprietorships,corporations can be complicated to manage.

The duty of loyalty,one of the fiduciary duties of board members,includes a duty not to take corporate opportunities for their own purposes and a duty not to self-deal.

When a debtor is in bankruptcy,the creditors must choose which type of bankruptcy to file.

As in a sole proprietorship,there is no _____ involvement in creating a general partnership because there is no separation from the business and the partners.

The number of shareholders tends to be large in a closely held corporation.

An)_____ agreement refers to an agreement usually written)among LLC members governing the LLC's management,rights,and duties.

_____ results when a corporation issues additional shares,resulting in a reduction of percentage of the corporation owned by shareholders.

A limited liability company LLC)cannot choose how it wishes to be taxed.

_____ is a portion of a corporation's net income designated by the board of directors and returned to shareholders on a per share basis.

Limited partners are generally prohibited from participating in day-to-day management of the business.

An order entered by the bankruptcy judge to discharge all dischargeable debts of the debtors is known as an)_____.

A nonprofit that is a "501c)3)" organization does not have to pay taxes.

What are the factors that business professionals must consider when choosing a business organization?

Limited partnerships have to be formed in compliance with _____ law.

Sole proprietors may carry on business operations under a fictitious name by applying for an)_____.

Limited liability partnerships:

Venture capital firms combine funds from institutional investors and _____ to identify promising start-ups.

A true statement about D&O insurance is that:

Limited liability company LLC)members can be real persons or they can be other LLCs.

Introduction to Law

The Court System

Litigation

Alternative Dispute Resolution

The Constitution

Contracts

Torts

The Property System

Intellectual Property

Criminal Law

Employment Discrimination

Business in the Global Legal Environment

Filters

Exam 11: Business Organizations

Identify the correct statement about an arm's-length transaction.

Unlike sole proprietorships,corporations can be complicated to manage.

The duty of loyalty,one of the fiduciary duties of board members,includes a duty not to take corporate opportunities for their own purposes and a duty not to self-deal.

When a debtor is in bankruptcy,the creditors must choose which type of bankruptcy to file.

As in a sole proprietorship,there is no _____ involvement in creating a general partnership because there is no separation from the business and the partners.

The number of shareholders tends to be large in a closely held corporation.

An)_____ agreement refers to an agreement usually written)among LLC members governing the LLC's management,rights,and duties.

_____ results when a corporation issues additional shares,resulting in a reduction of percentage of the corporation owned by shareholders.

A limited liability company LLC)cannot choose how it wishes to be taxed.

_____ is a portion of a corporation's net income designated by the board of directors and returned to shareholders on a per share basis.

Limited partners are generally prohibited from participating in day-to-day management of the business.

An order entered by the bankruptcy judge to discharge all dischargeable debts of the debtors is known as an)_____.

A nonprofit that is a "501c)3)" organization does not have to pay taxes.

What are the factors that business professionals must consider when choosing a business organization?

Limited partnerships have to be formed in compliance with _____ law.

Sole proprietors may carry on business operations under a fictitious name by applying for an)_____.

Limited liability partnerships:

Venture capital firms combine funds from institutional investors and _____ to identify promising start-ups.

A true statement about D&O insurance is that:

Limited liability company LLC)members can be real persons or they can be other LLCs.

Introduction to Law

The Court System

Litigation

Alternative Dispute Resolution

The Constitution

Contracts

Torts

The Property System

Intellectual Property

Criminal Law

Employment Discrimination

Business in the Global Legal Environment

Filters