Question 1

A social enterprise must do all of the following EXCEPT

Accepted Answer

A) register with the state as a nonprofit organization. 
B) state in its charter that it is a benefit corporation. 
C) obtain approval of its charter from two-thirds of its shareholders. 
D) measure its social benefit using a standard set by an objective third party. 
A) register with the state as a nonprofit organization. 
B) state in its charter that it is a benefit corporation. 
C) obtain approval of its charter from two-thirds of its shareholders. 
D) measure its social benefit using a standard set by an objective third party. A

Question 2

The form of business ownership that is the MOST easily transferable is the

Accepted Answer

A) general partnership. 
B) corporation. 
C) close corporation. 
D) sole proprietorship. 
A) general partnership. 
B) corporation. 
C) close corporation. 
D) sole proprietorship. B

Question 3

All the business forms listed below have limited liability EXCEPT the

Accepted Answer

A) limited liability company. 
B) general partnership. 
C) "S" corporation. 
D) corporation. 
A) limited liability company. 
B) general partnership. 
C) "S" corporation. 
D) corporation. B

Question 4

The phrase "piercing the company veil" applies to which type of organization?

Accepted Answer

A) a close corporation 
B) a general partnership 
C) a limited liability company 
D) an S corporation 
A) a close corporation 
B) a general partnership 
C) a limited liability company 
D) an S corporation

Question 5

In many ways,a limited liability company can be thought of as a cross between

Accepted Answer

A) a corporation and a franchise. 
B) a joint venture and a partnership. 
C) a corporation and a sole proprietorship. 
D) a sole proprietorship and a social enterprise. 
A) a corporation and a franchise. 
B) a joint venture and a partnership. 
C) a corporation and a sole proprietorship. 
D) a sole proprietorship and a social enterprise.

Question 6

The Federal Trade Commission requires franchisors to

Accepted Answer

A) give prospective franchisees a franchise disclosure document at least 14 business days prior to the signing of a contract or payment of any money. 
B) give prospective franchisees earnings information on the company. 
C) disclose any litigation the company has ever been involved in. 
D) let prospective franchisees know how many franchisees have gone out of business in the prior five years. 
A) give prospective franchisees a franchise disclosure document at least 14 business days prior to the signing of a contract or payment of any money. 
B) give prospective franchisees earnings information on the company. 
C) disclose any litigation the company has ever been involved in. 
D) let prospective franchisees know how many franchisees have gone out of business in the prior five years.

Question 7

What constitutes a social enterprise's "triple bottom line"?

Accepted Answer

A) employees,customers,and profits 
B) assets,liabilities,and revenue 
C) social concerns,shareholders,and sales 
D) people,planet,and profits 
A) employees,customers,and profits 
B) assets,liabilities,and revenue 
C) social concerns,shareholders,and sales 
D) people,planet,and profits

Question 8

The term "S Corporation" comes from

Accepted Answer

A) the Internal Revenue Code. 
B) the FTC rules. 
C) the Securities and Exchange Commission. 
D) state corporation law. 
A) the Internal Revenue Code. 
B) the FTC rules. 
C) the Securities and Exchange Commission. 
D) state corporation law.

Question 9

Which of the following statements regarding social enterprises is TRUE?

Accepted Answer

A) Social enterprises are essentially nonprofit organizations. 
B) To become a socially conscious organization,one-half of the shareholders must approve. 
C) The focus of social enterprises is the motto "reduce,reuse,recycle." 
D) Unlike charities,social enterprises can sell stock to investors. 
A) Social enterprises are essentially nonprofit organizations. 
B) To become a socially conscious organization,one-half of the shareholders must approve. 
C) The focus of social enterprises is the motto "reduce,reuse,recycle." 
D) Unlike charities,social enterprises can sell stock to investors.

Question 10

No formal steps are necessary to create a sole proprietorship.

Accepted Answer

A) True 
 B)False

Question 11

A court may pierce an LLC's veil if

Accepted Answer

A) members fail to provide adequate capital. 
B) members treat the LLC like a separate organization. 
C) members keep their assets and the assets of the LLC separate. 
D) the LLC has too many members. 
A) members fail to provide adequate capital. 
B) members treat the LLC like a separate organization. 
C) members keep their assets and the assets of the LLC separate. 
D) the LLC has too many members.

Question 12

What is a joint venture? Briefly explain the tax and liability implications of a joint venture.

Accepted Answer

A joint venture is a partnership for a l

Question 13

Andy wants to start his own business.He has decided to rent space in a "strip mall" and open a pet shop.Additionally,he will provide dog grooming services.He figures he can do almost everything himself,though he will need to hire a part-time employee on an "as needed" basis.His friend,Lacy,has agreed to work when needed.
Andy is considering operating his business as a sole proprietorship.What are the primary legal advantages and disadvantages to this form of business ownership for Andy's pet shop?

Accepted Answer

There are many advantages to operating t

Question 14

To be a close corporation,the business must be small,with no more than 20 owners and no more than $500,000 in gross annual income.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following forms of organization is a compromise between starting one's own business as an entrepreneur and working for someone else as an employee?

Accepted Answer

A) limited liability company 
B) sole proprietorship 
C) close corporation 
D) franchise 
A) limited liability company 
B) sole proprietorship 
C) close corporation 
D) franchise

Question 16

Trudy wishes to buy a national franchise.What information is the seller legally required to provide before she buys the franchise?

Accepted Answer

The Federal Trade Commission requires th

Question 17

Charles and Ellen,an unmarried couple,run an ice cream store.The business is not incorporated,and they have filed no formation papers with the state.Their business is a

Accepted Answer

A) sole proprietorship. 
B) partnership. 
C) franchise. 
D) limited liability company. 
A) sole proprietorship. 
B) partnership. 
C) franchise. 
D) limited liability company.

Question 18

Which is an advantage of a sole proprietorship?

Accepted Answer

A) It can offer multiple classes of stock. 
B) It is very easy to form. 
C) It can attract a wide variety of shareholders. 
D) It offers its owner limited liability. 
A) It can offer multiple classes of stock. 
B) It is very easy to form. 
C) It can attract a wide variety of shareholders. 
D) It offers its owner limited liability.

Question 19

A limited liability company,unlike an S corporation,can have members that are corporations,partnerships,or nonresident aliens.

Accepted Answer

A) True 
 B)False

Question 20

When a partner leaves the partnership,whether it be voluntary or by expulsion,death or bankruptcy,it is called

Accepted Answer

A) dissociation. 
B) termination. 
C) detachment. 
D) separation. 
A) dissociation. 
B) termination. 
C) detachment. 
D) separation.

Exam 31: Starting a Business: Llcs and Other Options

A social enterprise must do all of the following EXCEPT

The form of business ownership that is the MOST easily transferable is the

All the business forms listed below have limited liability EXCEPT the

The phrase "piercing the company veil" applies to which type of organization?

In many ways,a limited liability company can be thought of as a cross between

The Federal Trade Commission requires franchisors to

What constitutes a social enterprise's "triple bottom line"?

The term "S Corporation" comes from

Which of the following statements regarding social enterprises is TRUE?

No formal steps are necessary to create a sole proprietorship.

A court may pierce an LLC's veil if

What is a joint venture? Briefly explain the tax and liability implications of a joint venture.

To be a close corporation,the business must be small,with no more than 20 owners and no more than $500,000 in gross annual income.

Which of the following forms of organization is a compromise between starting one's own business as an entrepreneur and working for someone else as an employee?

Trudy wishes to buy a national franchise.What information is the seller legally required to provide before she buys the franchise?

Charles and Ellen,an unmarried couple,run an ice cream store.The business is not incorporated,and they have filed no formation papers with the state.Their business is a

Which is an advantage of a sole proprietorship?

A limited liability company,unlike an S corporation,can have members that are corporations,partnerships,or nonresident aliens.

When a partner leaves the partnership,whether it be voluntary or by expulsion,death or bankruptcy,it is called

Introduction to Law

Ethics and Corporate Social Responsibility

International Law

Common Law, Statutory Law, and Administrative Law

Constitutional Law

Dispute Resolution

Crime

Intentional Torts and Business Torts

Negligence, Strict Liability, and Product Liability

Privacy and Internet Law

Introduction to Contracts

Agreement: Offers and Acceptances

Consideration

Legality

Voidable Contracts: Capacity and Consent

Written Contracts

Third Parties

Contract Termination

Remedies

Practical Contracts

Introduction to Sales

Ownership, Risk and Warranties

Performance and Remedies

Secured Transactions

Creating a Negotiable Instrument

Liability for Negotiable Instruments

Accountants Liability

Agency Law

Employment and Labor Law

Employment Discrimination

Partnerships

Life and Death of a Corporation

Management Duties

Shareholder Rights

Bankruptcy

Securities Regulation

Antitrust

Consumer Protection

Environmental Law

Intellectual Property

Real Property and Landlord Tenant Law

Personal Property and Bailment

Planning for the Future: Wills, Trusts and Insurance

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