Question 1

An S corporation:

Accepted Answer

A) must have at least 100 shareholders. 
B) may have only one class of shares. 
C) has the ability to attract capital,more than the limited partnership. 
D) has the disadvantage of its shareholders being double taxed at the federal tax level. 
A) must have at least 100 shareholders. 
B) may have only one class of shares. 
C) has the ability to attract capital,more than the limited partnership. 
D) has the disadvantage of its shareholders being double taxed at the federal tax level. B

Question 2

A written agreement to the effect that the parties do not intend to form a partnership is not conclusive if their actions provide evidence of their intent to form a relationship that meets the RUPA partnership test.

Accepted Answer

A) True 
 B)False  True

Question 3

Which of the following business forms means personal liability for the owner of the business?

Accepted Answer

A) Sole proprietorship 
B) LLC 
C) Corporation 
D) LLP 
A) Sole proprietorship 
B) LLC 
C) Corporation 
D) LLP A

Question 4

A ________ is owned by shareholders who elect a board of directors to manage the business.

Accepted Answer

A) limited liability company 
B) corporation 
C) partnership 
D) sole proprietorship 
A) limited liability company 
B) corporation 
C) partnership 
D) sole proprietorship

Question 5

Which of the following is NOT an essential characteristic of a limited liability company (LLC)?

Accepted Answer

A) The LLC can elect to be taxed as a partnership or a corporation. 
B) Members' ownership interest is completely and freely transferable. 
C) Members have limited liability for the obligations of the LLC. 
D) The bankruptcy of one member does not dissolve the LLC. 
A) The LLC can elect to be taxed as a partnership or a corporation. 
B) Members' ownership interest is completely and freely transferable. 
C) Members have limited liability for the obligations of the LLC. 
D) The bankruptcy of one member does not dissolve the LLC.

Question 6

Loans made by partners to a partnership are:

Accepted Answer

A) partnership property. 
B) partnership capital. 
C) partnership cash flow. 
D) partnership liabilities. 
A) partnership property. 
B) partnership capital. 
C) partnership cash flow. 
D) partnership liabilities.

Question 7

Which of the following is an advantage of a sole proprietorship?

Accepted Answer

A) Owners of sole proprietorships can raise a lot of capital quickly for expansion purposes. 
B) The owner of a sole proprietorship has complete control over the business. 
C) The sole proprietorship's existence does not depend entirely upon the sole proprietor. 
D) The owner of a sole proprietorship has no liability. 
A) Owners of sole proprietorships can raise a lot of capital quickly for expansion purposes. 
B) The owner of a sole proprietorship has complete control over the business. 
C) The sole proprietorship's existence does not depend entirely upon the sole proprietor. 
D) The owner of a sole proprietorship has no liability.

Question 8

A partner's contribution is called ________.

Accepted Answer

A) partnership property 
B) partnership liability 
C) partnership cash flow 
D) partnership capital 
A) partnership property 
B) partnership liability 
C) partnership cash flow 
D) partnership capital

Question 9

Dr.Matt Fornfeld,a physician practicing as a sole proprietor,falls behind on his payments to First Bank,a creditor to whom he owes $275,000.First Bank agrees to take reduced payments from Matt,but wants more money if Matt's practice becomes more profitable.Matt agrees to pay First Bank at least $4,000 per month up to a maximum of 15 percent of his profits.Does this agreement make First Bank a partner with Matt?

Accepted Answer

No.First Bank is sharing profits as a cr

Question 10

Which of the following statements about a transfer of a partner's transferable interest is true?

Accepted Answer

A) The transfer entitles the transferee to become a partner of the partnership. 
B) The transferee has become the creditor of the transferable interest. 
C) The transferee can ask a court to dissolve and wind up the partnership,but only if the partnership is at will. 
D) The transferee has the right to inspect the partnership's books and records. 
A) The transfer entitles the transferee to become a partner of the partnership. 
B) The transferee has become the creditor of the transferable interest. 
C) The transferee can ask a court to dissolve and wind up the partnership,but only if the partnership is at will. 
D) The transferee has the right to inspect the partnership's books and records.

Question 11

Which of the following is true of a corporation?

Accepted Answer

A) A corporation is not a tax-paying entity for federal income tax purposes. 
B) A corporation does not have a life separate from its owners and its managers. 
C) A corporation has the ability to attract capital,more than the limited partnership. 
D) A corporation is owned by partners who have founded the business and have the right to manage it. 
A) A corporation is not a tax-paying entity for federal income tax purposes. 
B) A corporation does not have a life separate from its owners and its managers. 
C) A corporation has the ability to attract capital,more than the limited partnership. 
D) A corporation is owned by partners who have founded the business and have the right to manage it.

Question 12

Which of the following is true about the effect of purported partnerships?

Accepted Answer

A) Purported partners share profits of the business. 
B) A purported partner does not have authority to make contracts for the partnership. 
C) A purported partner is liable on contracts entered into by third parties on their belief that he is a partner. 
D) A purported partner is not liable for the torts committed in the course of relationships entered by third parties who believed he was a partner. 
A) Purported partners share profits of the business. 
B) A purported partner does not have authority to make contracts for the partnership. 
C) A purported partner is liable on contracts entered into by third parties on their belief that he is a partner. 
D) A purported partner is not liable for the torts committed in the course of relationships entered by third parties who believed he was a partner.

Question 13

Loans made by partners to a partnership are partnership capital.

Accepted Answer

A) True 
 B)False

Question 14

The equity of a partnership is called partnership capital.

Accepted Answer

A) True 
 B)False

Question 15

As demonstrated in the case in the text,Finch v.Raymer,the presumption is very strong that:

Accepted Answer

A) property purchased with partnership funds belongs to the partners on a pro rata basis. 
B) property purchased with partnership funds and used in the partnership belongs to the partnership. 
C) property purchased with partnership funds and used in the partnership belongs to the partner that initiated the transaction. 
D) property purchased with partnership funds and used in the partnership belongs to the partnership,as long as the property is titled to the partnership. 
A) property purchased with partnership funds belongs to the partners on a pro rata basis. 
B) property purchased with partnership funds and used in the partnership belongs to the partnership. 
C) property purchased with partnership funds and used in the partnership belongs to the partner that initiated the transaction. 
D) property purchased with partnership funds and used in the partnership belongs to the partnership,as long as the property is titled to the partnership.

Question 16

Which of the following is an advantage of a limited partnership?

Accepted Answer

A) It has the ability to attract large amounts of capital. 
B) It is a nontax paying entity. 
C) It can be created by default. 
D) It cannot be transferred to another person. 
A) It has the ability to attract large amounts of capital. 
B) It is a nontax paying entity. 
C) It can be created by default. 
D) It cannot be transferred to another person.

Question 17

A mining partner's interest is:

Accepted Answer

A) nontransferable. 
B) freely transferable. 
C) partially transferable. 
D) dissolved and later,transferred. 
A) nontransferable. 
B) freely transferable. 
C) partially transferable. 
D) dissolved and later,transferred.

Question 18

A(n)________ is a limited partnership whose partners have elected limited liability status for all the partners.

Accepted Answer

A) corporation 
B) LLLP 
C) S Corporation 
D) LLP 
A) corporation 
B) LLLP 
C) S Corporation 
D) LLP

Question 19

In a limited partnership,general partners:

Accepted Answer

A) have the right to manage the business. 
B) are not liable for the firm's debts. 
C) are nonparticipating investors. 
D) cannot transfer their ownership interest. 
A) have the right to manage the business. 
B) are not liable for the firm's debts. 
C) are nonparticipating investors. 
D) cannot transfer their ownership interest.

Question 20

John is a partner of Aegon Services,a limited liability partnership firm.He committed fraud and embezzled $1 million from a client.The other partners would not be personally liable for John's malpractice.

Accepted Answer

A) True 
 B)False

Exam 37: Introduction to Forms of Business and Formation of Partnerships

An S corporation:

A written agreement to the effect that the parties do not intend to form a partnership is not conclusive if their actions provide evidence of their intent to form a relationship that meets the RUPA partnership test.

Which of the following business forms means personal liability for the owner of the business?

A ________ is owned by shareholders who elect a board of directors to manage the business.

Which of the following is NOT an essential characteristic of a limited liability company (LLC)?

Loans made by partners to a partnership are:

Which of the following is an advantage of a sole proprietorship?

A partner's contribution is called ________.

Which of the following statements about a transfer of a partner's transferable interest is true?

Which of the following is true of a corporation?

Which of the following is true about the effect of purported partnerships?

Loans made by partners to a partnership are partnership capital.

The equity of a partnership is called partnership capital.

As demonstrated in the case in the text,Finch v.Raymer,the presumption is very strong that:

Which of the following is an advantage of a limited partnership?

A mining partner's interest is:

A(n)________ is a limited partnership whose partners have elected limited liability status for all the partners.

In a limited partnership,general partners:

John is a partner of Aegon Services,a limited liability partnership firm.He committed fraud and embezzled $1 million from a client.The other partners would not be personally liable for John's malpractice.

The Nature of Law

The Resolution of Private Disputes

Business and the Constitution

Business Ethics, Corporate Social Responsibility, Corporate Governance, and Critical Thinking

Criminal Law and Procedure

Intentional Torts

Negligence and Strict Liability

Intellectual Property and Unfair Competition

Introduction to Contracts

The Agreement: Offer

The Agreement: Acceptance

Consideration

Reality of Consent

Capacity to Contract

Illegality

Writing

Rights of Third Parties

Performance and Remedies

Formation and Terms of Sales Contracts

Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contracts

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance Law

Introduction to Credit and Secured Transactions

Security Interests in Personal Property

Bankruptcy

Negotiable Instruments

Negotiation and Holder in Due Course

Liability of Parties

Checks and Electronic Transfers

The Agency Relationship

Third-Party Relations of the Principal and the Agent

Operation of Partnerships and Related Forms

Partners Dissociation and Partnerships Dissolution and Winding up

Limited Liability Companies, limited Partnerships, and Limited Liability Limited Partnerships

History and Nature of Corporations

Organization and Financial Structure of Corporations

Management of Corporations

Shareholders Rights and Liabilities

Securities Regulation

Legal and Professional Responsibilities of Auditors, Consultants, and Securities Professionals

Administrative Law

The Federal Trade Commission Act and Consumer Protection Laws

Antitrust: the Sherman Act

The Clayton Act, the Robinsonpatman Act, and Antitrust Exemptions and Immunities

Employment Law

Environmental Regulation

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