Question 1

Which of the following is true about a sole proprietorship?

Accepted Answer

A) A sole proprietorship is a legal entity. 
B) A sole proprietorship cannot sue or be sued. 
C) A sole proprietorship as form of business can be transferred to someone else. 
D) A sole proprietorship has a life of its own apart from its owner. 
A) A sole proprietorship is a legal entity. 
B) A sole proprietorship cannot sue or be sued. 
C) A sole proprietorship as form of business can be transferred to someone else. 
D) A sole proprietorship has a life of its own apart from its owner.

Question 2

Which of the following statements about professional corporations is false?

Accepted Answer

A) A professional corporation is formed only by a filing with the secretary of state. 
B) A professional corporation is managed by a board of directors,unless a statute provides otherwise. 
C) A professional corporation's shareholders have personal liability for the obligations of the professional corporation. 
D) A professional corporation's rigid management structure makes it inappropriate for some smaller professional practices. 
A) A professional corporation is formed only by a filing with the secretary of state. 
B) A professional corporation is managed by a board of directors,unless a statute provides otherwise. 
C) A professional corporation's shareholders have personal liability for the obligations of the professional corporation. 
D) A professional corporation's rigid management structure makes it inappropriate for some smaller professional practices.

Question 3

A ________ is found when an arrangement is made not to establish an ongoing business involving many transactions,but is limited to a single project.

Accepted Answer

A) corporation 
B) limited liability company 
C) partnership 
D) joint venture 
A) corporation 
B) limited liability company 
C) partnership 
D) joint venture

Question 4

Generally,professional shareholders are personally liable for the obligations of the professional corporation.

Accepted Answer

A) True 
 B)False

Question 5

If a partnership leases a building that belongs to one of the partners,the property is said to be owned by the partnership.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not essential to the formation of a mining partnership?

Accepted Answer

A) Joint operation of the property 
B) Joint ownership of a mineral interest 
C) Active physical participation in operations 
D) Sharing of profits and losses 
A) Joint operation of the property 
B) Joint ownership of a mineral interest 
C) Active physical participation in operations 
D) Sharing of profits and losses

Question 7

A(n)________ arises when a person misleads a second person into believing that the first person is a partner of a third person.

Accepted Answer

A) purported partnership 
B) actual partnership 
C) constructive partnership 
D) notice partnership 
A) purported partnership 
B) actual partnership 
C) constructive partnership 
D) notice partnership

Question 8

A sole proprietorship is a legal entity separate from its owner.

Accepted Answer

A) True 
 B)False

Question 9

In a limited partnership,limited partners:

Accepted Answer

A) play an active role in the management of the firm. 
B) do not pay federal income tax on their share of the profits. 
C) are passive investors. 
D) have unlimited liability for the firm's debts. 
A) play an active role in the management of the firm. 
B) do not pay federal income tax on their share of the profits. 
C) are passive investors. 
D) have unlimited liability for the firm's debts.

Question 10

When a partnership is formed,partners contribute cash or other property to the partnership,this 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 11

The ________ is the preferred form of business for professionals and is especially good for consultants and auditors,allowing them management flexibility while insulating them mostly from personal liability.

Accepted Answer

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

Question 12

A joint venture is a(n):

Accepted Answer

A) association limited to no more than two persons in business for profit. 
B) enterprise of numerous co-owners in a nonprofit undertaking. 
C) enterprise engaged in a single project. 
D) association of persons engaged as co-owners in a single undertaking for profit. 
A) association limited to no more than two persons in business for profit. 
B) enterprise of numerous co-owners in a nonprofit undertaking. 
C) enterprise engaged in a single project. 
D) association of persons engaged as co-owners in a single undertaking for profit.

Question 13

No formalities are required in order to establish a partnership.

Accepted Answer

A) True 
 B)False

Question 14

The sale of a partner's transferable interest in a business entitles the buyer to what rights?

Accepted Answer

A) Distributions,like profit,that the selling partner was entitled to. 
B) The right to inspect the partnership's accounting books. 
C) The right to manage the partnership. 
D) The right to represent the partnership in a legal proceeding. 
A) Distributions,like profit,that the selling partner was entitled to. 
B) The right to inspect the partnership's accounting books. 
C) The right to manage the partnership. 
D) The right to represent the partnership in a legal proceeding.

Question 15

Which of the following is incorrect concerning a joint venture?

Accepted Answer

A) Joint ventures are limited to single projects. 
B) Joint venturers are personally liable for its debts. 
C) Joint ventures are created much like partnerships. 
D) Joint venturers have more implied and apparent authority than do partners in a partnership. 
A) Joint ventures are limited to single projects. 
B) Joint venturers are personally liable for its debts. 
C) Joint ventures are created much like partnerships. 
D) Joint venturers have more implied and apparent authority than do partners in a partnership.

Question 16

Which of the following statements about a partner's partnership interest is false?

Accepted Answer

A) The RUPA gives ownership of partnership property to the partners. 
B) A partner's partnership interest includes his transferable interest. 
C) A partner has no individual ownership rights in partnership property. 
D) Partners have the right to use partnership property for partnership purposes. 
A) The RUPA gives ownership of partnership property to the partners. 
B) A partner's partnership interest includes his transferable interest. 
C) A partner has no individual ownership rights in partnership property. 
D) Partners have the right to use partnership property for partnership purposes.

Question 17

As of December 2014,________ states plus the District of Columbia and the Virgin Islands have adopted the RUPA.

Accepted Answer

A) 37 
B) 24 
C) 50 
D) 44 
A) 37 
B) 24 
C) 50 
D) 44

Question 18

Jane and Ridge are partners in a computer animation firm.Jane retires from the firm,but tells Ridge that he can leave her name on the entrance door to the firm and in the telephone listing.Alex,a new client,visits the firm after telephoning the firm.Alex has seen Jane's name listed in the phone book along with Ridge's and the firm's names.He also sees Jane's name on the entrance door to the firm.Believing Jane is a partner with Ridge,Alex contracts to have the firm develop animation for his upcoming film.Ridge,however,never performs the contract.Alex sues Ridge and Jane.Is Jane liable to Alex?

Accepted Answer

Yes.Jane and Ridge are purported partner

Question 19

The charging-order creditor is a lien creditor and is entitled to receive only the partner's share of the partnership distributions.

Accepted Answer

A) True 
 B)False

Question 20

An order charging all or part of the partner's transferable partnership interest with payment of the unsatisfied amount of the judgment is called a(n)________.

Accepted Answer

A) interim charge 
B) redeeming order 
C) charging order 
D) redeeming the charge order 
A) interim charge 
B) redeeming order 
C) charging order 
D) redeeming the charge order

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

Which of the following is true about a sole proprietorship?

Which of the following statements about professional corporations is false?

A ________ is found when an arrangement is made not to establish an ongoing business involving many transactions,but is limited to a single project.

Generally,professional shareholders are personally liable for the obligations of the professional corporation.

If a partnership leases a building that belongs to one of the partners,the property is said to be owned by the partnership.

Which of the following is not essential to the formation of a mining partnership?

A(n)________ arises when a person misleads a second person into believing that the first person is a partner of a third person.

A sole proprietorship is a legal entity separate from its owner.

In a limited partnership,limited partners:

When a partnership is formed,partners contribute cash or other property to the partnership,this is called:

The ________ is the preferred form of business for professionals and is especially good for consultants and auditors,allowing them management flexibility while insulating them mostly from personal liability.

A joint venture is a(n):

No formalities are required in order to establish a partnership.

The sale of a partner's transferable interest in a business entitles the buyer to what rights?

Which of the following is incorrect concerning a joint venture?

Which of the following statements about a partner's partnership interest is false?

As of December 2014,________ states plus the District of Columbia and the Virgin Islands have adopted the RUPA.

The charging-order creditor is a lien creditor and is entitled to receive only the partner's share of the partnership distributions.

An order charging all or part of the partner's transferable partnership interest with payment of the unsatisfied amount of the judgment is called a(n)________.

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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