Question 1

Which of the following forms of business always imposes double taxation on the earnings of the business?

Accepted Answer

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

Question 2

Which legal form of business has the ability to attract the greatest amount of capital from investors?

Accepted Answer

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

Question 3

A sole proprietorship lasts for how long if it continues to run unabated?

Accepted Answer

A)  For 100 years 
B)  10 years with an option to renew for another 10 years 
C)  Till the death of the owner 
D)  30 years then the business has to be reformed 
A)  For 100 years 
B)  10 years with an option to renew for another 10 years 
C)  Till the death of the owner 
D)  30 years then the business has to be reformed C

Question 4

According to the RUPA:

Accepted Answer

A)  partners have no liability for the obligations of the partnership. 
B)  a partnership cannot sue or be sued in its own name. 
C)  a partnership does not have a life apart from its owners. 
D)  partnerships have continuity of existence. 
A)  partners have no liability for the obligations of the partnership. 
B)  a partnership cannot sue or be sued in its own name. 
C)  a partnership does not have a life apart from its owners. 
D)  partnerships have continuity of existence.

Question 5

A _____ has one or more general partners and one or more limited partners.

Accepted Answer

A)  limited liability partnership 
B)  professional corporation 
C)  limited partnership 
D)  limited liability company 
A)  limited liability partnership 
B)  professional corporation 
C)  limited partnership 
D)  limited liability company

Question 6

Ann and Susan want to enter into a partnership business,having a term of five years,of selling used cars.They have to prepare a partnership agreement in writing to be enforceable under the statute of frauds.

Accepted Answer

A) True 
 B)False

Question 7

The owner of a sole proprietorship assumes personal liability for the actions of the business.

Accepted Answer

A) True 
 B)False

Question 8

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 9

A partnership is an income tax-paying entity for federal income tax purposes.

Accepted Answer

A) True 
 B)False

Question 10

A loan made by a partner to partnership business is:

Accepted Answer

A)  a part of partnership capital. 
B)  a part of the partnership's assets. 
C)  a liability of the partnership business. 
D)  a partner's contribution to the partnership business. 
A)  a part of partnership capital. 
B)  a part of the partnership's assets. 
C)  a liability of the partnership business. 
D)  a partner's contribution to the partnership business.

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Babs,Mindy,and Eric decide to leave a large accounting firm and start their own accounting business.What form of business should they elect?

Accepted Answer

Babs,Mindy,and Eric should choose either

Question 13

A partner's contribution is also 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 14

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

Question 15

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 16

Dr.Matt Fornfeld,a physician practicing as a sole proprietor,falls behind in 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 17

One of the most important factors in establishing co-ownership of the business is:

Accepted Answer

A)  making profits. 
B)  sharing management. 
C)  encouraging voluntary relationships. 
D)  creating joint ventures. 
A)  making profits. 
B)  sharing management. 
C)  encouraging voluntary relationships. 
D)  creating joint ventures.

Question 18

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 19

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 20

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

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

Which of the following forms of business always imposes double taxation on the earnings of the business?

Which legal form of business has the ability to attract the greatest amount of capital from investors?

A sole proprietorship lasts for how long if it continues to run unabated?

According to the RUPA:

A _____ has one or more general partners and one or more limited partners.

Ann and Susan want to enter into a partnership business,having a term of five years,of selling used cars.They have to prepare a partnership agreement in writing to be enforceable under the statute of frauds.

The owner of a sole proprietorship assumes personal liability for the actions of the business.

Which of the following is true about a sole proprietorship?

A partnership is an income tax-paying entity for federal income tax purposes.

A loan made by a partner to partnership business is:

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

Babs,Mindy,and Eric decide to leave a large accounting firm and start their own accounting business.What form of business should they elect?

A partner's contribution is also called _____.

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

One of the most important factors in establishing co-ownership of the business is:

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

In a limited partnership,limited partners:

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

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 Robinson-Patman Act, and Antitrust Exemptions and Immunities

Employment Law

Environmental Regulation

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