Question 1

Limited partners who act as guarantors for partnership notes lose their limited partner status.

Accepted Answer

A) True 
 B)False

Question 2

Lawyers for corporations are required to report misconduct by the corporation to the SEC after they have exhausted all means for an internal correction.

Accepted Answer

A) True 
 B)False

Question 3

Limited partnerships are taxed the same way as general partnerships.

Accepted Answer

A) True 
 B)False

Question 4

A limited liability company:

Accepted Answer

A)  can be created informally. 
B)  does not have the pass-through feature of income and losses. 
C)  is exclusive to the United States. 
D)  none of the above 
A)  can be created informally. 
B)  does not have the pass-through feature of income and losses. 
C)  is exclusive to the United States. 
D)  none of the above

Question 5

Which of the following is true of a sole proprietorship?

Accepted Answer

A)  A separate tax return must be filed. 
B)  It is not a business entity. 
C)  There is no personal liability for the owner. 
D)  none of the above 
A)  A separate tax return must be filed. 
B)  It is not a business entity. 
C)  There is no personal liability for the owner. 
D)  none of the above

Question 6

Partnership property:

Accepted Answer

A)  is always personal property. 
B)  is owned by the partners as tenants in partnership. 
C)  can be pledged to a partner's personal creditor. 
D)  all of the above 
A)  is always personal property. 
B)  is owned by the partners as tenants in partnership. 
C)  can be pledged to a partner's personal creditor. 
D)  all of the above

Question 7

Oil company executives are the highest paid CEOs annually.

Accepted Answer

A) True 
 B)False

Question 8

Parent corporations can never be held liable for the environmental clean-up costs of subsidiaries.

Accepted Answer

A) True 
 B)False

Question 9

A director who usurps a corporate opportunity:

Accepted Answer

A)  will owe his/her corporation the profits from the opportunity. 
B)  will not owe the profits to the corporation so long as the venture was disclosed in advance. 
C)  has violated the business judgment rule. 
D)  none of the above 
A)  will owe his/her corporation the profits from the opportunity. 
B)  will not owe the profits to the corporation so long as the venture was disclosed in advance. 
C)  has violated the business judgment rule. 
D)  none of the above

Question 10

Grace Owen formed a corporation with three of her friends for purposes of operating a catering company. Grace used her own checking account to deposit the client payments and to make distributions of the corporation's profits to her three friends, who together owned 50% of the shares, with Grace owning the remainder of the shares. Grace promised her friends "no meetings, no formalities, we'll just run the catering business." Several wedding guests at a reception Grace's company catered became ill. Grace had not purchased insurance. The guests brought suit to recover their medical bills and other damages from Grace and her three friends. Grace says she has no personal liability for the bad food that resulted in their illness.

Accepted Answer

A)  Grace is correct; their suit should be against the corporation. 
B)  Grace is incorrect because of the veil and alter ego theory. 
C)  Grace is liable, but her friends are not. 
D)  none of the above 
A)  Grace is correct; their suit should be against the corporation. 
B)  Grace is incorrect because of the veil and alter ego theory. 
C)  Grace is liable, but her friends are not. 
D)  none of the above

Question 11

Transfer of a partner's interest:

Accepted Answer

A)  is void. 
B)  results in dissolution of the partnership. 
C)  relieves the partner of liability. 
D)  makes the transferee a partner. 
E)  none of the above 
A)  is void. 
B)  results in dissolution of the partnership. 
C)  relieves the partner of liability. 
D)  makes the transferee a partner. 
E)  none of the above

Question 12

Watered shares result:

Accepted Answer

A)  when a purchaser does not pay full market value for the shares. 
B)  when a purchaser does pay more than par value for the shares. 
C)  in personal liability for the shareholders. 
D)  none of the above 
A)  when a purchaser does not pay full market value for the shares. 
B)  when a purchaser does pay more than par value for the shares. 
C)  in personal liability for the shareholders. 
D)  none of the above

Question 13

Under Sarbanes-Oxley, codes of ethics must cover financial reporting standards.

Accepted Answer

A) True 
 B)False

Question 14

The income of the sole proprietor's business is reported as a separate entity's income.

Accepted Answer

A) True 
 B)False

Question 15

If members of a limited liability company exercise management authority, they lose their limited liability.

Accepted Answer

A) True 
 B)False

Question 16

Upon termination of both limited and general partnerships, outside creditors have first priority in terms of asset distribution.

Accepted Answer

A) True 
 B)False

Question 17

A partnership by estoppel arises when actions lead a third party to believe a partnership exists.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following forms of business structure has the easiest means of transfer of ownership interests?

Accepted Answer

A)  LLCs 
B)  LLPs 
C)  Subchapter S corporations 
D)  C corporations 
A)  LLCs 
B)  LLPs 
C)  Subchapter S corporations 
D)  C corporations

Limited partners who act as guarantors for partnership notes lose their limited partner status.

Lawyers for corporations are required to report misconduct by the corporation to the SEC after they have exhausted all means for an internal correction.

Limited partnerships are taxed the same way as general partnerships.

A limited liability company:

Which of the following is true of a sole proprietorship?

Partnership property:

Oil company executives are the highest paid CEOs annually.

Parent corporations can never be held liable for the environmental clean-up costs of subsidiaries.

A director who usurps a corporate opportunity:

Transfer of a partner's interest:

Watered shares result:

Under Sarbanes-Oxley, codes of ethics must cover financial reporting standards.

The income of the sole proprietor's business is reported as a separate entity's income.

If members of a limited liability company exercise management authority, they lose their limited liability.

Upon termination of both limited and general partnerships, outside creditors have first priority in terms of asset distribution.

A partnership by estoppel arises when actions lead a third party to believe a partnership exists.

Which of the following forms of business structure has the easiest means of transfer of ownership interests?

Introduction to Law

Business Ethics and Social Responsibility

The Judicial System

Managing Disputes: Alternative Dispute Resolution and Litigation Strategies

Business and the Constitution

Administrative Law

International Law

Business Crime

Business Torts

Cyberlaw, Social Media, and Privacy

Environmental Regulation and Sustainability

Contracts and Sales: Introduction and Formation

Contracts: Performance, Remedies, and Rights

Sales: Product Advertising and Liability

Products: Business Intellectual Property

Business Competition: Antitrust

Management of Employee Conduct: Agency

Governance and Regulation: Securities Law

Management: Employee Welfare

Management: Employment Discrimination

Filters

Exam 18: Governance and Structure: Forms of Doing Business

Limited partners who act as guarantors for partnership notes lose their limited partner status.

Lawyers for corporations are required to report misconduct by the corporation to the SEC after they have exhausted all means for an internal correction.

Limited partnerships are taxed the same way as general partnerships.

A limited liability company:

Which of the following is true of a sole proprietorship?

Partnership property:

Oil company executives are the highest paid CEOs annually.

Parent corporations can never be held liable for the environmental clean-up costs of subsidiaries.

A director who usurps a corporate opportunity:

Transfer of a partner's interest:

Watered shares result:

Under Sarbanes-Oxley, codes of ethics must cover financial reporting standards.

The income of the sole proprietor's business is reported as a separate entity's income.

If members of a limited liability company exercise management authority, they lose their limited liability.

Upon termination of both limited and general partnerships, outside creditors have first priority in terms of asset distribution.

A partnership by estoppel arises when actions lead a third party to believe a partnership exists.

Which of the following forms of business structure has the easiest means of transfer of ownership interests?

Introduction to Law

Business Ethics and Social Responsibility

The Judicial System

Managing Disputes: Alternative Dispute Resolution and Litigation Strategies

Business and the Constitution

Administrative Law

International Law

Business Crime

Business Torts

Cyberlaw, Social Media, and Privacy

Environmental Regulation and Sustainability

Contracts and Sales: Introduction and Formation

Contracts: Performance, Remedies, and Rights

Sales: Product Advertising and Liability

Products: Business Intellectual Property

Business Competition: Antitrust

Management of Employee Conduct: Agency

Governance and Regulation: Securities Law

Management: Employee Welfare

Management: Employment Discrimination

Filters