Deck 18: Business Organizations and Employment Law

Question 1

The governs the operation of partnerships unless the partners have expressly agreed otherwise.

A) Uniform Business Act
B) Uniform Partnership Act
C) Uniform Commercial Code
D) Federal Partnership Act

Answer 1

B

Question 2

A business in which two or more individuals undertake to do business together as partners is called a

A) partnership.
B) sole proprietorship.
C) bilateral proprietorship.
D) joint proprietorship.

Answer 2

A

Question 3

A sole proprietor must file

A) an income tax return for the entity and for him- or herself individually.
B) an individual income tax return only.
C) an income tax return for the entity only.
D) a profit and loss statement only.

Answer 3

B

Question 4

Which of the following is true of a partnership?

A) Neither partner is personally liable for the debts and obligations of the business.
B) Both partners are personally liable for the debts and obligations of the business.
C) The partner who owns the larger share of the partnership is liable for the debts and obligations of the business.
D) The partner who owns the smaller share of the partnership is liable for the debts and obligations of the business.

Question 5

Which of the following is the most common form of business organization?

A) Sole proprietorship
B) Limited partnership
C) Corporation
D) Partnership
E) All but limited partnership

Question 6

Stacy wants to set up a sole proprietorship. She must

A) make a partnership agreement.
B) file appropriate papers with the state.
C) file appropriate papers with the federal government.
D) None of these choices is correct.

Question 7

Erica and Melanie set up a partnership. Which of the following statements is true?

A) Erica and Melanie must live in the same state.
B) Erica and Melanie share jointly in the firm's profits.
C) Erica and Melanie are not personally liable for all the debts of the firm.
D) None of these choices is correct.

Question 8

Which of the following is a traditional form of business organization?

A) Sole proprietorship
B) Partnership
C) Corporation
D) All of these choices are correct.

Question 9

Which of the following statements is not true regarding paralegals?

A) Paralegals commonly work with people in business.
B) Paralegals are often employees of business entities.
C) Paralegals are banned from working with people in business.
D) None of these choices is correct.

Question 10

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

A) The sole proprietorship continues upon the death of the owner.
B) The sole proprietor is entitled to all of the profits of the firm.
C) The sole proprietor is personally liable for all debts and obligations of the firm.
D) The sole proprietor is dependent on loans made by lending institutions and others for capital expansion.

Question 11

Which of the following statements is true regarding employment?

A) Employment rarely causes legal issues.
B) Employment law is a difficult subject and paralegals are rarely involved.
C) Employment often causes legal issues.
D) Employment law is an area that paralegals are not allowed to work in.

Question 12

When a sole proprietor dies, his or her business is automatically

A) transferred to his or her heirs.
B) dissolved.
C) transferred to the state.
D) transferred to the federal government.

Question 13

A sole proprietor's business profits are

A) not taxed.
B) taxed at the highest possible business rate.
C) taxed as personal income.
D) taxed as business income.

Question 14

Which of the following is a reason why a sole proprietorship is easier and less costly to start up than any other kind of business?

A) Few legal forms are involved.
B) No papers need be filed with the state to establish the business.
C) No partnership agreement is needed because there are no partners.
D) All of these choices are correct.

Question 15

There are more than sole proprietorships in the United States.

A) twenty million
B) fifty million
C) sixty million
D) sixty-five million

Question 16

Which of the following statements is true regarding paralegals?

A) Paralegals commonly work with people in business.
B) Paralegals rarely work with people in business.
C) Paralegals are banned from working with people in business.
D) Paralegals are considered businessmen and businesswomen.

Question 17

Which of the following statements is not true regarding employment?

A) Employment rarely causes legal issues.
B) Employment law is a difficult subject and paralegals are rarely involved.
C) Employment law is an area that paralegals are not allowed to work in.
D) All of these choices are correct.

Question 18

Allison wants to set up a sole proprietorship. She does not need to

A) make a partnership agreement.
B) file appropriate papers with the state.
C) file appropriate papers with the federal government.
D) All of these choices are correct.

Question 19

About of the sole proprietorships in the United States earn more than $1 million per year.

A) 1 percent
B) 10 percent
C) 50 percent
D) 75 percent

Question 20

Sole proprietorships constitute over of all American businesses.

A) one-third
B) one-fourth
C) half
D) two-thirds

Question 21

Fred and Matthew have a partnership together. They do not want to be governed by the Uniform Partnership Act (UPA). They must

A) casually agree not to be governed by the UPA.
B) expressly agree not to be governed by the UPA.
C) file papers with the federal government.
D) None of these choices is correct.

Question 22

Jared is a member of a partnership. He decides to withdraw from the partnership. This will result in which of the following?

A) Liquidation
B) Merger
C) Dissolution
D) Winding up

Question 23

Which of the following is true regarding limited partnerships?

A) The general partners are investors only.
B) The limited partners are managers only.
C) The general partners have limited liability.
D) The limited partners have limited liability.

Question 24

A partnership is based on a(n) contract between two or more competent persons who agree to place some or all of their money or other assets, labor, and skill in a business, with the understanding that profits and losses will be proportionately shared.

A) involuntary
B) voluntary
C) notarized
D) mandated

Question 25

A consists of one or more general partners with full liability and one or more limited partners with limited liability.

A) joint partnership
B) limited liability partnership
C) partnership
D) limited partnership

Question 26

In partnership law, liability means that a third party may sue all of the partners or one or more of the partners separately. This is true even if one of the partners sued did not participate in, ratify, or know about whatever gave rise to the cause of action.

A) joint
B) joint and several
C) limited
D) vicarious

Question 27

The Uniform Partnership Act (UPA) is also known as which of the following?

A) The Revised Uniform Partnership Act (RUPA)
B) The Unilateral Uniform Partnership Act (UUPA)
C) The Final Uniform Partnership Act (FUPA)
D) None of these choices is correct.

Question 28

In partnership law, partners incur liability for partnership obligations and debts.

A) limited
B) joint
C) sole
D) vicarious

Question 29

Julia and Mary are business partners. Mary buys 100 black leather dresses for the partnership, but fails to pay for them. Julia is

A) not liable for the cost of the dresses because Mary bought them.
B) liable for the cost of the dresses because of joint liability.
C) not liable for the cost of the dresses because of fiduciary duty.
D) None of these choices is correct.

Question 30

Lucy is in a partnership. Which of the following statements is not true?

A) Lucy shares in the partnership's profits and losses.
B) Lucy must give two weeks' notice before withdrawing from the partnership.
C) Lucy may withdraw at any time from the partnership.
D) Lucy must declare her shares of the partnership's profits on her personal income tax return.

Question 31

Which of the following is the second step of partnership termination?

A) Liquidation
B) Merger
C) Dissolution
D) Winding up

Question 32

A(n) relationship is one that involves a high degree of trust and confidence and imposes duties of honesty and loyalty.

A) principal
B) shareholder
C) fiduciary
D) employee

Question 33

Partners owe each other a duty, the highest level of obligation imposed by the law.

A) fiduciary
B) moral
C) joint
D) legal

Question 34

Which of the following is the first step of partnership termination?

A) Liquidation
B) Merger
C) Dissolution
D) Winding up

Question 35

The earliest version of the Uniform Partnership Act was issued in

A) 1914.
B) 1950.
C) 1964.
D) 1990.

Question 36

Partnerships do not pay federal income taxes as an entity. Each partner declares his or her profits from the partnership as personal income. The partnership is referred to as which of the following?

A) A tax-free entity
B) A pass-through entity
C) A personal tax entity
D) A run-through entity

Question 37

Several liability means liability.

A) individual
B) limited
C) fiduciary
D) legal

Question 38

Jane is in a partnership. Which of the following statements is true?

A) Jane must give forty-eight hours' notice before withdrawing from the partnership.
B) Jane must give two weeks' notice before withdrawing from the partnership.
C) Jane may withdraw at any time from the partnership.
D) Jane may never withdraw from the partnership.

Question 39

Which of the following is true regarding partnerships?

A) They are created when two or more persons agree to undertake to do business jointly for profit.
B) Agency concepts do not apply to partners.
C) Partners assume fiduciary duties toward one another.
D) Partners are not personally liable for the business obligations and debts of the partnership.
E) They are created when two or more persons agree to undertake to do business jointly for profit, and partners assume fiduciary duties toward one another.

Question 40

The formal disbanding of a partnership or corporation is called

A) liquidation.
B) merger.
C) dissolution.
D) winding up.

Question 41

In a limited partnership, the partners are only investors in the business.

A) general
B) limited
C) investing
D) protected

Question 42

If a plaintiff seeks to recover damages allegedly caused by a physician's negligence (medical malpractice), and the physician is one of four partners in a medical practice partnership, the plaintiff could sue which of the following?

A) The physician who allegedly caused the harm
B) The partnership
C) One of the other physicians
D) All of the other physicians
E) All of these choices are correct.

Question 43

As a paralegal, you are to be involved with legal matters involving corporations.

A) not likely
B) likely
C) not allowed
D) None of these choices is correct.

Question 44

Which of the following rights is enjoyed by corporations?

A) The right of access to the courts
B) The right to due process of law
C) The right to freedom from unreasonable searches and seizures
D) All of these choices are correct.

Question 45

A shareholder in a corporation is which of the following?

A) An owner of the business
B) A person elected to direct corporate affairs
C) A liable partner
D) A person hired to manage the day-to-day operations of the corporation

Question 46

Any person or entity that purchases one or more shares of corporate stock, giving rise to an ownership interest in the corporation whose stock was purchased, is called a(n)

A) officer.
B) director.
C) employee.
D) shareholder.

Question 47

A director in a corporation is which of the following?

A) An owner of the business
B) A person elected by shareholders to direct corporate affairs
C) A liable partner
D) A person hired to manage the day-to-day operations of the corporation

Question 48

The limited partner in a limited partnership in the management of the partnership.

A) may participate
B) may not participate
C) must participate
D) may participate under certain conditions (such as bankruptcy of the partnership)

Question 49

A partnership is based on a(n) between two or more competent persons who agree to place some or all of their money or other assets, labor, and skill in a business, with the understanding that profits and losses will be proportionately shared.

A) mandatory contract
B) involuntary arrangement
C) voluntary contract
D) None of these choices is correct.

Question 50

A person hired by the corporate board of directors to assist in and oversee the management of the day-to-day operations of a corporation is called a(n)

A) shareholder.
B) director.
C) officer.
D) employee.

Question 51

In a limited partnership, the partners manage the business and have the rights and liabilities of partners in a general partnership.

A) general
B) limited
C) legal
D) head

Question 52

A person elected by the shareholders to direct corporate affairs is called a(n)

A) shareholder.
B) director.
C) officer.
D) employee.

Question 53

Which of the following is not among the rights of partners in the Uniform Partnership Act?

A) To participate in the management of the business operation unless the partnership agreement specifies otherwise
B) To inspect partnership books and records
C) To unilaterally dissolve the partnership
D) To hold an ownership interest in the firm and to receive a share of the profits

Question 54

Which of the following is not true regarding corporations?

A) A corporation is formed with the issuance of a state charter and is governed by state corporation laws.
B) Corporate shareholders are personally liable for the business obligations of the corporation.
C) Corporate income is subject to double taxation.
D) A corporation may be sued.

Question 55

A partnership must file an

A) informational return with the Internal Revenue Service.
B) income tax return with the Internal Revenue Service.
C) income tax return with the state in which it has its principal office.
D) All of these choices are correct.

Question 56

An officer in a corporation is which of the following?

A) An owner of the business
B) A person elected to direct corporate affairs
C) A liable partner
D) A person hired to manage the day-to-day operations of the corporation

Question 57

The is a codification of modern corporation law that has been influential in the
Codification of corporation statutes.

A) Model Business Corporation Act
B) Federal Business Corporation Act
C) National Business Corporation Act
D) Complete Business Corporation Act

Question 58

Andy invests $5,000 as a limited partner in FastHorses, LP. When all of the horses owned by FastHorses fail to win races and the limited partnership goes bankrupt, Andy loses

A) $5,000.
B) $2,500.
C) $5,000 plus his house.
D) nothing.

Question 59

Megan purchases corporate shares in ArticFun, Inc. Megan is a(n)

A) director.
B) officer.
C) shareholder.
D) client.

Question 60

Which of the following is true regarding corporations?

A) A corporation is formed with the issuance of a state charter and is governed by state corporation laws.
B) Corporate shareholders are personally liable for the business obligations of the corporation.
C) Corporate income is subject to double taxation.
D) A corporation may not be terminated at any time.
E) A corporation is formed with the issuance of a state charter and governed by state corporation laws, and corporate income is subject to double taxation.

Question 61

Payments to shareholders representing their share of corporate profits are called

A) dividends.
B) corporate payments.
C) stock interests.
D) stock payments.

Question 62

Charitable associations often create individual owners to personal liability.

A) nonprofit corporations
B) for-profit corporations
C) partnerships
D) closely held corporations to conduct business without exposing the

Question 63

Which of the following is a corporation whose shares are eligible to be publicly traded in securities markets, such as the New York Stock Exchange?

A) Public corporation
B) Publicly held corporation
C) Closely held corporation
D) Private corporation

Question 64

Certain close corporations are permitted to elect a special corporate tax status under Subchapter S of the Internal Revenue Code. These corporations are called which of the following?

A) Tax-free corporations
B) Pass through corporations
C) S corporations
D) Special corporations

Question 65

A director's responsibilities to a corporation do not include which of the following?

A) Declaring dividends
B) Choosing the corporation's name
C) Appointing officers
D) Making significant policy decisions
E) None of these choices is correct.

Question 66

Phyllis is a director for CattleBreeders, Inc. Phyllis has the right to

A) participate in board meetings only.
B) inspect corporate books only.
C) participate in board meetings and inspect corporate books.
D) None of these choices is correct.

Question 67

The classification of a corporation depends on its

A) purpose.
B) ownership.
C) location.
D) All of these choices are correct.

Question 68

Paralegal Margaret is assigned to find out if client John can name his new corporation John's Jams. Margaret should

A) determine if the preferred name as well as several possible alternatives are available.
B) check on the possibility of registering the company name as a trademark.
C) check on the availability of domain names for John to use for a website.
D) All of these choices are correct.

Question 69

The is the document filed with the appropriate state official when a business is
Incorporated.

A) prospectus
B) articles of incorporation
C) certificate of incorporation
D) Keogh plan

Question 70

The document issued by a state official or agency granting a corporation legal existence is called

A) a prospectus.
B) a certificate of incorporation.
C) the articles of incorporation.
D) a corporate charter.
E) a certificate of incorporation and a corporate charter.

Question 71

A corporation is a corporation owned by a small group of shareholders, often family members. Its shares cannot be publicly traded on the stock market, and often other restrictions on stock transfer apply.

A) public
B) publicly held
C) private
D) closely held

Question 72

Which of the following is something a paralegal might do?

A) Assist in litigation relating to a corporation or other form of business
B) Assist in the dissolution of a partnership or corporation
C) Review or prepare documents relating to the sale of corporate securities
D) All of these choices are correct.

Question 73

Ryan wants to purchase some corporate stock. He prefers to have greater voting rights, rather than greater rights to receive dividends or payments if the company liquidates. Ryan should purchase which of the following?

A) Preferred stock
B) Limited stock
C) Common stock
D) Voting stock

Question 74

Which of the following refers to the set of rules that a corporation adopts at its first organizational meeting to govern the management of the corporation?

A) Prospectus
B) Corporate charter
C) Articles of organization
D) Bylaws

Question 75

A director's responsibilities to a corporation include which of the following?

A) Declaring dividends
B) Paying dividends
C) Appointing officers
D) Making significant policy decisions
E) All of these choices are correct.

Question 76

Jacob wants to purchase some corporate stock. He prefers to have greater rights to receive dividends or payments if the company liquidates, rather than greater voting rights. Jacob should purchase which of the following?

A) Preferred stock
B) Limited stock
C) Common stock
D) Voting stock

Question 77

Which of the following is an example of a professional who might incorporate as part of a professional corporation?

A) A lawyer
B) A doctor
C) An accountant
D) All of these choices are correct.

Question 78

Which of the following is not something a paralegal might do?

A) Assist in litigation relating to a corporation or other form of business
B) Assist in the dissolution of a partnership or corporation
C) Review or prepare documents relating to the sale of corporate securities
D) None of these choices is correct.

Question 79

John Smith, Mary Barney, and Tom Reed work for a law firm called Smith, Barney, and Reed, P.C. Which of the following business entities have they formed?

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

Question 80

A privately owned corporation is called a corporation.

A) private
B) limited
C) closely held
D) family