Deck 17: Governance and Structure: Forms of Doing Business

Question 1

Partners are mutual principals and agents.

Answer 1

True

Question 2

A partnership can only be formed voluntarily.

Answer 2

False

Question 3

In a limited partnership,there must be a least one general partner.

Answer 3

True

Question 4

The sale of the goodwill of a partnership requires unanimous consent.

Question 5

Partners by implication cannot share profits.

Question 6

The sole proprietor's personal assets are subject to business creditor attachment.

Question 7

Limited partners have liability limited to the amount of their contribution to the partnership.

Question 8

Dissolution of a partnership is termination of a partnership.

Question 9

Limited partners can take a management role and remain limited partners.

Question 10

A partnership must file a separate tax return and pay taxes on its income.

Question 11

Sharing of profits is prima facie evidence that a partnership exists.

Question 12

There are no formal requirements for forming a sole proprietorship.

Question 13

A tenancy in partnership does not carry rights of survivorship.

Question 14

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

Question 15

A partner's interest in a partnership is not transferable.

Question 16

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

Question 17

Only the general partner in a limited partnership has personal liability.

Question 18

A limited partnership can exist by implication.

Question 19

Partners are not liable for each others' torts committed in the scope of business.

Question 20

Partners' personal assets can be reached by partnership creditors.

Question 21

Novation and ratification have the same effect on promoters' pre-incorporation contracts.

Question 22

Any shareholder can demand access to the corporate books and records.

Question 23

Watered shares are shares for which the purchaser did pay more than par but less than full market value.

Question 24

Directors are personally liable for errors in business judgment.

Question 25

An S corporation is created as an LLC.

Question 26

The corporate veil can be pierced for inadequate capitalization.

Question 27

Incorporators are not liable for contracts entered into before incorporation.

Question 28

Partners are only jointly liable for torts of other partners committed in the scope of the partnership business.

Question 29

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

Question 30

Oil company executives are the highest paid CEOs annually.

Question 31

A corporation is only a domestic corporation in its state of incorporation.

Question 32

A copy of the voting trust must be on file in the corporate records.

Question 33

The statutory agent is the party who will be served with lawsuits against the corporation.

Question 34

Stock transfer restrictions are void.

Question 35

The articles of incorporation must include the capital stock structure of the corporation.

Question 36

The corporate opportunity doctrine requires directors to first present related business opportunities to the corporation.

Question 37

A proxy is valid only for 11 months.

Question 38

Limited partnerships are taxed the same way as general partnerships.

Question 39

Bylaws provide the requirements for meetings and voting.

Question 40

Boards cannot rely on outside experts in decision making.

Question 41

New members are admitted to an LLC only with approval by a majority of existing members.

Question 42

Close corporations have less formality in their operational requirements.

Question 43

A limited liability company can be created informally.

Question 44

Members of limited liability companies have no right to vote on who should manage their companies.

Question 45

Limited partners' profits and losses are allocated equally.

Question 46

It is fraud to form a corporation to avoid personal liability.

Question 47

Limited partners can consult and advise with the general partner and still retain limited liability.

Question 48

Appraisal rights are given only to dissenting shareholders.

Question 49

A LLP can be created by implication.

Question 50

A limited liability company can be created informally.

Question 51

Limited liability companies,limited liability partnerships,limited partnerships,general partnerships,sole proprietorships and S corporations all have flow-through income and loss provisions for tax purposes.

Question 52

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

Question 53

All owners in an LLP have limited liability.

Question 54

Subchapter S or S Corporation shareholders have personal liability for corporate debts.

Question 55

Limited liability companies are peculiar to the United States.

Question 56

Owners of limited liability companies enjoy flow-through treatment of income and losses.

Question 57

An assignment of a limited partner's interest terminates the limited partnership.

Question 58

A merger requires a board resolution and shareholder approval.

Question 59

An inadequately capitalized corporation can have its corporate veil pierced.

Question 60

"Say on pay" gets its name from stakeholders getting to vote on executive compensation.

Question 61

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

Question 62

Limited partnership interests are generally not transferable.

Question 63

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

Question 64

Under Sarbanes-Oxley,the majority of members of the audit committee must be independent directors.

Question 65

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

Question 66

Piercing the corporate veil has been used for purposes of imposing CERCLA liability.

Question 67

The corporate veil liability theory has been applied in situations that involve environmental clean-up issues.

Question 68

Under Sarbanes-Oxley,current employees are not considered independent for purposes of board structure.

Question 69

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

Question 70

Shareholders generally elect the officers of the corporation.

Question 71

Evidence of sharing profits is prima facie evidence of partnership existence unless the profits are:

A)wages or rent.
B)not shared equally.
C)income.
D)all of the above

Question 72

Which of the following is true of a sole proprietorship?

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 73

LLCs have existed in Europe and South America prior to their existence in the U.S.

Question 74

Lawyers for corporations are not required to reveal investigations of misconduct in the corporation to the CEO.

Question 75

Close corporations are generally publicly traded.

Question 76

AIG was not involved in the subprime mortgage debacle.

Question 77

Under Sarbanes-Oxley,loans to corporate officers are prohibited.

Question 78

Which of the following is not a method for forming a partnership?

A)by agreement
B)by estoppel
C)by implication
D)by transfer

Question 79

Pooling agreements are the same as voting trusts.

Question 80

Corporations pay double taxes,on income and shareholders on dividends.