Deck 9: Small Business and the Law

Question 1

Baracas is a place with maximum number of business laws

Answer 1

False

Question 2

For small businesses, the most popular form of legal structure is the partnership

Answer 2

False

Question 3

A sole proprietorship is the most inexpensive and simplest to set up

Answer 3

True

Question 4

In the eyes of the law, there is no difference between a proprietor and her business

Question 5

Proprietorships are taxed at the owner's personal tax rate

Question 6

A sole proprietorship has a perpetual existence

Question 7

Across many jurisdictions in United States, no legal filing is required to set up a proprietorship

Question 8

Because the taxes of business are filed with the personal tax return of the individual owning the business, it is called a double taxation

Question 9

In a partnership form of business, partners are held responsible for the actions of the other partners

Question 10

Unlike sole proprietorship, a partnership pays taxes on its income and partners must exclude partnership items on their tax forms

Question 11

A partnership is required to inform the IRS by filing a Form 1065

Question 12

A general partnership involves anonymous partners plus one or more general partners whose identity is not known to the public at large

Question 13

A limited partner in a limited partnership is actively engaged in the management of the firm and bears personal responsibility for all liabilities of the firm

Question 14

Articles of copartnership is a mandatory legal agreement in a partnership form of business

Question 15

All types of corporations face double taxation

Question 16

An S Corporation can have only one class of common stock

Question 17

Fractional ownership is same as timeshare

Question 18

Handshake agreements can be enforced

Question 19

Contracts signed by minors, people with diminished mental capacity, and intoxicated persons are void

Question 20

Interstate contracts need to abide by laws of all states where they apply

Question 21

The U.S. law covers ONLY three main types of intellectual property: trademark, copyright, and patents

Question 22

It is not the idea itself, but the tangible expression of the idea that is protected by copyright law

Question 23

Copyright for new works lasts for the creator's life plus 120 years

Question 24

In order to obtain a patent, an applicant must show that the invention is novel, non-obvious, and useful

Question 25

For sole proprietorships, the most common form of bankruptcy is Chapter 11

Question 26

Which of the following is a legal form for business in the US?

A) Partnerships
B) Proprietorships
C) Corporations
D) All of the above

Question 27

A sole proprietorship involves a person who:

A) Does not fully own her business but has formed a separate legal entity for it
B) Does not fully own her business and has not formed a separate legal entity for it
C) Fully owns her business and has formed a separate legal entity for it
D) Fully owns her business but has not formed a separate legal entity for it

Question 28

What is true about a sole proprietorship?

A) The owner is not responsible for liabilities of the business
B) The legal existence of a proprietorship ends when the owner passes
C) A proprietor and her business are legally separable
D) Proprietorships are not taxed at the owner's personal tax rate

Question 29

A _________is the tax form filed by a sole proprietor to report the finances of the firm

A) Schedule A
B) Schedule B
C) Schedule C
D) Schedule D

Question 30

A partnership is a ______association of two or more people who make a _____decision to co-own a business together

A) Involuntary, conscious
B) Voluntary, conscious
C) Voluntary, subconscious
D) Involuntary, subconscious

Question 31

The general partners of a limited partnership have ________liability for the debt, and any limited partners have _____ liability that may not exceed their capital contribution to the business

A) Limited, limited
B) Unlimited, limited
C) Unlimited, unlimited
D) Control, unlimited

Question 32

Which of the following is NOT included in the articles of copartnership?

A) Duties and responsibilities of the partners
B) The preferred approach to resolve disputes
C) Steps that need to be taken to dissolve the partnership
D) Lifestyle of each partner

Question 33

Which of the following is a drawback of partnerships?

A) Help raise more funds
B) Pool ideas from multiple people
C) Partners share workload
D) Limited autonomy

Question 34

What is true about a Corporation?

A) It is chartered by the state in which it is headquartered
B) It dissolves when ownership changes
C) Income and expenses are filed with the owner's personal income tax return
D) In the eyes of the law, a corporation and owner are the same

Question 35

Which of the following statements is NOT true?

A) The traditional form of the corporation is called a C-Corporation (C-Corp)
B) The income and losses of S-corporation (S-Corps) pass through to the tax returns of its owners and are then taxed at the individual rates
C) A benefit corporation (benefit corp) is a tax exempt nonprofit corporation
D) A Limited Liability Company (LLC) can choose whether to be taxed as a partnership or as a corporation

Question 36

What criterion must be met for a corporation to qualify for legal status as an S-Corp?

A) Must have partnerships
B) Shareholders must own more than one class of stock
C) Must have no more than 100 shareholders
D) Shareholders need not be US citizens or legal residents

Question 37

Owners of a Limited Liability Company (LLC) enter into an _______specifying their rights and responsibilities

A) Schedule A
B) Operating agreement
C) Articles of copartnership
D) Articles of Incorporation

Question 38

In ______the buyer gets part ownership in an asset, but with _________the buyer gets only part use of the asset

A) Fractional ownership, timeshares
B) Timeshares, fractional ownership
C) S-corp, B-corp
D) Proprietorship, partnership

Question 39

Which of the following contracts are considered void?

A) Contracts signed by an intoxicated person
B) Contracts signed by a minor
C) Contracts signed by an individual with diminished mental capacity
D) All of the above

Question 40

A ________is a legal contract that stipulates that one party will not hold another party liable for risk (often physical risk) or damage

A) Non-compete contract
B) Specialty contract
C) Standard contract
D) Hold Harmless Agreement

Question 41

_______contracts involve one party promising not to be in a situation that would put them into direct competition with the other party

A) Non-compete contract
B) Specialty contract
C) Standard contract
D) Hold Harmless Agreement

Question 42

_________clause relieves one party from responsibility for damages with things that relate to the personal property, possessions, of the other party

A) Confidential
B) Exculpatory
C) Non-compete
D) Uniform disclosure

Question 43

Any identification used to delineate and promote a certain product is a ______

A) Copyright
B) Patent
C) Trademark
D) Trade secret

Question 44

Copyright protection for "work for hire" bought from the creator, lasts for

A) 95 years from first publication
B) 120 years after original creation or 95 years from first publication, whichever is earlier
C) 120 years after original creation
D) Creator's life plus seventy years

Question 45

For patents in the U.S., applicants have _____year from the time the idea is disclosed to others to apply for a patent

A) Three
B) One
C) Five
D) Ten

Question 46

A _______pertains to the look of an invention and the parts that are essential to the design

A) Utility patent
B) Design patent
C) Plant patent
D) None of the above

Question 47

Patents are valid for _____ years from the date of filing an application

A) Three
B) One
C) Twenty
D) Ten

Question 48

Design patents last only _______ years from application filing

A) 14
B) 5
C) 2
D) 75

Question 49

Small Business Reorganization Act of 2019 allows applicants to file for Chapter 11 bankruptcy without having a _______approved by _______

A) Reorganization plan, creditors
B) Liquidity, creditors
C) Liquidity, debtors
D) Reorganization plan, debtors

Question 50

Chapter 11 bankruptcy is for firms who want to turn things around through __________, whereas Chapter 13 bankruptcy is for individuals, including small business owners, with _______who want to adjust their debt repayment

A) Reorganization, regular income
B) Regular income, liquidity
C) Regular income, reorganization
D) Liquidity, reorganization