Deck 35: Forms of Business Organization

Question 1

In Japan,which of the following statements is false regarding limited liability partnerships?

A)In regard to profits,Japan's limited liability partnership law requires that the members manage the business and negotiate among each other to determine how profits and losses should be distributed among individual members.
B)Japan's limited liability partnership law places restrictions on the distribution of partnership assets.
C)Japan's limited liability partnership law limits the liability of its members by their capital contribution.
D)When members are establishing the rules of the limited liability partnership,Japan's limited liability partnership law requires either the agreement of all members or a majority of at least two-thirds of the members.
E)The limited liability partnership has been recognized in Japan since the 1950s.

Answer 1

E
Explanation: A)The limited liability partnership was not introduced in Japan until 2005.
B)The limited liability partnership was not introduced in Japan until 2005.
C)The limited liability partnership was not introduced in Japan until 2005.
D)The limited liability partnership was not introduced in Japan until 2005.
E)The limited liability partnership was not introduced in Japan until 2005.

Question 2

A corporation can raise capital by issuing stock.

Answer 2

True

Question 3

When a person decides to go into business on his or her own without further formality,what do they form?

A)Sole proprietorship
B)Single entity
C)Sole entrepreneurship
D)Individual entity
E)Single entrepreneurship

Answer 3

A
Explanation: A)If you decide to go into business on your own,you are creating a sole
proprietorship.
B)If you decide to go into business on your own,you are creating a sole proprietorship.
C)If you decide to go into business on your own,you are creating a sole proprietorship.
D)If you decide to go into business on your own,you are creating a sole proprietorship.
E)If you decide to go into business on your own,you are creating a sole proprietorship.

Question 4

A sole proprietor is considered a separate legal entity.

Question 5

A syndicate is a type of partnership agreement in which company members hold transferable shares while the company's goods are held in the partners' names.

Question 6

A limited partnership is usually not affected by the death of a limited partner.

Question 7

Which of the following statements is false regarding a sole proprietorship?

A)A sole proprietorship requires few legal formalities.
B)A sole proprietor has complete control of the management of the business.
C)The sole proprietor keeps all the profits from the business.
D)A sole proprietor is not personally liable for obligations of the business.
E)Profits are taxed as the personal income of the sole proprietor.

Question 8

A limited partnership consists of limited partners,but not general partners.

Question 9

A partnership in which the partners share management responsibilities equally,but some partners are limited in regards to the amount of profit distribution to which they are entitled is an example of a limited partnership.

Question 10

Shareholders elect the members of the board of directors of a corporation.

Question 11

An S corporation cannot have more than 75 shareholders.

Question 12

A franchisee is the owner of a trade name or trademark who is a party to an arrangement,whereby another party sells goods or services under the trade name or trademark.

Question 13

A limited liability company is incorporated in the state in which it does business.

Question 14

What is the most popular form of business ownership in the U.S.?

A)Limited liability company
B)Limited liability partnership
C)Sole proprietorship
D)Limited partnership
E)Corporation

Question 15

Cooperatives must be incorporated.

Question 16

Shareholders hire the officers of a corporation.

Question 17

When one of the members dies,a joint venture is not automatically terminated.

Question 18

An LLC is considered a citizen of every state in which its members reside for purposes of jurisdiction.

Question 19

Which of the following is a voluntary association between two or more persons who co-own a business for a profit?

A)Partnership
B)Joint entity
C)Joint proprietorship
D)Joint corporation
E)Co-owned business

Question 20

A limited partnership and a limited liability partnership refer to the same type of business organization.

Question 21

In Mary Kay Inc. ,v.Janet Isbell,the case in the text involving whether the defendant's franchise was wrongfully terminated,what was the result?

A)That under federal law,no franchise existed.
B)That under state law a franchise existed;but that under applicable law,the franchise was not wrongfully terminated.
C)That under federal law a franchise existed;but that under applicable law,the franchise was not wrongfully terminated.
D)That under state law a franchise existed that was wrongfully terminated.
E)That under state law,no franchise existed.

Question 22

Who is responsible for running the day-to-day business of a corporation?

A)Administrators
B)Members of the board of directors
C)Shareholders
D)Investors
E)Officers

Question 23

What is the correct term for an organization formed by individuals who usually pool their resources to market products?

A)A cooperative
B)A consortium
C)A corporation
D)An enterprise
E)A universe

Question 24

Which of the following statements is false regarding a general partnership?

A)It is easy to create.
B)The partners are considered agents of the partnership.
C)Business losses can be deducted from taxes.
D)Income of the business is personal income.
E)In most cases partners do not have personal liability for losses.

Question 25

Who is responsible for managing the business of a corporation?

A)Investors
B)Shareholders
C)Administrators
D)Officers
E)Members of the board of directors

Question 26

Which corporation can avoid double taxation,assuming all requirements are met?

A)The S corporation.
B)The D corporation.
C)The F corporation.
D)The C corporation.
E)A corporation cannot avoid double taxation.

Question 27

Which statement is true regarding S corporations?

A)They may be formed under federal law.
B)They are considered partnerships yet taxed like corporations as long as they follow regulations.
C)Shareholders do not report profit on their personal income tax forms.
D)They cannot have more than 80 shareholders.
E)Income is taxed only when distributed to the shareholders,who must not report the income on their personal income tax forms.

Question 28

In which form of organization may investors share in profits but not in management responsibilities while avoiding personal liability?

A)General partnership
B)Limited liability partnership
C)Limited partnership
D)Limited liability company
E)There is no such entity

Question 29

What was the result in Patterson v.Dominos' Pizza,LLC,the case in the text addressing whether a franchisor can be held vicariously liable by a franchisee's employee for sexual harassment,retaliation,and tort claims?

A)The franchisor was vicariously liable for sexual harassment by the franchisee because it was the plaintiff's employer.
B)The franchisor failed to remedy sexual harassment by the franchisee,and thus was vicariously liable.
C)The franchisor was not vicariously liable for sexual harassment by the franchisee because it was not the plaintiff's employer.
D)The case was remanded to the trial court to determine whether the franchisor stands in an employment or agency position in relation to the franchisee and its employees,in order to determine if the plaintiff-employee can pursue her claims against the franchisor.
E)The franchise agreement governed whether or not the franchisor was vicariously liable for sexual harassment by the franchisee.

Question 30

Which of the following partnerships is distinguishable from other forms of partnership because the partners' liability for professional malpractice is limited to the partnership?

A)Limited liability partnership
B)Loss limiting partnership
C)Professional partnership
D)Limited partnership
E)General partnership

Question 31

Which of the following is a partnership agreement in which company members hold transferable shares,while all the goods of the company are held in the names of the partners?

A)A joint partnership
B)A collusive partnership
C)A collusive corporation
D)A joint stock company
E)A joint corporation

Question 32

Which of the following offers the tax advantages of a partnership and the liability advantages similar to a corporation,while also allowing for unlimited shareholders?

A)A joint partnership
B)A limited partnership
C)A limited liability company
D)A corporate partnership
E)A cooperative

Question 33

Which of the following statements is false regarding limited liability companies?

A)Owners of an LLC are referred to as incorporators.
B)Limited liability companies have the limited liability of corporations yet may be taxed like partnerships.
C)Members need not be citizens of the U.S.
D)For purposes of jurisdiction,an LLC is considered a citizen of every state in which its members reside.
E)A limited liability company is formed by filing articles of organization in the state in which members want to establish their LLC.

Question 34

Which of the following is not a type of partnership?

A)Cooperative
B)Limited liability partnerships
C)Limited partnerships
D)Limited liability company
E)General partnerships

Question 35

Which of the following statements is false regarding a limited partnership?

A)The partnership must use the word "limited" in its title.
B)If a limited partner dies,the limited partnership is usually unaffected.
C)There must be at least one general partner.
D)There must be at least two limited partners.
E)The parties must file a certificate of partnership with a state office to create it.

Question 36

From which of the following countries did Mexico adopt the limited liability company model?

A)Germany
B)Italy
C)Canada
D)The United States
E)Spain

Question 37

Which statement is true regarding corporations?

A)A corporation may not be sued.
B)A corporation is created according to federal law.
C)A corporation is not a separate legal entity.
D)The corporation must pay taxes on profits,and shareholders must pay taxes on dividends they receive from the corporation.
E)Shareholders may typically be held liable for debts of the corporation.

Question 38

What was the result in Meyer v.Christie,the case in the text involving whether an agreement to enter into a joint venture existed?

A)That no joint venture existed because there was evidence contrary to the intent to form a joint venture.
B)That while a joint venture existed,no damages were found.
C)That a joint venture existed with no prohibition against damages.
D)That the evidence showed only an anticipatory agreement to form a joint venture in the future,not the actual formation of a joint venture.
E)That any alleged joint venture agreement was unenforceable under the statute of frauds because it was premised upon an unenforceable oral agreement to purchase and transfer land.

Question 39

In the absence of an express agreement,which act governs partnerships in most states?

A)The Joint Partnership Act
B)The Uniform Partnership Act
C)The Uniform Joint Agreement Act
D)The Joint Agreement Act
E)The Associated Partnership Act

Question 40

What is the correct term for the investor-owners of a corporation?

A)Shareholders
B)Limited partners
C)Profit owners
D)Profit and loss owners
E)Approved investors

Question 41

[Tutoring Concerns] André and Sasha want to go into business together and plan on offering a tutoring service to high school and college students.André proposes that they share control of the business and split profits equally and not bother with a written agreement.Sasha,however,is concerned about being able to pay their debts,since they will have to rent tutoring space,and purchase computers and supplies.She is also concerned about parents and students who may sue if their test scores do not improve.She tells André that she just bought a new boat and car,and that she does not want her assets to be in jeopardy.She tells André that they should form a corporation to shield their personal assets.André,however,tells Sasha that their personal assets are not in danger with his proposal because they are a business and that,furthermore,forming a corporation would result in a tax being imposed twice.
What type of arrangement did André propose when he suggested that they share control of the business and split profits equally,not bothering with a written agreement?

A)A corporation
B)A joint sole proprietorship
C)A partnership
D)A limited partnership
E)An S corporation

Question 42

In which of the following does the franchisor provide the franchisee with the formula or necessary ingredient to manufacture a product?

A)Distributorship
B)Acknowledged standards operation
C)Chain-style business operation
D)Approved business franchise
E)Manufacturing arrangement

Question 43

Which of the following statements is false regarding cooperatives?

A)Unincorporated cooperatives are treated like partnerships.
B)A cooperative is usually formed to market products.
C)In unincorporated cooperatives,members share joint liability for the cooperative's actions.
D)Members of incorporated cooperatives enjoy limited liability just as do the shareholders of a corporation.
E)Cooperatives are usually formed as syndicates.

Question 44

Which of the following statements is true regarding joint ventures?

A)Participants in a joint venture usually share profits equally,but share losses based on the percentage of contribution.
B)Courts frequently apply sole proprietorship law to joint ventures.
C)Participants in a joint venture usually share losses equally,but share profits based on the percentage of contribution.
D)The joint venture is not automatically terminated when one of the members dies.
E)A joint venture requires the filing of a formal agreement with the state.

Question 45

Syndicates are usually considered a type of ________,thus they are almost always governed by ________ law.

A)Joint stock company;partnership
B)Business trust;corporate
C)Cooperative;corporate
D)Joint venture;partnership
E)Limited liability company;corporate

Question 46

Which of the following establishes how a franchise agreement will be terminated?

A)The franchise agreement
B)The Franchise Wrap-Up Act
C)The Franchisor-Franchisee Protection Act
D)The Franchise Termination Act
E)The Franchisee Protection Act

Question 47

Which of the following would be an appropriate form of business organization for Daria and her parents,such that her parents could invest but not participate in management?

A)Managed partnership
B)Limited partnership
C)Combined partnership
D)General partnership
E)Family-Based partnership

Question 48

[Daria's Bakery] Daria decided to open her own bakery.She decided she did not need a lawyer to advise her on different forms of ownership.Unfortunately,Daria had not paid attention in business law class.She proceeded to simply open her business called Daria's Bakery.Eli told Daria that he wanted to order some cookies for his girlfriend,Kirsten,but that Kirsten had allergies to peanuts.Daria told him not to worry because she would make up a special batch just for him.Daria had hired some assistants because she was so busy.She told an assistant,Kate,to make up several batches of cookies for different customers including Eli and told her to leave out the peanuts in Eli's batch because of the allergy.Kate,however,forgot about the peanut allergy and proceeded to make Eli's cookies with peanuts.Eli picked up the cookies and gave one to Kirsten in the car.Kirsten became violently ill,vomited in Eli's car,and had to have her stomach pumped.Eli and Kirsten sought recovery from Daria who told them that Kirsten's doctor bill and Eli's car cleaning bill were business debts,that the business was new and not making any money at the moment,and that she had no personal liability.Following the incident involving Eli and Kirsten,Daria discussed her problems with the bakery with her parents.Daria's parents would like to invest in her business and share in any profits,but they do not want to share in the management responsibilities.
Daria initially set up which type of business?

A)An individual proprietorship
B)A franchise
C)An S corporation
D)A general company
E)A sole proprietorship

Question 49

A business that exists because of an arrangement between the owner of a trade name or trademark and a person who sells goods or services under the trade name or trademark is known as an) ________.

A)Franchise
B)Joint partnership
C)Approved arrangement
D)Consensual seller
E)Joint venture

Question 50

Which of the following is a group that comes together for the explicit purpose of financing a specific large project?

A)A franchise
B)An enterprise
C)A joint venture
D)A business trust
E)A syndicate

Question 51

In China,which of the following is defined as "an organization which possesses civil legal capacity for civil acts and which,according to the law,independently enjoys civil rights and assumes civil obligations"?

A)Legal person
B)Public entity
C)Public organization
D)Civil organization
E)Legal corporation

Question 52

Which of the following is true regarding André's assertion regarding taxes?

A)André is correct but only because his proposal does not involve a writing and the filing of paperwork with the secretary of their state.
B)André is incorrect but only because the law involving taxation of corporations does not apply until there are at least 75 shareholders.
C)André is correct insofar as the corporation would be required to pay taxes on its profits,and the shareholders would also be required to pay taxes on dividends.
D)André is incorrect because all businesses are taxed in the same manner.
E)André is incorrect but only because the law involving taxation of corporations does not apply until there are at least 10 shareholders.

Question 53

Which of the following is a business organization governed by a group of trustees who operate the trust for the beneficiaries?

A)A business trust
B)A syndicate
C)An E corporation
D)A joint enterprise
E)An S corporation

Question 54

In which of the following does the franchise operate under the franchisor's business name and act subject to the franchisor's standards and methods of business operation?

A)Manufacturing arrangement
B)Distributorship
C)Approved business franchise
D)Acknowledged standards operation
E)Chain-style business operation

Question 55

Which of the following statements is false regarding franchises?

A)The franchisor has the legal authority to ensure that the franchisee maintains the quality of goods and services associated with the franchise.
B)The UCC does not apply in the realm of disputes between franchisors and franchisees.
C)If a franchisor exercises too much authority in the day-to-day affairs of the franchisee's business,the franchisor could be held liable for the torts of the franchisee's employees.
D)A franchise is a contractual relationship between the franchisor and the franchisee.
E)The franchisor can set sales quotas and record-keeping requirements.

Question 56

Which of the following is a relationship between two or more persons or corporations created for a specific business undertaking?

A)A franchise
B)A business trust
C)A syndicate
D)A joint venture
E)An enterprise

Question 57

Which kind of organization would likely be formed by farmers who want to pool certain crops to ensure that they obtain a high market price for their crops?

A)A business trust
B)A syndicate
C)A cooperative
D)A joint stock company
E)A joint venture

Question 58

Is André correct in his assertion that by sharing control of the business and splitting profits equally there could be no personal liability for debts?

A)Yes,because so long as they have nothing in writing,their arrangement will be considered a joint venture.
B)Yes,he is correct so long as they do not reach an agreement in writing.
C)No,he is incorrect.
D)Yes,so long as they sign no contracts by which they agree to be personally liable.
E)Yes,because they will be considered a partnership regardless of whether any agreement is in writing.

Question 59

Which of the following are franchises in which the franchisor manufactures a product and licenses a dealer to sell the product in an exclusive territory?

A)Manufacturing arrangement
B)Chain-style business operation
C)Approved business franchise
D)Acknowledged standards operation
E)Distributorship

Question 60

Which of the following is a true statement regarding Daria's statement that she had no personal liability?

A)She was incorrect.
B)She was correct.
C)She was correct only if she can establish that she has at least 5 employees.
D)She was incorrect unless she signed an agreement with a financial institution in order to get a loan for the business and agreed in the document that she would not accept personal liability for any losses.
E)She was correct only if she can establish that she has paid all her business taxes on time.

Question 61

[Heart surgery invention] Winston and Noe patented a mechanism that will change open heart surgery forever.They are setting up a business to produce and sell their invention to hospitals and will take advantage of Noe's non-U.S.citizenship to help with sales in international markets.They hire Lenita,a corporate lawyer,to assist in setting up their business.Winston's largest concern is taxes.Noe,on the other hand,doesn't want to bother keeping corporate minutes and having board meetings as he is too busy.Both are concerned about being sued personally for products liability.
Which of the following business organizations would best address Winston and Noe's concerns?

A)General Partnership,as it is only taxed once,and has no requirement to hold meetings or follow corporate formalities.
B)S Corporation or Corporation
C)LLC,because it is not double taxed,members are not required to follow corporate formalities or hold annual meetings,and members have only limited liability.
D)Corporation,because shareholders are not double taxed,are not required to follow corporate formalities,and are generally shielded from liability.
E)S Corporation,because shareholders are not double taxed,are not required to follow corporate formalities,and are generally shielded from liability.

Question 62

Winston tells Lenita that he prefers to form an S corporation because he does not want to attach "LLC" to the name of the company.Lenita responds that the option of an S corporation is not available for their situation.Is she correct?

A)No,because only one owner need be a U.S.citizenship for purposes of forming an S corporation.
B)No,because the owners of an S corporation are not required to be U.S.citizens.
C)Yes,because all the owners are not U.S.citizens and they do not have the appropriate number of shareholders for an S corporation.
D)Yes,because all the owners are not U.S.citizens.
E)Yes,because they do not have the appropriate number of shareholders for an S corporation.

Question 63

[R&R Landscaping,LLC] R&R Landscaping,LLC,is registered as a limited liability company in Illinois.R&R provides corporate landscape design and maintenance.During a large corporate project near Chicago,the driver of R&R's bulldozer lost control,went into oncoming traffic,and caused injuries to Viktor.Viktor wants to file a lawsuit and,after research,learns that R&R is owned by Rohan,an Illinois resident,and Roland,an Indiana resident,and that R&R filed articles of organization in Illinois and a certificate of authority in Indiana.
In which states)can Viktor file suit against R&R?

A)Only Illinois,because that is that state where the LLC's articles of organization are filed.
B)Only Illinois,because that is the state of incorporation.
C)Either Indiana or Illinois,which are the states in which the LLC's members reside.
D)Either Indiana or Illinois,as long as the proper documentation was filed in those states.
E)Only Illinois,because that is the state of registration.

Question 64

Which of the following statements is true about cooperatives?

A)Courts never treat cooperatives like a partnership.
B)Like shareholders of a corporation,members of incorporated cooperatives enjoy limited liability.
C)Cooperatives may be incorporated or unincorporated,however,in either case,liability for its members is the same.
D)Unincorporated cooperatives are treated like limited liability companies.
E)Cooperatives are not incorporated.

Question 65

Under which of the following types of business organization is the ownership transferable to another person?

A)Limited liability company and corporation,but not sole proprietorship or general partnership.
B)General partnership,limited liability company,and corporation,but not sole proprietorship.
C)Corporation and general partnership,but not sole proprietorship nor limited liability company.
D)Corporation,but not sole proprietorship,general partnership,nor limited liability company.
E)Sole proprietorship,general partnership,limited liability company,and corporation.

Question 66

Which types of business organizations are terminated upon death of the owners?

A)Sole proprietorships and partnerships,but not corporations.
B)Sole proprietorships and corporations,but not partnerships.
C)Sole proprietorships,partnerships,and corporations continue to exist after the death of any owner.
D)Sole proprietorships,partnerships,and corporations.
E)Corporations and partnerships,but not sole proprietorships.

Question 67

Which of the following is true regarding André's and Sasha's quest to find the best form of business organization?

A)A double sole proprietorship avoids corporate double taxation and also shields assets of the owners from tort claims of third parties although creditors may reach the personal assets of the owners.
B)An unincorporated cooperative combines the tax advantages of a partnership with the limited liability of a corporation.
C)A joint venture is a type of undertaking involving joint stock which is treated as a corporation in regard to double taxation and limited liability.
D)A limited liability company combines the tax advantages of a partnership with the limited liability of a corporation.
E)An S corporation provides the tax advantages of a partnership but does not avoid personal liability for shareholders.

Question 68

Which of the following statements is true about a joint venture?

A)A joint venture is automatically terminated when one member dies.
B)A joint venture is similar to a partnership as they are usually both created for making and selling a single product.
C)Courts frequently apply partnership law to joint ventures.
D)Members of a joint venture are agents of the other members.
E)Although a formal agreement is not necessary for a partnership,it is necessary for a joint venture.

Question 69

Elias and his rich friends want to purchase a professional baseball team and need to raise a large amount of money in a short time.Which of the following forms of business organization is often used in Elias' situation?

A)Syndicate.
B)Cooperative.
C)Sole proprietorship.
D)Limited Liability Partnership.
E)Joint stock company.

Question 70

Which of the following statements is true regarding Rashi's inspections of franchisees' kitchens?

A)Franchise law prohibits such inspections because a franchisee is seen as a separate corporation.
B)Rashi had the right to do so only if she can establish the existence of customer complaints.
C)Franchise law prohibits such inspections because a franchisee is seen as a separate partnership.
D)Rashi had the right to do so only if workers' compensation claims had been filed against the franchisees involved.
E)Rashi had the right to inspect the kitchens.

Question 71

Which of the following statements is correct about the requirements to form a limited liability company?

A)Articles of organization must be filed in the state in which members want to establish their LLC,but the LLC need not register in every additional state in which it will do business.
B)Members must execute an operating agreement,and the LLC must register in every additional state in which it will do business.
C)Members must execute an operating agreement,articles of organization must be filed in the state in which members want to establish their LLC,and the LLC must register in every additional state in which it will do business.
D)Members must execute an operating agreement,and articles of organization must be filed in the state in which members want to establish their LLC.
E)Articles of organization must be filed in the state in which members want to establish their LLC,and the LLC must register in every additional state in which it will do business.

Question 72

Which of the following statements is true about taxes in a limited partnership?

A)Both limited partners and general partners are double taxed.
B)Both limited partners and general partners pay taxes on their share of the profit.
C)Both limited partners and general partners are double taxed,however,the amount of tax liability by limited partners is capped.
D)Limited partners are not double taxed,but general partners are.
E)General partners,but not limited partners,pay taxes for profits of the partnership.

Question 73

What type of agreement do owners of a limited liability company usually create when establishing their organization?

A)Shareholders Agreement
B)Partnership Agreement
C)Operating Agreement
D)Oral Agreement
E)Member Contract

Question 74

Will Rashi likely be held liable to Jonah?

A)Yes,because the cookies had her name on them.
B)Yes,but only if Lola is insolvent.
C)No,because she was a franchisor.
D)Yes,but only if Lola has officially filed for bankruptcy protection.
E)It is unclear and depends on whether she exercised too much authority in the day-to-day affairs of Lola's business.

Question 75

Winston wants to have an office in California and one in Atlanta.Lenita tells Winston that,if they form an LLC,they only need to file paperwork in one of those states.Is she correct?

A)Yes,the state in which she registers will send copies to all other states in which the business intends to operate.
B)Yes,by law,an LLC can only be registered in one state.
C)No,LLCs usually need to register in every state in which they intend to operate.
D)No,like a partnership,one of the advantages of an LLC is that they do need to file formal documents with the state in order to operate.
E)Yes,an LLC only needs to file documents in one state,as there is now an online system that covers all states.

Question 76

Which of the following statements is correct about the requirements of an LLP?

A)The business name must include the phrase Limited Liability Partnership or an abbreviation of the phrase,and the parties must file a form with the secretary of the state.
B)The parties must execute a Partnership Agreement identifying itself with the phrase Limited Liability Partnership or an abbreviation of the phrase,and the parties must file a form with the secretary of the state.
C)The business name must include the phrase Limited Liability Partnership or an abbreviation of the phrase,and the parties must execute a Partnership Agreement.
D)The business name must include the phrase Limited Liability Partnership or an abbreviation of the phrase,the parties must execute a Partnership Agreement,and the parties must file a form with the secretary of the state.
E)The parties only need to file a form with the secretary of the state.

Question 77

Kendra and Amelia operate an art gallery,owned as a partnership.Kendra disappeared.A few days later,Amelia learned that Kendra embezzled $75,000 of government grant money through the company.Is Amelia responsible for the $75,000?

A)Yes,because Amelia and Kendra are partners.
B)Yes,but only if Amelia was aware of the embezzlement.
C)No,because the embezzlement was done by Kendra.
D)Yes,but only to the extent of Amelia's investment into the partnership.
E)No,because partners are not responsible for the wrongful acts of other partners.

Question 78

[Cookie Problems] Rashi makes great chocolate chip cookies and sells them in her café called Rashi's Famous Cookies.Some of her friends have expressed interest in selling her cookies.They want to use her name and identify the cookies as Rashi's Famous Cookies.Seeing a business opportunity,Rashi agrees to bake the cookies and provide them frozen to her friends who will open other cafés under her café's name.Rashi strictly controls all packaging and sales.She also frequently inspects kitchens used by the sellers,pursuant to her agreements with them.Lola,one of Rashi's friends who entered into an agreement with Rashi to open a café and sell the cookies,was not being careful and negligently put a harmful ingredient into the cookie dough resulting in a customer,Jonah,becoming ill.Jonah threatens to sue both Lola and Rashi.Rashi is so exasperated that she cancels all the franchise contracts.Although the franchise agreements provide that,as long as requirements are met,the franchise agreements will continue for a period of two years,Rashi takes the position that the cookies involve a personal service using a trade secret,and that she cannot be held liable to her franchisees for discontinuation of the franchises.
What type of arrangement did Rashi make with her friends?

A)A franchise that was a manufacturing agreement.
B)A joint venture.
C)A joint partnership.
D)A franchise that was a distributorship.
E)A franchise that was a chain-style business operation.

Question 79

What is the term used for the process under which an LLC must register in every additional state in which it intends to operate?

A)Qualification.
B)Organization.
C)Registration.
D)Incorporation.
E)Approval.

Question 80

Is Rashi correct that she was entitled to cancel all franchise agreements?

A)No,while she was arguably justified in canceling Lola's franchise agreement,she was not justified in canceling other franchise agreements because no breach of the other franchise agreements had occurred.
B)No,she could only cancel all franchises after a judgment was entered against her,and that had not yet occurred.
C)Yes,because a personal service type of franchise was involved,she could cancel all the franchises at will.
D)No,she was not entitled to cancel any franchise agreements.
E)Yes,she can cancel the franchises but only if she can establish that her profits were less than had been expected.