Deck 11: The Law of Business Organizations and Bankruptcy

Question 1

The term "securities" is used to describe:

A) a financial interest in a business
B) only shares of stock in a corporation
C) only a partnership interest in a general partnership
D) only a partnership interest in a limited partnership
E) none of the above

Answer 1

A

Question 2

Actual authority of partners to enter contracts on behalf of the partnership

A) means that authority is implied because the conduct of the parties have reasonably led third persons to believe that such authority exists
B) means that other partners have approved the contract
C) always exists for all partners
D) all of the above
E) none of the above

Answer 2

B

Question 3

A sole proprietorship

A) consists of a business owned and operated by one individual
B) is a business form that protects the personal assets of the owner
C) is a business form that requires several formalities
D) is a business form that pays taxes as a business
E) all of the above

Answer 3

A

Question 4

In a limited liability partnership, partners have limited liability as long as they do not participate in the management of the business.

Question 5

Corporations are formed by filing which document with the secretary of state?

A) bylaws
B) articles of incorporation
C) stock permit
D) partnership agreement
E) shareholder agreement

Question 6

In a limited partnership

A) all partners have limited liability
B) only general partners have limited liability
C) only limited partners have limited liability
D) limited partners have no liability
E) no partner has any liability

Question 7

All debts are dischargeable in bankruptcy.

Question 8

A corporation is sometimes called an artificial person.

Question 9

Each partner in a partnership is the agent of the other partners and is responsible for the torts of the other partners if committed in the course and scope of the partnership.

Question 10

Blue Sky laws refer to:

A) federal securities laws
B) state securities laws
C) federal bankruptcy laws
D) state bankruptcy laws
E) none of the above

Question 11

Which of the following factors are considered when one tries to pierce the corporate veil?

A) did the corporation observe corporate formalities such as holding meetings?
B) did the corporation keep separate bank accounts?
C) were corporate funds used for corporate and not personal purposes?
D) was the corporation undercapitalized?
E) all of the above.

Question 12

A limited liability company the individuals who own the company are generally not personally liable for the company debts.

Question 13

Equity securities are:

A) loans taken out by the corporation
B) only owned by shareholders in public corporations
C) only owned by shareholders in close corporations
D) usually in the form of shares of stock for a corporation
E) always regulated by the federal government

Question 14

Exempt assets must be turned over to the Bankruptcy trustee and are used to satisfy the debts of the person filing bankruptcy.
Multiple Choice

Question 15

In a partnership, each of the partners is liable to third parties for debts of the partnership in proportion to his or her ownership interest in the partnership.

Question 16

A non-profit corporation

A) cannot generate any income
B) always has tax exempt status
C) cannot distribute any profit to its members
D) both b and c
E) all of the above

Question 17

The owners of a corporation are known as:

A) officers
B) shareholders
C) directors
D) members
E) none of the above

Question 18

A limited partnership must have at least one general partner.

Question 19

A general partnership always has a managing partner.

Question 20

Bankruptcy is governed primarily by federal law.