Deck 43: B: Law for Small Business

Question 1

If a new company has only two owners,they do not need a shareholder agreement that defines their relative ownership rights and interests.

Answer 1

False

Question 2

An attorney may be helpful when a business negotiates a franchise agreement.

Answer 2

True

Question 3

A limited liability organization's limited liability may be lost by failure to comply with the rules for a business form.

Answer 3

True

Question 4

Standard-form contracts are available on the Internet,but they should be adapted to the specific circumstances of a transaction.

Question 5

To incorporate,you must first choose a corporate name and file it with the appropriate state office.

Question 6

A business plan describes a company,its products,and its anticipated future performance.

Question 7

There are no benefits to establishing a more formal business arrangement than a sole proprietorship.

Question 8

Promises made to an employee in a contract or a handbook may prevent an employer from firing the employee without fulfilling the promise.

Question 9

Federal immigration laws do not require verifying whether workers are U.S.citizens or are otherwise authorized to work in this country.

Question 10

Factors to consider when choosing a business form include continuity of life.

Question 11

Corporate bylaws are the company's governing rules.

Question 12

Generally,your trademark must be the same as another's mark or so similar that confusion results.

Question 13

One way to raise capital to expand a business is to borrow the funds.

Question 14

A limited liability company's members must be its managers.

Question 15

Companies may require employees who have access to trade secrets to agree in their employment contracts never to divulge those secrets.

Question 16

The duties of a limited liability company's members may not be limited by its operating agreement.

Question 17

A member of a limited liability company must be a natural person.

Question 18

A business entity's limited personal liability obviates the need to obtain insurance for significant business liability risks.

Question 19

Business networks do not help to identify a knowledgeable attorney.

Question 20

The states and the Securities and Exchange Commission jointly created a simplified securities registration process for large businesses.

Question 21

Dallas and Ellyn operate Freestyle Riders,a bicycle shop,as a part?nership.Taxes on the business's income are paid by

A)Dallas and Ellyn.
B)no one.
C)the state or federal government.
D)the business.

Question 22

Reb wants to start a new business enterprise.Shari is an accountant.Reb most likely needs to consult Shari because

A)an accountant can be less expensive than an attorney.
B)bookkeeping errors can provoke litigation.
C)ignorance of the law is a defense against liability.
D)keeping up with laws that govern business conduct is difficult.

Question 23

Bemis is forming Cool Air Company to make and sell a device that removes the heat from working kitchens and other hot rooms.In exchange for legal services to Bemis and his new firm at the start-up stage,an attorney is not likely to accept

A)an equity stake in Cool Air.
B)a promise of Bemis's future legal business.
C)a flat fee or a retainer.
D)a promise to keep the attorney's legal advice confidential.

Question 24

Mabel and Nahim want to start up and incorporate a new business enterprise.The first step in the incorporation process is to

A)choose and file a corporate name with a state office.
B)draft the bylaws to govern the corporation.
C)hold an initial board of directors' meeting.
D)prepare and file articles of incorporation with a state office.

Question 25

Bild-It-Rite Corporation uses independent contractors.Bild-It-Rite can

A)be sued by a contractor for a violation of discrimination laws.
B)exercise little control over how the contractors perform.
C)obtain workers' compensation insurance for the contractors.
D)withhold income taxes from payments to the contractors.

Question 26

Max wants to open Max's Medical Equipment Supply with the assistance of an attorney.To find an attorney,Max should most likely

A)ask a court to appoint a lawyer to assist him.
B)advertise in the "Help Wanted" section of a newspaper or database.
C)review listings in the Martindale-Hubbell Law Directory.
D)audit classes at a local law school.

Question 27

Demi operates Eyes Wide Open,a small-business optician enterprise.To raise capital,Demi contacts Foster,a venture capitalist.Besides capital,Foster will most likely

A)assist in the drafting of a business plan.
B)decline a proportion of future profits.
C)offer assistance with respect to marketing.
D)refrain from demanding operational control.

Question 28

National Standard Company (NSC)products are identified with a trade?mark.For several years,NSC al?lows others to use the mark without permission and without protest.This may be deemed,on NSC's part,

A)abandonment of the mark.
B)anticompetitive conduct.
C)liability for misleading consumers.
D)liability for misleading competitors.

Question 29

Josh and Kya form Longview Associates,a limited part?nership,to invest in real estate.Compared to a sole proprietorship and a general partnership,a limited partnership has limited

A)business purposes.
B)investment opportunities.
C)personal liability.
D)requirements.

Question 30

Stingo operates Tropic Burger Restaurant as a corporation.A customer slips and breaks her ankle in the restaurant and is awarded damages by a court.Those damages must most likely be paid by

A)Stingo.
B)Tropic Burger.
C)the customer.
D)the company that supplies the restaurant's burgers.

Question 31

The five shareholders of Orthopedic Ease,Inc. ,a medical equipment firm,want to prevent each other from sell?ing the shares to third parties without first being given the opportu?nity to buy them.This can be provided for in

A)a shareholder agreement.
B)key-person insurance.
C)a private offering.
D)a public offering.

Question 32

Philo wants to start a new business enterprise.Because it is difficult,if not impossible,to keep up with the many legal rules that govern business conduct,Philo most likely needs to consult

A)an accountant.
B)an attorney.
C)an experienced small-business owner.
D)a partner.

Question 33

Nero opened Oh! Fudge!,a candy store,as a corporation.When doing busi?ness on behalf of the store,to avoid personal liability,Nero should sign contracts

A)as an agent for the corporation.
B)in his individual capacity.
C)as a gourmand.
D)under a false name.

Question 34

Global Tours,a travel agency,is a limited liability company.Global is ex?empt from legal requirements that relate to

A)business name registration.
B)occupational licensing.
C)state tax registration.
D)none of the choices.

Question 35

Quisha operates River Valley Soccer,an athletic equipment shop,as a sole proprietorship.Taxes on the business's income are paid by

A)no one.
B)Quisha.
C)the state or federal government.
D)the business.

Question 36

Klee wants to make and sell a computer operating system under a trade?mark.To obtain the most protection under the law,Klee should choose a mark that is

A)distinctive.
B)similar to an existing mark.
C)the same as an existing mark.
D)non-distinctive.

Question 37

Elan Elite Service Company's offer of shares of stock in itself to anyone who is willing to pay $600 per share is

A)a shareholder agreement.
B)key-person insurance.
C)a private offering.
D)a public offering.

Question 38

Jess and Kaley own and operate Little Tykes,a small-business enterprise.Little Tykes pays taxes on its profits,and Jess and Kaley pay taxes on the profits that are afterwards distributed to them.Little Tykes is

A)a corporation.
B)a limited liability company.
C)a partnership.
D)a sole proprietorship.

Question 39

Quia and Rafi form SA,LLC,a limited liability company,to operate Superior Athletics,a fitness center.Compared to a sole pro?prietorship and a general partnership,a limited liability company has limited

A)business purposes.
B)investment opportunities.
C)personal liability.
D)requirements.

Question 40

Finn wants to incorporate his game store as GameZ,Inc. ,and files the name with the Idaho secretary of state.Filing will protect the name

A)only within Idaho.
B)throughout the Pacific Northwest.
C)throughout the United States.
D)throughout North America.

Question 41

Electro,Inc. ,makes and sells electric bikes,as well as parts and service,to customers in the United States and other countries.Can Electro pre?vent its employees from revealing its customer lists,pricing policies,and other confidential information,if the em?ployees resign to work for a com?petitor or to enter the same business themselves? How?

Question 42

Ben owns Copyshop and wants to sell Copyshop franchises throughout the United States.In doing so,Ben wants to prevent competitors from imitating the distinctive Copyshop logo and thereby misleading consum?ers.How can Ben protect the logo?