Test 3 CH14-18

A corporation is

an artificial legal person

Brent and Char are limited partners in Dental Center, a limited partnership. In terms of the firm's books and information regarding partnership business, Brent and Char are entitled to

complete access

Carl starts up, and assumes the financial risk of, DataWorks, a new marketing enterprise. As a sole proprietorship, the enterprise must meet legal requirements relating to

intellectual property laws licensing & registration

Auto Company's liabilities exceed its assets. The firm hires Bass, an accountant, to prepare a balance sheet. Through negligent omissions, the sheet shows a net worth. Credit Bank relies on the document to make a loan to Auto. When the firm defaults, the bank files a suit against Bass. Bass is most likely

liable if the accountant knew the bank would rely on the balance sheet.

Accounting LLC is a member-managed limited liability company. Unless the members have agreed otherwise, all decisions with respect to the firm's business are made by

majority vote

Roy is a director of Sales Inc. Sales enters into a contract with TeleCenter Corporation in which Roy has a personal interest. Roy must

make a full disclosure of the conflict of interest

A corporate officer

manages day-to-day operations of the corporation

Data Analytics LLC is a limited liability company. Unless the firm's articles of organization specify otherwise, it will most likely be assumed that the firm is

member-managed

Ben is an accountant whose clients include Capital Inc. Under the Ultramares rule, if Ben is negligent in his work for Capital, he could be liable to the client and

no third party with whom the accountant is not in privity or "near privity."

Bayard organized, and owns and operates, Cypress Tours in the simplest form of business organization. This is

none of these choices

An S corporation avoids taxes at

the corporate level

Daisy is a director of Excavation Corporation. She opposes an offer to merge Excavation with Fill Inc. because she would lose her board position. Daisy is most likely liable for breach of

the duty of loyalty

In most situations, with respect to a limited liability company's debts, the firm's members are shielded from

the loss of their capital investment in the firm

The day-to-day operations of a corporation are overseen by

the officers

With respect to a corporation, a director is

a fiduciary

Most states provide that the minimum number of directors that must be present before the board may transact business is

a majority of the number authorized in the articles or bylaws

A limited liability company that wants to distribute profits to its members could avoid "double taxation" by electing to be taxed as

a partnership

Eton owns Fast Freight Company. He uses the firm's funds to pay his personal expenses, creates Go Trucking Inc. to engage in the same business, transfers Fast Freight's assets to Go Trucking, and petitions Fast Freight into bankruptcy. This most likely warrants

a pierce of the corporate veil

Carmen and Diego are shareholders of Espresso Inc. Carmen's written authorization to Diego to vote her shares at a shareholders' meeting is

a proxy

Bayside Restaurant LLC is a limited liability company. Its sole member is Conrad. For federal income tax purposes, unless the firm indicates otherwise, it will automatically be taxed as

a sole proprietorship

Olivia is a partner in Pacific Trade. In the majority of states, with respect to any partnership obligations that Olivia does not participate in, know about, or ratify, she would be liable for

all of the obligations, jointly & severally

Cal, Dex, and Erin agree to be partners in Fajitas, a food cart outfit, splitting the profits equally. Cal contributes 65 percent of the capital. When Fajitas is dissolved, its liabilities are greater than its assets. The losses are paid by

all of the partners in proportion to their shares of the profits

Limited liability business forms, such as LLCs, LPs, and LLPs, offer tax advantages that are similar to those offered by

an S corporation

"A reasonably competent general practitioner of ordinary skill, experience, and capacity" is the normal standard of performance expected of

an attorney

Bhat and Cho do business as Data Security, a partnership. In most states, for the purposes of collecting judgments and having accounting performed, this firm would be treated as

an independent entity

Nell is considering forms of business organization for Optic Center, a medical eye clinic. An advantage of a limited liability partnership is that, depending on the applicable state statute, partners can avoid personal liability for

any partnership obligation

The number of directors that serve on a corporate board is determined by its

articles of incorporation

Ensure Care LLC's owners are Fez and Guan. As a limited liability company, Ensure Care enters into contracts

as a legal entity apart from its owners

Betsy is a director of ChemCo Inc. Because of this position, she becomes involved in litigation. With respect to the costs, fees, and damages involved, she has a right to

be reimbursed, or indemnified

Global Capital S.A. is a foreign investor. With respect to the operations of a limited liability company in the United States, Global can

become a member

Initiating and negotiating the sale and lease of corporate assets outside the regular course of business is a responsibility of the corporation's

board of directors

Kay and Leo form Metro Delivery Inc. Responsibility for all policymaking decisions related to corporate affairs lies with Metro's

board of directors

Ling owns and operates Metro Delivery Service as a sole proprietorship. When she dies, the business will automatically

dissolve

Start-Up LLC is a limited liability company without a written operating agreement. Among the members, a dispute arises concerning the division of profits. Under most LLC statutes, the profits will be

divided equally among the members

Kathy is a director of Line Production Inc. As a director, with respect to the corporation, Kathy is expected to subordinate

her personal interests to the corporation's welfare

Gwen and Hera do business as G&H Civil Engineers, a partnership. The Uniform Partnership Act governs the firm

in the absence of an express agreement

Obie operates Pizza Palace. Obie hires Qua to take and fill customers' orders at an hourly wage of $15.00, plus tips. Obie and Qua are

not partners, because Qua does not have an ownership interest or management rights in Pizza Palace

Ford is the sole proprietor of Go, a game subscription service. As a sole proprietor, on the business's profits, Ford pays

only personal income taxes

Development LP is a limited partnership that invests in residential real estate projects. Its limited partners include more than 150 sophisticated investors and investment professionals, including Ethan. Ethan loses his limited liability if he

participates in the firm's management

To gain an advantage in a business deal, Masonry LLC engages in fraud. Nicole, a member of Masonry, significantly contributes to the firm's misconduct. For any resulting damages, a court is most likely to hold Nicole

personally liable

Rex forms Shell Company to assume debts that he does not wish to pay. The firm is not intended to make a profit, and Rex does not provide it with sufficient capital. This most likely warrants

piercing Shell's corporate veil

Most likely to appear in the articles of incorporation are the names of the company's initial

registered office and agent

The first step in the incorporation of a business firm is to

select the state of incorporation

Dhani, Ezra, and Finn are the first directors on the board of Global Shipping Corporation. Subsequent directors will be elected by a majority vote of Global's

shareholders

Among the states, the law governing limited liability companies is far from uniform because

state limited liability company statues vary from state to state

An attorney's conduct is governed by rules of professional conduct established by the state in which he or she is licensed, and the Model Rules of Professional Conduct of

the American Bar Association

The primary document needed to incorporate a business is

the articles of incorporation

Guy is a director of Healthcare Corporation. Guy attempts to use his best judgment in guiding corporate management but makes a few honest mistakes. He may be protected from liability for these mistakes by

the business judgement rule

Brad and Carol are partners in Doctors for Children, a medical clinic. Brad's dissociation from the firm results in

the partnership's buyout of Brad's interest in the firm

Bee is an accountant whose clients include Concessions Inc. If Bee is negligent in her work for Concessions, most courts would hold her liable to the client and

third parties who are foreseen users of the work

Dain is a limited partner in Eco Baits, a pest control service organized as a limited partnership, which cannot pay its debts. Dain is liable for the debts

to extent of his capital contribution to the firm

Del owns Everlast Painting, a sole proprietorship. Del's liability is

unlimited