ACCT 324 - Exam 2

Neal is aware that Lara is making an agreement on behalf of a principal and also knows that Jonathan is the principal. In this situation, Jonathan is said to be a ________.

disclosed principal

According to RULPA, a limited partnership can be dissolved for what five reasons?

1) Expiration of the term established in the certificate of limited partnership 2) the completion of the objective established in the certificate 3) The unanimous written consent of all partners 4) Withdrawal of the general partner 5) an act of court

According to the UPA, the distribution of liquidated assets must proceed in which order?

1) Payments to creditors of the partnerships 2) Payments of refunds or repayment of loans to partners for loans made to the partnership 3) Payments to partners of the capital they invested 4) payments of profits distributed on the basis of the partnership agreement

When does a partner have a right to an accounting?

1) Whenever the partnership agreement calls for one. 2) Whenever the other partners wrongfully exclude a partner from the partnership or from access to the books. 3) Whenever a partner fails to disclose a profit or a benefit from the partnership thus breaching his or her judiciary duty, 4) Whenever circumstances render an accounting "just and reasonable"

What are the three ways a partnership may be dissolved by acts of a partner?

1) a partner withdraws from a partnership at will 2) a partner withdraws from the partnership according to the partnership agreement 3) a partner is expelled from the partnership according to the partnership agreement

Shareholders have the right to sue the corporation in what three situations?

1) derivative suits 2) direct suits 3) class action suits

What are the three circumstances when an acquiring corporation takes on the selling corporation's liabilities?

1) the contract governing the purchase may expressly or impliedly state the acquiring corporation takes on the selling corporation's liabilities 2) the agreement actually falls between the legal framework of a merger or consolidation 3) the sale occurs under fraudulent circumstances

The secretary of state can compel involuntary dissolution for what five reasons?

1) the corporation's directors have abused their power 2) the corporation's duration as specified in the articles of incorporation has expired 3) the corporation obtained its articles or incorporation fraudulently 4) the corporation did not have a registered agent in the state for 60 days or more 5) the corporation failed to notify the secretary of state that their registered agent had changed within 60 days

What are the five elements a written partnership agreement should include?

1) the names of the parties and the name of the partnership 2) the duration of the partnership 3) the division of profits and losses 4) the division of management duties 5) each parties' capital contribution

What is the difference between unaffiliated and affiliated directors

Affiliated directors have a contract with the corporation

What is a review and listing of all partnership assets and/or profit called?

An accounting

In a general partnership, default occurs when _________.

Any partner stops fulfilling the role of a partner to the business

The _________ is a document providing basic information about the corporation.

Articles of incorporation

What are the 8 ways an agency relationship can be terminated by operation of law?

Death, insanity, bankruptcy, changed circumstances, change in law, impossibility, disloyalty of agent, and war

_________ play the role of decision makers.

Directors

_________ is defined as the change in the relation of the partners caused by any partner's ceasing to be associated with the carrying on, as distinguished from the winding up, of the business.

Dissolution

What are the four forms of authority that support a basis for an agency relationship?

Expressed, implied authority, apparent agency/agency by estoppel, and ratification

What are the 7 ways an agency relationship can be terminated by acts of parties?

Lapse of time, fulfillment of purpose, occurrence of specific event, mutual agreement by the parties, revocation of authority, renunciation by the agent, and agency coupled with an interest

In a consolidation, which corporation(s) continue(s) to exist legally?

Neither of the original corporations

A corporation's shareholders are liable for a corporation's debt to what extent?

Shareholders are liable to the extent of their investment

To create a valid limited partnership, who must sign the certificate of limited partnership?

The general and limited partners must sign the certificate of limited partnership

Under the doctrine of respondeat superior, the principal/employer holds vicarious liability. What is vicarious liability?

Vicarious liability holds the principal liable for any agent/employee caused while working for the principal.

What is a consolidation?

When two or more corporations combine to form an entirely new corporation, with its own legal status

A target corporation may defend itself by having a group within the corporation purchase all the corporation's outstanding stock held by the public. This defense strategy is called _________.

a leveraged buyout

A _________ is a business incorporated in another country.

alien corporation

What does general power of attorney grant?

allows the agent to conduct all business for the principal

A dissenting shareholder has a right to have his/her shares appraised to receive monetary compensation from the corporation for their value. This is referred to as a(n) _________.

appraisal right

Shareholders have the right to inspect records and books only if they _________.

ask in advance and have a proper purpose

A limited partnership is an agreement between _________.

at least one general partner and at least one limited partner

According to the Revised Uniform Limited Partnership Act (RULPA), when the objective established in the certificate is complete, limited partnerships can:

be dissolved

If a principal is partially disclosed, the agent and the principal are both __________.

considered parties to the contract and each may be liable separately from the other.

A(n) _________ corporation has made minor errors in the incorporation process but has met the substantial elements.

de jure

A _________ is a corporation in the particular state in which it is incorporated.

domestic corporation

What does a special power of attorney grant?

expressed authority over specifically outlined acts

A _________ is a corporation in states in which it conducts business but is not incorporated.

foreign corporation

A de facto corporation literally means a corporation _________.

from the fact

An agent who is not paid for his or her services is known as a ________ agent.

gratuitous

An individual who applies to the state for incorporation on behalf of a corporation is called a(n) _________.

incorporator

If a third party is able to establish employee negligence such that the employer is liable, the employer has the right to recover from the employee any damages paid to the third party; such right to recover damages is referred to as the right of ________.

indemnification

A principal has a duty to ________ the agent for any losses the agent incurs in the course of working on behalf of the principal.

indemnify

A _______ is a person who contracts with another to do something for another person but who is not controlled by the other nor subject to the other's right to control with respect to his or her physical conduct in the performance of the undertaking.

independent contractor

Directors who are officers or employees are _________.

inside directors

Directoirs can be classified as _________, _________, _________, and _________.

inside, outside, affiliated, and unaffiliated

A partnership is considered a _________ of the partners such as when partnership debts become the debts of the individual partners.

legal aggregate

The process by which the board of directors converts the corporation's assets into cash and distributes them among the corporation's creditors and shareholders is referred to as _________.

liquidation

The duty of ________ is the generally considered the most important duty an agent owes to a principal.

loyalty

Which of the following is not a requirement for a partnership under the UPA? An association of two or more persons The intent to make a profit Must make a profit As co-owners

must make a profit

Which classification of corporations may earn profits, but d not distribute them to shareholders?

nonprofit

An agent has not breached the duty of ________ if the principal gives unlawful or unethical instructions.

obedience

Directors who are not officers or employees are _________.

outside directors

A _________ corporation is a corporation created by the government to help administer law.

public

What is a reason a shareholder may be held personally liable?

receiving illegal dividends

A court may apply the _________ to find a corporate officer criminally liable regardless of the extent to which the officer took part in any criminal activity.

responsible person doctrine

Under the Uniform Partnership Act (UPA), if the partnership agreement does not establish the division of profits, all partners _________.

share equally in both profits and losses

A(n) _________ main liability is for the extent of their investment when the company loses money.

shareholder's

If an agency contract is for personal services, the agent does not have the right to pursue ________ as a remedy if the principal does not perform as agreed.

specific performance

Agency contracts do not need to be in writing unless an agent has been given power of authority or if the agent will be entering into a contract that the ________ requires to be in writing.

statute of frauds

Partners own the partnership property as _________, which means they own it as a group.

tenants

The aggressor offers target shareholders a price above the current market value of the stock in a _________.

tender offer

What type of termination occurs due to operation of law?

termination due to insanity

In order for a third party to sue an employer for a tort committed by the employer's agent, the third party must establish what?

that the agent did not make a substantial departure from the course of the employer's business

What does durable power of attorney specify?

the agent's authority continues beyond the principal's incapacity

According to the doctrine of respondeat superior, corporations are liable for what?

the torts and crimes committed by their agents during the scope of their employment

After the dissolution of a partnership, what do the remaining partners have the right to?

to continue or end the partnership

If a corporation does not issue physical stock certificates, the shares are considered _________.

uncertifcated

Perhaps the most important factor in determining whether a partnership exists is _________.

whether profits are shared among the partners