LGS 200 - Exam 3

What are the main 2 disadvantages to sole proprietorships?

- personal liability for debts - limited capital (many people unable to put up money)

Because bonds do not represent debt, they need never be repaid. true or false

False

When the owner of a sole proprietorship dies, the business automatically transfers to family members or other heirs rather than being dissolved. true or false

False

Dissociation terminates some of the rights of the dissociated partner, requires the firm to buy that dissociated partner's interest, and alters the parties' liability to third parties. true or false

True

True/False. If a member of a limited liability company dissociates from the firm in violation of the operating agreement, the member can be held liable for any loss to the business resulting from the withdrawal.

True

true/false a shareholder's right to transfer their shares to another party can be subject to restrictions set out in the bylaws or a shareholder agreement.

True

Erin, a shareholder of Finance Inc., demands the right to inspect corporate records to determine whether management has engaged in self-dealing that impacts the company. The firm refuses the request. On Erin's challenge, a court is most likely to hold that her request constitutes -harassment -unreasonable access to trade secrets and other confidential info. -a proper purpose -potential abuse

a proper purpose

Ensure Care LLC's owners are Avery and Aaron. As a limited liability company, Ensure Care enters into contracts. -as an aggregate of its owners. -only through its owners. -only in conjunction with its owners. -as a legal entity apart from its owners.

as a legal entity apart from its owners

A de jure corporation is one that is formed to accomplish a single purpose within a limited time. true or false

false

To be a partnership, there must be a formal written agreement in place between both parties. true or false

false

true/false. In a limited partnership, every partner has full responsibility for the management of the partnership and its obligations

false

true/false. to pierce the corporate veil is to disregard the corporate entity and hold the directors liable for a corporate obligation.

false

Instead of issuing securities, Artificial Intelligence Inc. pursues other sources of funds. To obtain venture capital financing, the firm will most likely

give up a share of its ownership.

Elliott is the sole proprietor of On Your Mark, a game subscription service. As a sole proprietor, on the business's profits, Elliott pays

only personal income taxes

Rodrigo is a director of STEM Inc. As a director, with respect to the corporation, Rodrigo is expected to use -prolonged business judgement -prudent business judgement -pluperfect business judgment -perfect business judgment

prudent business judgment

An S corporation avoids taxes at

the corporate level.

Java and Juice Inc. offers entrepreneurs the opportunity to operate a franchise under the Java and Juice trade name as a member of a group of dealers that engage in retail beverage sales. To prospective franchisees, Java and Juice must disclose

the range of goods and services included, the value of the franchise, and the estimated profitability of the franchise.

Juan is a limited partner in Port Exports, a limited partnership. By participating in the firm's management, Juan is liable for its obligations -in proportion to the number of partners in the firm. -to no extent -to the extent of his capital contribution to the firm -to the full extent

to the full extent