LGS EXAM 3
When a new partner joins a previously existing partnership, the new partner is personally liable for: 1. All the debts of the partnership, whenever incurred. 2. Only obligations after becoming partner. 3. Only the debts she agrees to take on upon joining the partnership. 4. Any of the debts of the partnership up to $10,000.
2. Only obligations after becoming partner.
The simplest form of business to establish is a: 1. Limited liability company. 2. Sole proprietorship. 3. Partnership. 4. Corporation.
2. Sole proprietorship.
Owners of the following business associations have limited liability protection (choose 2 answers): 1. General partnerships. 2. Sole proprietorships. 3. Limited liability partnerships. 4. Limited liability companies.
3. Limited liability partnerships. 4. Limited liability companies.
Tala operates Sunshine Event Planning as a sole proprietorship. Lately, Tala has become dissatisfied with her employee, Leon. Leon continually refuses to follow directions, calls in late to work, and generally is not performing up to Tala's standards. Before Tala can fire Leon, she must obtain approval from: 1. The partners of Sunshine Event Planning. 2. The Board of Directors of Sunshine Event Planning. 3. No one. 4. The shareholders of Sunshine Event Planning.
3. No one.
While shopping in your local Wal-Mart store, you slip and fall on a wet spot in the grocery aisle. You break a hip, incur huge medical bills, and miss several weeks at work. You know that Wal-Mart is a huge corporation and that thousands of people own stock in Wal-Mart, so you start thinking about who you can sue to recover for your injuries. What do you think would happen if you tried to sue not only Wal-Mart but also all the people who owned stock in Wal-Mart? 1. Neither Wal-Mart nor the individual stock owners might be held responsible. 2. The individual stock owners might be held responsible. 3. Only Wal-Mart might be held responsible. 4. Both Wal-Mart and the individual stock owners might be held responsible.
3. Only Wal-Mart might be held responsible.
Which of the following rights may a member of a limited liability company (LLC) transfer to a non-member? 1. Voting on matters of business management 2. Participating in management 3. Sharing the company's financial profits 4. Inspecting the records of the LLC
3. Sharing the company's financial profits
A sole proprietorship differs from a partnership in: 1. Documentation required for formation. 2. Liability for debt. 3. The number of owners. 4. How stock is sold.
3. The number of owners.
Which of the following provisions are typically in an operating agreement for a limited liability company (LLC)? Choose 2 answers. 1. How membership interests may be transferred 2. A record of the company's assets and debts 3. Whether the dissociation of a member, such as by death or departure, will trigger dissolution of the LLC 4. The advertising plan for the company
1. How membership interests may be transferred 3. Whether the dissociation of a member, such as by death or departure, will trigger dissolution of the LLC
Lillian applies for a job as the chief financial officer (CFO) of Delco Corporation. Lillian is excited about the opportunity and feels that she has a pretty good chance of getting the position. Just to make sure, Lillian decides to explore the backgrounds of the decision-makers at Delco. If Lillian knows their interests, she thinks that might increase her chances of making a good impression in the final interview. The decision-makers who will decide whether or not Lillian gets the CFO position at Delco Corporation include: 1. The board of directors. 2. The chief executive officer, secretary, and treasurer of Delco Corporation. 3. The shareholders of Delco Corporation. 4. The chief executive officer only.
1. The board of directors.
Which of the following is required in the Articles of Organization for an LLC (choose 2 answers)? 1. The name of the business 2. The attorney's name and address 3. The agent's name and address 4. The principal place of business
1. The name of the business 4. The principal place of business
What is true of the liability for loss or injury caused by the wrongful acts or omissions of the members of limited liability companies (LLCs)? 1. The LLC as an entity cannot be held liable, and members themselves are not personally liable. 2. The LLC as an entity can be held liable, and members themselves are also personally liable. 3. The LLC as an entity can be held liable, but members themselves are not personally liable. 4. The LLC as an entity cannot be held liable, but members themselves are personally liable.
3. The LLC as an entity can be held liable, but members themselves are not personally liable.
The formation of LLCs is governed by: 1. Federal statute. 2. The ULLCA. 3. The laws of the state in which the LLC is created. 4. Private agreements.
3. The laws of the state in which the LLC is created.
In ordinary circumstances, when the corporate veil has not been pierced, a shareholder may be liable for: 1. The actions of the board of directors. 2. A portion of the settlement in a class-action lawsuit. 3. Unpaid amounts on the shares held by that shareholder. 4. A portion of corporate fines for environmental violations.
3. Unpaid amounts on the shares held by that shareholder.
A foreign corporation is: 1. One that was incorporated outside of the United States. 2. One that was incorporated in two or more different states. 3. One that it privately held. 4. One that was incorporated in a different state.
4. One that was incorporated in a different state.
Where should Articles of Incorporation be filed? 1. Articles of Incorporation are not filed. 2. With the county recorder's office 3. With the state 4. With the federal government
3. With the state
Which of the following is a requirement for the initial formation of a corporation? 1. A minute book 2. A board of directors 3. An initial stock offering 4. Articles of Incorporation
4. Articles of Incorporation
Ben and Jerry are partners in an ice cream shop. They both work in the ice cream shop and share profits and expenses equally. Jerry thinks that expanding their ice cream shop to include a soda fountain would attract more customers. Without getting Ben's approval on the deal, Jerry signs a contract with the construction company to begin building the soda fountain. When Ben finds out, he is furious and says that he will not be responsible for payment under the contract. The construction company can enforce the contract against: 1. Jerry only. 2. Neither Ben nor Jerry. 3. Ben only. 4. Both Ben and Jerry.
4. Both Ben and Jerry.
Which statement is true about creating a sole proprietorship? 1. There is a waiting period of 30 days between opening the business and the time a sole proprietorship becomes official. 2. The owner of a sole proprietorship must file an official record of the business name with the secretary of state's office. 3. The members of a sole proprietorship must write and sign an operating agreement. 4. No documentation is required to create a sole proprietorship.
4. No documentation is required to create a sole proprietorship.
In a distributorship: 1. A manufacturer licenses a dealer to sell its product. 2. A franchisor transmits to the franchisee the essential ingredients to make a particular product. 3. Franchisee operates under a franchisor's trade name. 4. Management rights belong to the FTC.
1. A manufacturer licenses a dealer to sell its product.
An operating agreement for a limited liability company: 1. Typically includes provisions about choosing the LLC's management. 2. Must be in writing and signed by all the officers of the company. 3. Is required for the operation of a limited liability company. 4. May not specify how profits are divided.
1. Typically includes provisions about choosing the LLC's management.
Who is liable for contracts entered into on behalf of the corporation before the corporation is formed? 1. The Chief Executive Officer 2. The promoter 3. The corporation 4. No one, because that cannot happen
2. The promoter
Which of the following is a disadvantage of operating as a partnership? 1. Partnerships are taxed at the same rate as corporations. 2. A partnership may not own real or personal property. 3. Partners may suffer financial loss if the partnership is not profitable. 4. A partnership may be formed for only one year at a time and the registration must be renewed annually.
3. Partners may suffer financial loss if the partnership is not profitable.
Limited liability means: 1. Owners are held personally liable for the debts of the business. 2. Owners are personally liable for the debts of the business, but only for the decisions they make. 3. The business cannot be held liable for its own debts. 4. Owners are only liable to the extent of their capital contribution to the business.
4. Owners are only liable to the extent of their capital contribution to the business.
Any partner: 1. May act as an agent who binds the partnership. 2. May encumber the property of the partnership to satisfy personal debt. 3. Is entitled to compensation for their time, skill, and effort. 4. May create a business in direct competition with the partnership.
1. May act as an agent who binds the partnership.
Partners have which of the following duties? 1. Record keeping 2. Fiduciary duties 3. Capital contribution 4. Litigating on behalf of the partnership
1. Record keeping 2. Fiduciary duties 3. Capital contribution
A partnership in which the liability is shared between all of the partners together or one or more individually is called: 1. Dissociation. 2. Joint and several liability. 3. Joint liability. 4. Indemnification.
2. Joint and several liability.
What documents spell out the powers of a corporation? Choose 2 answers. 1. Certificate of corporate power 2. The charter (also called the articles of incorporation) 3. The bylaws 4. De facto documentation
2. The charter (also called the articles of incorporation) 3. The bylaws
Which of the following is a necessary element of the business judgment rule? Choose 2 answer choices. 1. The outcome of the action did not cause financial harm to the corporation. 2. The person acted in good faith. 3. The person acted with the care of an ordinarily prudent person. 4. The person acted with extraordinary skill and care.
2. The person acted in good faith. 3. The person acted with the care of an ordinarily prudent person.
Which of the following is a requirement for the formation of a limited liability company (LLC)? 1. At least three members 2. Articles (or certificate) of organization 3. An initial stock offering 4. An operating agreement
2. Articles (or certificate) of organization
Which of the following are qualities of a non-profit corporation (choose 2 answers)? 1. It provides minimal dividends to company shareholders. 2. Its goal is to earn a profit. 3. It does not provide dividends to shareholders. 4. Its goal is to not earn a profit.
2. Its goal is to earn a profit. 3. It does not provide dividends to shareholders.
Which of the following are TWO disadvantages of a sole proprietorship? 1. Ease of tax filing 2. Limited capital 3. Personal liability for debts 4. Ease of formation
2. Limited capital 3. Personal liability for debts
Most limited liability company (LLC) statutes provide that unless the articles of organization specify otherwise, an LLC is assumed to be managed by: 1. One manager. 2. A board of nine managers. 3. A board of six members and six non-member managers. 4. Its members.
4. Its members.
What is true of the dissolution of a limited liability company (LLC)? Choose 2 answers. 1. A court may order the dissolution of an LLC under certain circumstances, such as the members engaging in illegal conduct. 2. An LLC may only be dissolved by court order. 3. Members of an LLC may stipulate in their operating agreement that certain events will cause dissolution. 4. When a member dissociates, the LLC is automatically dissolved.
1. A court may order the dissolution of an LLC under certain circumstances, such as the members engaging in illegal conduct. 3. Members of an LLC may stipulate in their operating agreement that certain events will cause dissolution.
To meet the standard for the duty of care, a person must: 1. Act in good faith and with the judgment of an ordinarily prudent person. 2. Act in good faith and without a mistake. 3. Be faithful to the corporation. 4. Act in good faith and with the judgment of a highly skilled person.
1. Act in good faith and with the judgment of an ordinarily prudent person.
A member-managed LLC means: 1. All members participate, and decisions are made by majority vote. 2. Shareholders vote on financial decisions. 3. Partners vote on financial decisions. 4. The members elect a board of directors who make business decisions.
1. All members participate, and decisions are made by majority vote.
Common shareholders have the right to vote on: 1. Proposals for fundamental changes affecting the company such as mergers or liquidation. 2. Compensation for the officers. 3. Price of stock. 4. When to pay dividends.
1. Proposals for fundamental changes affecting the company such as mergers or liquidation.
Which of the following are rights of common shareholders? Choose 3 answers. 1. Transferable ownership 2. Voting on matters such as election of directors and proposals for mergers or liquidation 3. Priority for having debts paid from the liquidating company's assets 4. Opportunity to inspect corporate books and records
1. Transferable ownership 2. Voting on matters such as election of directors and proposals for mergers or liquidation 4. Opportunity to inspect corporate books and records
You and your buddy want to start a new landscaping business. You equally invest in the equipment you need to get started. You will both be equally responsible for the work and will share the profits equally. After investigating the possible forms of business entities available, you decide a partnership would be the best for your landscaping business. What do you think you might need to do to form a partnership? 1. You and your buddy just need to agree to be partners. 2. You and your buddy must file a certificate of organization with the government. 3. You and your buddy must sign a written partnership agreement. 4. You and your buddy must register your landscaping business with the county clerk.
1. You and your buddy just need to agree to be partners.
In a manager-managed LLC, the designated manager may (choose 2 answers): 1. Only be from outside the members of the company. 2. Be from within the members of the company. 3. Be from outside the members of the company. 4. Only be from within members of the company.
2. Be from within the members of the company. 3. Be from outside the members of the company.
In order to capitalize a sole proprietorship, an owner is likely to: 1. Pay out of their own pocket or undertake personal debt. 2. Sell membership shares. 3. Sell stock. 4. Take out a bank loan without a personal guarantee.
1. Pay out of their own pocket or undertake personal debt.
In which of the following would the business judgment rule not help a manager escape liability? Choose 2 answer choices. 1. When they did not act in the best interests of the corporation 2. When they acted as an ordinarily prudent person in good faith would act 3. When they committed an illegal act 4. If they conducted a reasonable inquiry, but the activity still resulted in a poor outcome
1. When they did not act in the best interests of the corporation 3. When they committed an illegal act
Which of the following is a duty of both corporate directors and corporate officers? 1. Working at least forty hours per week for the corporation 2. Making a full disclosure of potential conflicts of interest 3. Limiting political endorsements to only candidates that the corporation supports 4. Purchasing stock in the company
2. Making a full disclosure of potential conflicts of interest
Bart, Sam, and Greg create Big Barns Sales LLC, a company that builds pre-constructed barns. They file the certificate of organization with the secretary of state and create an operating agreement for the LLC. The operating agreement, however, does not address the method by which the LLC will be managed. Because management of the LLC is not addressed in the operating agreement, it is assumed the LLC will be: 1. Manager-managed, and the members will designate a person or persons to manage the LLC, which may include nonmembers. 2. Member-managed, and the member with the largest capital investment will control the decisions of the LLC. 3. Member-managed; all members will vote on decisions of the LLC, and the majority vote controls. 4. Manager-managed; the members will designate a person or persons to manage the LLC, and none of the managers can be members.
3. Member-managed; all members will vote on decisions of the LLC, and the majority vote controls.
What are the three ways in which a partnership can be dissolved? (Choose 3 answers.) 1. By an act of the partners 2. By a fixed term in the partnership agreement. 3. By operation of law 4. By failing to make a profit
1. By an act of the partners 2. By a fixed term in the partnership agreement. 3. By operation of law
Which of the following are advantages of operating as a partnership? Choose 2 answers. 1. Partnerships are not taxed. 2. Forming a partnership is simple and relatively inexpensive. 3. The partners are not personally liable for business debts if the partnership is registered with the state. 4. Any partner may add a new partner at any time to help decrease the workload and liability and to bring in more capital.
1. Partnerships are not taxed. 2. Forming a partnership is simple and relatively inexpensive.
You are thinking about buying a restaurant with some of your buddies from college. One of the first things you need to discuss is what kind of business entity you want to create. You want to make sure that you are liable for only what you do, not what any of your buddies do. However, you're also concerned about getting the best tax deal. Do you think there is a way to organize your business so that you are not liable for your buddies' actions or debts without risking paying more taxes? 1. Yes, you could organize your business as a corporation. 2. Yes, you could organize your business as a sole proprietorship. 3. Yes, you could organize your business as a partnership. 4. Yes, you could organize your business as a limited liability company.
4. Yes, you could organize your business as a limited liability company.
Anita is a member of Three Roses Nursery LLC, and is also one of the managers of the LLC. This means that Anita and her fellow member-managers vote on decisions that need to be made for the company, and the majority vote controls on those decisions. One day, the member-managers discuss a possible new contract with a potential supplier, Heartland Seedlings Co. Anita is a part-owner in Heartland Seedlings, and she would benefit greatly if Three Roses enters into the contract. The contract would cost Three Roses more money than their existing contract, but Anita pushes the other member-managers to agree to the contract anyway. By pushing the other member-managers to agree to the more expensive contract, Anita has: 1. Not violated any duties to the company. 2. Violated the duty of loyalty. 3. Violated the duty of candor. 4. Violated the duty of confidentiality.
2. Violated the duty of loyalty.
What type of corporation is formed for the purpose of doing a public service instead of making money? 1. Public 2. Nonprofit 3. Publicly held 4. Privately held
2. Nonprofit
Genna and four others are establishing a business to create monogrammed items of personal clothing to sell to the general public. Genna is concerned about entering into business with others and possibly being liable for their actions, so she convinces the others that they should incorporate. After doing some basic research on how to incorporate a business, Genna starts preparing the articles of incorporation. At a minimum, Genna must make sure that the articles of incorporation include: 1. The name of the corporation, the number of shares of stock the corporation is authorized to issue, the name and street address of the initial registered agent of the corporation and his or her registered office, and the name and address of each incorporator. 2. The name of the corporation, the name and street address of the initial registered agent of the corporation and his or her registered office, and the name and address of each incorporator. 3. The name of the corporation and the name and address of each incorporator. 4. The name of the corporation, the number of shares of stock the corporation is authorized to issue, and the name and address of each incorporator.
1. The name of the corporation, the number of shares of stock the corporation is authorized to issue, the name and street address of the initial registered agent of the corporation and his or her registered office, and the name and address of each incorporator.
Lola, Jacy, and Tate plan to create a company to manufacture bicycles. After reviewing the pros and cons of the various forms of business enterprises, they decide to create a limited liability company. To create a limited liability company: 1. They must file an operating agreement with the secretary of state and should create a certificate of organization, although a certificate of organization is not required. 2. They must file a certificate of organization with the secretary of state and should create an operating agreement, although an operating agreement is not required. 3. They must file a certificate of organization and an operating agreement with the secretary of state. 4. They must file a certificate of organization with the county clerk and should create an operating agreement, although an operating agreement is not required.
2. They must file a certificate of organization with the secretary of state and should create an operating agreement, although an operating agreement is not required.
What tax options are available to a limited liability company (LLC)? Choose 2 answers. 1. An LLC with only one member may be taxed as a partnership or a sole proprietorship. 2. An LLC with two or more members can choose to be taxed as a partnership or a corporation. 3. An LLC with only one member can choose to be taxed as a corporation or a sole proprietor. 4. An LLC with two or more members may only be taxed as a corporation.
2. An LLC with two or more members can choose to be taxed as a partnership or a corporation. 3. An LLC with only one member can choose to be taxed as a corporation or a sole proprietor.
Jasper, Saul, and Kenyon plan to open a new business providing sky-diving lessons and selling sky-diving equipment. Each of them plans to contribute the same amount of money to get the business started, and each will work for the business. Jasper is concerned about the possibility of being liable for the acts of Saul and Kenyon. Jasper also wants to make sure he does not pay more taxes than required. After reviewing the types of business entities available, Jasper suggests to Saul and Kenyon that they organize their new business as a(n): 1. Close corporation. 2. LLC. 3. Partnership. 4. Corporation.
2. LLC.
Kaleb is the CEO of Sports City, a sporting goods store. Kaleb wants to increase the sales of Sports City. Kaleb researches the market and discovers that boat sales are soaring, so Kaleb decides to add a line of boats to the inventory of Sports City. Kaleb finds what he believes is a great deal on fishing boats with Fisherman's Boat Supply and enters into a contract for $90,000 worth of fishing boats. During the first year after the fishing boats are delivered to Sports City, only one boat sells. Sports City suffers an $85,000 loss on the deal. If the board of directors tries to hold Kaleb personally liable for the loss: 1. They will not be successful, because Kaleb will be protected by the business judgment rule. 2. They will not be successful, because as CEO, Kaleb has the ultimate authority to make any decision he chooses about the company and cannot be held responsible even for a careless decision. 3. They will be successful, because Kaleb violated his duty of loyalty to the company. 4. They will be successful, because Kaleb violated his duty of care to the company.
1. They will not be successful, because Kaleb will be protected by the business judgment rule.
Ellie, Josie, and Dylan are partners in a car dealership. Ellie gives notice to Josie and Dylan that she wants to withdraw from the partnership, and Josie and Dylan decide to continue the partnership without her. Shortly after Ellie leaves the partnership, she has lunch with an old friend, Justin. Justin has been looking for a new car and asks about the price of a particular car he saw on the website of the dealership, because he does not know that Ellie has left the partnership. Instead of telling Justin that she has left the partnership, Ellie quotes Dylan a price for the car, and Dylan accepts. When Dylan goes to the car dealership to complete the deal: 1. The dealership must honor the deal and reinstate Ellie as a partner. 2. The dealership is not required to honor the deal whether or not it has provided Dylan notice of Ellie's dissociation. 3. The dealership must honor the deal unless it has provided Dylan notice of Ellie's dissociation. 4. The dealership is not required to honor the deal because Ellie is no longer a partner.
3. The dealership must honor the deal unless it has provided Dylan notice of Ellie's dissociation.
Jerry Hall and Lawrence Vaught practice law in the same building. They share equally in the overhead expenses, such as rent and utilities, required to keep the business running. Both Jerry and Lawrence handle their own cases, consult and accept their own clients, and purchase their own advertising. Jerry and Lawrence do occasionally handle a case together, and they have stationery that says "Hall and Vaught" on the letterhead. They each have their own stationery as well. Jerry and Lawrence keep their finances separate, except when they handle a case together; then, they split the proceeds equally. When a client of Jerry's becomes dissatisfied and sues Jerry for malpractice, she sues Lawrence as well. In deciding whether or not a partnership exists here, the court will look at: 1. Whether Jerry and Lawrence list themselves as partners on their letterhead. 2. Whether Jerry and Lawrence share profits and losses in the business. 3. Whether Jerry and Lawrence share profits and losses, whether they own the business jointly, and whether they have an equal right to be involved in the management of the business. 4. Whether Jerry and Lawrence have signed a partnership agreement.
3. Whether Jerry and Lawrence share profits and losses, whether they own the business jointly, and whether they have an equal right to be involved in the management of the business.
The legal effects of dissociation of a member of a limited liability company (LLC) include: (Choose 2 answers.) 1. The dissociated member's duty of loyalty to the LLC terminates. 2. The LLC must purchase the dissociated member's share within 30 days. 3. The LLC must wrap up business and dissolve within 180 days. 4. The dissociated member loses the right to participate in management.
1. The dissociated member's duty of loyalty to the LLC terminates. 4. The dissociated member loses the right to participate in management.
A sole proprietorship differs from a limited liability company (LLC) in: 1. The documentation required for formation. 2. The minimum number of owners. 3. How stock is sold. 4. Ability to earn a profit.
1. The documentation required for formation.
At the first meeting of corporate shareholders, what business is normally conducted (choose 2 answers)? 1. The election of the board of directors 2. The filing of the articles of incorporation 3. The adoption of corporate bylaws 4. Voting on the business name
1. The election of the board of directors 3. The adoption of corporate bylaws
Which of the following provisions are typically in a charter/Article of Incorporation for a corporation? Choose 2 answers. 1. The intended business purpose of the corporation 2. The advertising plan for the corporation 3. The name and address of the corporation's agent 4. The trade secrets of the corporation
1. The intended business purpose of the corporation 3. The name and address of the corporation's agent
Which of the following defines the "implied powers" of a corporation? 1. The right to perform all acts reasonably necessary to accomplish a corporate purpose 2. The power granted to a corporation by the corporate bylaws 3. Any power arising out of a formally adopted resolution of the corporation 4. The power granted to a corporation by the U.S. Constitution
1. The right to perform all acts reasonably necessary to accomplish a corporate purpose
Officers and directors owe which of the following duties to the corporation? Choose 2 answer choices. 1. Duty of Compensation 2. Duty of Loyalty 3. Duty of Good Decisions 4. Duty of Care
2. Duty of Loyalty 4. Duty of Care
Pro Flowers LLC has been in business for five years. When one of its members dies, the other members of the LLC agree to dissolve the LLC. They proceed to wind up the business, collecting and liquidating all the assets of the LLC. Once that is done, the proceeds will be distributed: 1. First to creditors, and then members' capital contributions will be returned. 2. First to creditors, then members' capital contributions will be returned, and any remaining amounts are then distributed to members in equal shares or according to their operating agreement. 3. First to creditors, and then the remaining amount will be divided equally among the members. 4. First to members in the amount of their capital contributions, then to creditors, and any remaining amounts are then distributed to members in equal shares or according to their operating agreement.
2. First to creditors, then members' capital contributions will be returned, and any remaining amounts are then distributed to members in equal shares or according to their operating agreement.
A written agreement outlining the roles of partners, their rights, and their duties are called: 1. Operating agreements. 2. Articles of Organization. 3. A partnership agreement. 4. Articles of Incorporation.
3. A partnership agreement.
If an action is permitted expressly by the corporate bylaws, but is prohibited by state law, a corporation: 1. Must amend their articles of incorporation. 2. Has the power to act. 3. Does not have the power to act. 4. Must challenge the state law.
3. Does not have the power to act.
The formation of a partnership without a partnership agreement requires which of the following (choose 2 answers)? 1. Five or more partners 2. The intent to form a partnership 3. Sharing of management duties 4. Sharing of profits and losses
3. Sharing of management duties 4. Sharing of profits and losses
Johnson lives near Dollywood, a popular theme park in Tennessee. Johnson decides to begin a new money-making venture selling screen printed t-shirts from a booth just down the road from the theme park, to take advantage of the traffic that flows by on its way to the park. Johnson's t-shirts, however, will not be Dollywood-themed t-shirts; they will be Johnson's own creations. Johnson's daughter Susan helps him in his new venture by manning the booth from time to time, but Johnson has total control over everything about the business—from ordering the t-shirts, paying the bills, pricing the t-shirts, paying the taxes on his sales, and receiving all the profits from the venture. Even though Johnson put no thought into what kind of business venture he was creating when he started his business, Johnson has effectively created a: 1. Corporation. 2. Limited liability company. 3. Sole proprietorship. 4. Franchise.
3. Sole proprietorship.
Alma owns fifty shares of common stock in Alpha Corporation. Alma also owns eighty shares of preferred stock in the same corporation. Alpha Corporation has an upcoming vote for a new director. In the election for the new board member of Alpha, Alma will be able to cast: 1. 80 votes. 2. 130 votes. 3. No votes. 4. 50 votes.
4. 50 votes.
A corporation that is formed in one state but does business in another state is referred to in the second state as: 1. A domestic corporation. 2. An alien corporation. 3. A distant corporation. 4. A foreign corporation.
4. A foreign corporation.
Which of the following documents spells out the rights and duties of the members of a limited liability company (LLC)? 1. Certificate of organization 2. Charter 3. Bylaws 4. Operating agreement
4. Operating agreement
