ACCT 324 Test 2
The government agency that is interested in whether a person is an employee or an independent contractor for tax purposes is the ___
IRS
What form of business organization is an agreement between at least one general partner and at least one limited partner?
Limited partnership
Nolan is a limited partner in a limited partnership. Nolan started taking on the responsibilities of hiring the staff, scheduling the employees, and making compensation decisions for the firm. Can Nolan maintain his limited partnership status?
No (because a limited partner is not allowed to participate in the control of the business)
Who will be liable if an agent exceeds his authority to act on behalf of the principal to a third party?
(the) agent (is personally liable)
_________ is defined as "the fiduciary relationship that results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent to the other so to act"
Agency
What specialized form of business organizations is an organization formed by individuals who pool resources to gain a market advantage?
Cooperative
True or false? With reference to agency relationship, when an agent's authority was granted in writing, actual notice can be given orally
False
________ begin the corporate creation process by arranging for capital, financing, and licenses
Promoters
What is the term for documents that shareholders receive if they have preemptive rights and there is going to be a new issue of stock by the corporation?
Stock warrants
Specialized form of business organization that comes together for the explicit purpose of financing a specific large project?
Syndicate
What body of law states that partners have the authority to bind a partnership in an agreement?
The Uniform Partnership Act (UPA)
True or False? If a third party is able to establish an employee was negligent and the employer is liable as a result, the employer can recover from the employee any damages paid to the third party.
True
The specific law governing the conduct of athlete agents is the A) Code of Conduct of Athlete Agents (CCAA) B) Restatement of Agent Athletes (RAA) C) Uniform Athlete Agents Act (UAAA) D) Athlete Agency Regulation Act (AARA)
UAAA
What kind of vote is required for partners to change some element of their partnership agreement, admit new partners, or alter the nature of their business?
Unanimous
The duty which requires the agent to keep accurate records of all transactions of money and property is known as the duty of ________
accounting
A relationship between an agent and a principal is an ________ relationship
agency
According to the Uniform Partnership Act, general ______ principles establish that partners have the authority to bind a partnership in an agreement
agency
A person who has the duty to act primarily for the benefit of another person is known as an _________
agent
A principal owes specific duties to the ________
agent
The principal is liable only if the ________ has authority to act on the principal's behalf
agent
When partnership debts eventually become the debts of the individual partners, the partnership is considered a legal ________ of the partners
aggregate
A written __________ that creates a partnership is called the articles of partnership
agreement
Under the _______ judgment rule, directors and officers are not liable for decisions that harm the corporation if they were acting in good faith
business
the _________ judgment rule is common law and recognized by almost every court
business
What is the term used when a director or officer makes decisions that benefit a company other than the corporation they serve?
business self-dealing
A ____ ______ is a business organization governed by a group of trustees who operate the organization for the beneficiaries
business trust
________ are a set of rules and regulations that govern the corporation's internal management
bylaws
Which of the following is NOT an implied property right of a partner? a. The right to participate in the management of a business b. The right to specific partnership property c. The right to any intellectual property he or she creates while a partner d. the right to their partnership interest
c
___________ voting gives majority and minority shareholders a certain number of votes to cast by multiplying the number of shares the group owned by the number of open director positions
cumulative
If a corporation is harmed by an individual or another corporation, an individual shareholder of the harmed corporation has the right to file a shareholder's _______ suit on behalf of the corporation
derivative
If a partner dissolves the partnership or withdraws from the partnership, then any third party that has provided credit to the partnership must receive from the firm ______ _____ or _______ ______ of the dissolution
direct verbal or written notice
When _______ or ________ violate their duty of loyalty, then they are self-dealing
directors or officers
A __________ power of attorney specifies that the agent's authority is intended to continue beyond the principal's incapacitation
durable
A written document which expresses the principal's desire for the agent's authority not to be affected by the principal's subsequent incapacity is known an a _________ power of attorney
durable
Employees are agents of the ________
employer
Principals are the legal owners of anything an agent may come to possess through the _____ or ______ relationship
employment or agency
Shareholders own part of the company through the purchase of stock called
equity securities
If a corporation does business with a third party, then attempts to evade being held to contracts with the third party by claiming it is not a corporation, then the court will ______ the corporation from claiming it is not valid
estop
In agency by ________, the important conduct is how the principal acts to create the impression that the agent has the authority to act on behalf of the principal
estoppel
When a non-partner has represented himself as a partner and a third party reasonably relies on this information to her detriment, a partnership by __________ exists
estoppel
If the corporate officers withdraw of die, the corporation does not dissolve, but continues to ________ as though nothing legally has changed
exist
Agency by implied authority cannot conflict with agency by
express authority
Bobby and Dustin entered into an agency agreement using a written agreement. This kind of agency relationship is known as an ________.
expressed agency
Partners owe a _______ duty and a duty of ______ to each other
fiduciary and care
The creation of a corporation has two steps: _________ organizational activities and _________ activities
general and legal
In a _________, the partners divide the profits and the management responsibilities
general partnership
What type of power of attorney allows the agent to conduct all business for the principal?
general power of attorney
A __________ agent is one who is not paid for his or her services
gratuitous
An agency can be formed through the conduct of the parties. Such an agency relationship is known as an agency by __________ authority
implied
_______ authority permits partners to enter into agreements necessary to carry on partnership business
implied
A person who contracts with another to do something for him, but is not controlled by him nor subject to the other's right to control with respect to his physical conduct in the performance of the undertaking, as an ______ ________
independent contractor
A partnership agreement in which company members hold transferable shares, while all the goods of the company are held in the names of the partners is a _____ ______ ______
joint stock company
A ____ ________ is a relationship between two or more persons or corporations created for a specific business undertaking
joint venture
All partners are ______ liable for the partnership's debts
jointly
When a partner commits a tort or a breach of trust, all partners are _______ liable
jointly and severally
A partnership is often considered a ______ _____ when it is sued or being sued
legal entity
An individual who hires an independent contractor cannot be held _____ for the independent contractor's tortious actions
liable
For vicarious liability, the principal is ______ for the actions of the agent who is working of the principal's behalf
liable
If an employer is found _______ for an employee's act of negligence towards a third party, then the employer has a right to indemnify and seek damages paid to the third party back from the employee
liable
A limited partnership is an agreement between at least one ______ partner and at least one _________ partner
limited and general
The ______ combines the tax advantages and management flexibility of a partnership with the limited liability of a corporation
limited liability company (LLC)
In a _______ ______ _______, if one partner commits professional malpractice, the other partners' personal assets cannot be taken
limited liability partnership
A ________ is an agreement between at least one general partner and at least one limited partner
limited partnership
Courts suggest that the most important duty that an agent owes to a principal is the duty of _______
loyalty
The duty that describes the agent's requirement to keep all information about the principal confidential both during the agency relationship and after is known as the duty of _____
loyalty
Three property rights of partners include the right to participate in the _____ of the business, the right to specific partnership _______, and the right to their partnership ________.
management, property, interest
Under the doctrine of ______ ______, partnership assets are arranged in a certain order to pay any outstanding debts
marshaling assets
Unlike tort liability, _________ liability depends on whether the principal authorized the agent's act
misrepresentation
In 1946, the ABA drafted the first version of the _____ Business Corporation Act
model
What type of stocks do shareholders purchase from the corporation at fair market value?
non-par stocks
The Uniform Limited Liability Company Act is relatively new and has _____ accepted by many states
not been
If an agent fails to communicate to the principal any offers from third parties or any information that the agent feels would be important to the principal, that agent has failed in their duty of ___________
notification
The duty which requires the agent to follow the lawful instruction and direction of the principal is known as a duty of ___________
obedience
___________ of a corporation act as agents of the corporation
officers
________ conduct occurs when a majority shareholder does not act with care when selling their shares to a corporation
oppressive
A limited liability company is formed by filing articles of ________ in the state in which its members want to establish their company
organization
A special power of attorney is an express authority that is granted to an agent for only specified _________ acts
outlined
________ directors are divided into two categories: affiliated directors, who have business contacts with the corporation, and unaffiliated directors, who have had no previous business connections with the corporation
outside
If a person represents himself as an agent for an individual and that individual accepts the act of the person representing himself as the agent, this relationship is known as an agency by __________
ratification
The agent may not use the agency relationship to obtain goods or property for himself when the principal desired to obtain the same goods or property; the principal always has the right of first ___________
refusal
In its articles of organization, the limited liability company must include the name and address of both its principal business and a _____ ______ for service
registered agent
Under the _________ person doctrine, a corporate officer will be held liable if a reasonable person would have known about and could have prevented a criminal act
responsible
What is the doctrine a court can use to find a corporate officer liable if a responsible person would have known about the criminal activity and would have prevented it?
responsible person
If a partner withdraws from the partnership in accordance with the partnership agreement, then this kind of dissolution is a ______________
rightful dissolution
A ________ voting agreement is an agreement by multiple shareholders to vote together at a meeting
shareholder
According the the RMBCA, ____________ have a legal right to dissolve a corporation under certain circumstances
shareholders
__________ often meet once a year, but can meet more often if necessary
shareholders
A ________ power of attorney grants the agent express authority over specified outlined acts
special
An incorporator files the Articles of Incorporation with the ____ on behalf of the corporation
state
Quo warranty is the term used when the _______ challenges the legality of a de facto corporation
state
The formation of a limited partnership must follow specific _____ __________
statutory requirements
For par-valued stock, the shareholder must pay the amount on the _______ certificate to the corporation
stock
_______ owners actually own part of the corporation through equity security
stock
According to the right of survivorship, the rights in specific partnership property pass to the ________
surviving partners
Partners own partnership property as _______ in property
tenants
With an undisclosed principal, who is liable to a third party?
the agent
The most important factor in deciding whether a person is an employee or an independent contractor is _________
the degree of control the employer has over the individual's work
If a third party does not know that an agent is acting on behalf of a principal, then the principal is an _________ principal
undisclosed
According to the UPA, if a partnership is liable, each partner has __________ liability
unlimited personal
A ________ trust in an entity that is given the authority to vote on behalf of shareholders that are a part of the trust
voting
If preemptive rights exist, then all shareholders receive stock ________ which can be redeemed for a new issue of stock
warrants
Agents who go beyond their authority from a disclosed principal can be sued by a third party under the theory of breach of implied ________
warranty
Stock issued below its fair market value is called ______ stock
watered
According to the Copyright Act of 1976, an employer can order an employee to complete work at the request of the employer. This product is known as a _____-___-_______
work-for-hire
What type of agency relationship does not allow the principal to terminate it?
An agency coupled with an interest
What is the name of an individual who files Articles of Incorporation with the state on behalf of the corporation?
An incorporator
If an agent negotiates a contract on behalf of the principal, but the contract is breached through the negligence of the agent, and if the principal is sued by the third party, then the principal can sue the agent: A) for any property the agent acquired during the agency relationship B) for any and all monies given to the agent during the agency relationship C) to recover the amount assessed to the third party D) only for the court costs involved in the third party's suit against the principal
c (to recover the amount assessed to the third party)
If an agent has misrepresented himself, then injured party can either _____ the contract with the principal and be compensated for the money loss or affirm the contract and sue the principal to recover damages
cancel
A _________ of authority is obtained by a corporation that does business in multiple states
certificate
Creditor can obtain a _____ _____, which entitles the creditor to the partner's profits, while the partner continues to act as a partner and engage in the partnership business
charging order
The principal has a duty to ___________ the agent for the services provided, unless the parties have agreed that the agent will act gratuitously
compensate
If the agent illegally benefits from the agency relationship, the principal may enact a ____________ trust on the goods, profits, or property in question
constructive
An agreement that states that partners can preserve a partnership business is known as a(n) ________ agreement
continuation
Agency relationships are contractual relationships and the kind of remedies that are available are ________ remedies
contract
Unless they have the authority to do so by the principal, independent contractors are not allowed to enter into _____ ____ ___ _______
contracts for the principal
The principal's duty to assist the agent in the performance of their duties is known as the duty of _______
cooperation
What document dictates the number of members of a board of directors in a corporation?
corporate bylaws
The limited liability company offers its owners the same limited liability for business debts as that offered by a ____________
corporation
A partner's personal _______ cannot seize specific items of a partnership property
creditor
An S corporation is a corporation under federal tax law, but is taxed like a __________
partnership
When the dissolution of the partnership does not violate the ____ ________, we say that the partnership is rightfully dissolved
partnership agreement
The duty which requires the agent to perform his or her duties as required by the agency agreement is known as the duty of ___________
performance
_________ self-dealing is when a director or officer makes decisions that benefits himself personally
personal
An agency by agreement that gives the agent the authority to sign legal documents on behalf of the principal is known as a _____ __ _________
power of attorney
The ____ ___ _______ is a specific form of express authority granting an agent specific powers
power of attorney
________ rights mean that current shareholders in a corporation have preference in purchasing a new issue of stock
preemptive
An agent's apparent authority continues until the ________ notifies the third party that the agency relationship has ended
principal
When an employer hires an employee to enter into contracts on its behalf this is known as an _____-______ relationship
principal-agent