Business Law Final Review

False

"Piercing the corporate veil" means revealing to shareholders the internal rules of corporate management.

True

A Corporation can be a partner

False

A business incorporated in one state has an automatic right to do business in any other state.

True

A business that holds itself out as being a corporation may not be able to deny corporate status, even if it makes no attempt to incorporate.

True

A business trust is created by a written trust agreement

False

A close corporation cannot operate as an S corporation.

True

A cooperative may exist in the form of a partnership but not a corporation

False

A corporate director is an "owner" of the corporation.

False

A corporation cannot be formed without a profit-making purpose

True

A corporation has perpetual existence in most states unless the articles of incorporation state otherwise.

False

A corporation whose shares are held by relatively few persons is a partnership.

True

A corporation's internal management structure is described in its articles or bylaws.

True

A court can dissolve a corporation for mismanagement.

C. a nonprofit corporation.

A firm named Scientific Discovery Corporation (SDC) makes an attempt to incorporate for a purpose other than making a profit. SDC is a. a foreign corporation. b. an alien corporation. c. a nonprofit corporation. d. not a corporation.

False

A foreign corporation is a corporation formed in another country.

False

A foreign limited liability company (LLC) is an LLC owned by an entity outside the United States

False

A general partner has the power to dissociated from a limited partnership regardless of what the partnership agreement specifies

True

A general partner is personally liable for partnership debts if its assets are insufficient to pay its creditors

True

A group of individuals getting together to finance a particular project may form a syndicate

False

A joint venture does not terminate unless one of its participants dies

False

A joint venture is taxed like a partnership

False

A limited liability company cannot be taxed as a partnership

True

A limited liability company is a legal entity apart from its owners

True

A limited liability company is operated in compliance with state law

False

A limited liability company is required to have an operating agreement

True

A limited liability company limits the personal liability of its members

True

A limited liability partnership can be formed in virtually any state

True

A limited liability partnership must be formed in compliance with state law

False

A limited partner who gives a general partner advice on matters relating to the management of the partnership cannot be liable as a general partner

True

A limited partner who participates in the management of the partnership may be personally liable to the firm's creditors

A. Frosted Confections.

A merger between Frosted Confections, Inc., and Great Brewing Company, in which Frosted absorbs Great Brewing, can be expressed as Frosted Confections + Great Brewing = a. Frosted Confections. b. Hot Coffee Corporation. c. Hot Coffee Corporation + Iced Pastries Corporation. d. Iced Pastries Corporation.

False

A partner may not pursue his or her own interest without violating the fiduciary duties that he or she owes to the firm

False

A partner may use and possess partnership property for any purpose

False

A partner owes a partnership and its partners a duty of gross negligence and reckless conduct

False

A partner's fiduciary duties may be waived or eliminated in the partnership agreement

False

A partnership dissolves if any partner ceases to "carry on" partnership business

False

A sale of all of a corporation's assets requires the approval of the state.

True

A shareholder in a professional corporation can be liable for malpractice arising from the rendering of professional services.

True

A state constitution may resolve a conflict among documents involving a corporation.

False

A syndicate may be organized as a corporation but not as a partnership

True

After a consolidation, there is only one surviving corporation.

False

After a merger, a disappearing corporation's preexisting rights disappear.

False

An association cannot be a partnership without an express agreement

True

An operating agreement for a limited liability company need not be in writing

Lacking continuity after death

Another disadvantage to a sole proprietorship

True

Any limit on a partner's capacity to act on the partnership's behalf does not affect a third party who does not know about it

True

Any person who buys common stock acquires voting rights in a corporation.

True

Any person who buys preferred stock has priority over a holder of common stock to payment on the corporation's dissolution.

True

Appraisal rights are normally available in sales of substantially all corporate assets not in the ordinary course of business

True

Appraisal rights are often the only recourse for shareholders who object to a parent-subsidiary merger.

C. Nothing

As the beneficiary of a business trust, Kevin's liability for trust debts and obligations is A. limited to his capital investment in the trust B. Limited to his personal assets C. Nothing D. Unlimited

Creditors

Because of the sole proprietor's unlimited liability, _______ can go after his or her personal assets to satisfy any business debts.

C. A legal entity apart from the owners

Bee Hive Honey, LLC's members include Chad. For purposes of suing and being sued, Bee Hive Honey is A. An aggregate of Chad and the other members B. A natural person in the members' "family" C. A legal entity apart from the owners D. A non-participating third party

Ben's creditor only

Ben, who runs a livestock breeding business, owes the Circle C Ranch $40,000. Ben agrees to pay the Circle C a percentage of his profits each month until the debt is paid. Because of this agreement, the Circle C is

D. partnerships.

Big Valu Grocery Stores is an unincorporated cooperative. Big Valu and other unincorporated cooperatives are generally treated like a. business trusts. b. corporations. c. joint stock companies. d. partnerships.

Oral, written, or implied by conduct

Bo and Clancy decide to do business as Marketing & Promotion Services. To be a partnership, this association can result from an agreement that is

D. partnerships

Boutique Corporation would like to change its corporate status to avoid in-come taxes at the corporate level. To qualify, the shareholders must not be a. corporations. b. estates. c. individuals. d. partnerships.

The termination of the firm's legal existence

Brad, Carlos, and Dora are general partners in Eastside Physicians, a medial clinic. The partner's decide to dissolve Eastside. Dora collects and distributes the firm's assets. This results in

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

Brad, Carlos, and Dora are general partners in Eastside Physicians, a medical clinic. Brad's dissociation from the firm results in

Limited to his capital contribution to the firm

Brad, Carlos, and Dora are general partners in Eastside Physicians, a medical clinic. Brad, Carlos, and Dora decide to admit Faisal as a new partner in Eastside Physicians. Faisal's liability for partnership devts incurred before his admission is

To the extent of his capital contribution

Bret is a general partner in Capitol Realty, LLLP, a limited liability limited partnership, which cannot pay its debts. Bret is personally liable for the debts

C. Joint Venure

Build-Rite Construction Corporation and Deals-R-Us, Inc., combine their efforts to build an office and retail complex. Their form of business organization is A. Business trust B. Joint Stock Company C. Joint Venture D. Syndicate

C. their transactions with the cooperative.

Buyers Club is an incorporated cooperative. Like other incorporated cooperatives, Buyers Club distributes profits to its owners on the basis of a. the amount of capital they contribute. b. the degree to which they participate in management. c. their transactions with the cooperative. d. the requirements of the state in which it was incorporated.

A. All Members

CPA Accounting, LLC, is a limited liability company. If the law in CPA's state is like the law in most states, unless the members have agreed otherwise, participants in the firm's management will be considered to include A. All members B. No member C. One member D. Two members, including at least one general partner

B. each of the corporation's shareholders.

Caffeine Café, Inc., files its articles of incorporation with the appropriate government agency. Least likely to appear in the articles is the name of a. each of the corporation's incorporators. b. each of the corporation's shareholders. c. the corporation. d. the corporation's initial registered agent.

C. Eats.

Candy Corporation has a right of action against Dina. Candy merges with Eats, Inc., with Eats absorbing Candy. After the merger, Candy's right of action against Dina can be exercised by a. Candy. b. Dina. c. Eats. d. no one.

B. Become a member

China Bank is a foreign entity-A firm owned and operated by investors in a foreign country. With respect to an LLC in the United States, China Bank can A. act as a creditor, but cannot otherwise invest or participate B. Becomes a member C. Not become a member, but can participate in its operations D. Not become a member or otherwise participate in its operations

Dissociation

Clu, Dolf, and Elton do business as Fertile Valley Farm. Clu's relationship to the firm ends, but it continues to do business. This is

All of Delta's books and records

Cody is a partner in Delta Accounting Service. Cody can inspect

Continue only if Drew and Ellen consent

Connie, Drew, and Ellen are the general partners of Foreign Auto Repair, a limited partnership. Connie dies. The partnership can

B. a cooperative

Consumers in Delta City form a business organization to provide, without profit, an economic service to its members. This is a. a business trust. b. a cooperative. c. a corporation. d. a joint stock company.

C. generally allowed to restrict the transfer of its stock.

Convenience Mart, Inc., is a close corporation. Convenience Mart is a. eligible to make public offerings of securities. b. exempt from filing a certificate of incorporation. c. generally allowed to restrict the transfer of its stock. d. taxed in the same manner as a partnership.

B. Optional

Cookie Kiosk LLC's members and managers are Dwight, Emma, and Fawn. After Dwight's relationship to Cookie Kiosk ends, Emma and Fawn agree to discontinue the firm's business. This is most likely A. Advisable B. Optional C. Required D. Wrongful

False

Corporate officers hire corporate directors.

C. Articles of organization

Dani is considering forms of business organization for her financial advisory firm. Like most states, Dani's state requires that to form a limited liability company, she must file with a central state agency

Not entitled to compensation for his effort

Dave and Eiger are partners in First-Place Athletic Supplies, which sells sports equipment. Dave manages the business. Unless the partnership agreement states otherwise, Dave is

A. a business trust.

Dreem Land Corporation and EZ Investments Company transfer their property to Financial Managers, Inc., which manages the property and distributes the profits to Dreem and EZ. This form of a business organization is a. a business trust. b. a joint stock company. c. a joint venture. d. a syndicate.

D. Neither distribute the profits nor manage the property.

Drew is a beneficiary of a business trust. As a beneficiary, Drew is required to A. Distribute the profits and manage the property B. Distribute the profits only C. Manage the property only D. Neither distribute the profits nor manage the property

Total Access

Dunn and Etta are limited partners in Fancee Fashion Stores, a limited partnership. In terms of the firm's books, Dunn and Etta are entitled to

B. a de facto corporation.

Eager Beaver Corporation fails to adopt bylaws. Under this circumstance, Eager Beaver is most likely a. a corporation by estoppel. b. a de facto corporation. c. a de jure corporation. d. ultra vires.

C. Eagle Financial is the surviving corporation.

Eagle Financial Corporation merges with First Bank Corporation, with Eagle Financial absorbing First Bank. After the merger a. a different, new corporation is the surviving corporation. b. Eagle Financial and First Bank are both surviving corporations. c. Eagle Financial is the surviving corporation. d. First Bank is the surviving corporation.

A. Distribute the profits and manage the property

Elmo is the owner and manager of a business trust. Under the terms of a business trust, Elmo is required to A. Distribute the profits and manage the property B. Distribute the profits only C. Manage the property only D. Neither distribute the profits nor

A. A corporation

Energy Resources, LLC, is a limited liability company. Rather than distribute its profits to its members, Energy wants to reinvest the profits in its business. For this reason, Energy may prefer to be taxed as A. A corporation B. A partnership C. A sole proprietorship D. A syndicate

Graves first

Energy Unlimited, LP, is a limited partnership to which its partners, including Fink, have contributed capital. Energy's creditors include Graves Engineering, Inc. On Energy's dissolution, its assets will be distributed to pay

Erte's sole liability for the amount

Erte, a partner in Fluoride Dental Associates, applies for a loan with Great State Bank allegedly on Fluoride's behalf but without the authorization of the other partners. Great State knows that Erte is not authorized to take out the loan. Erte's default on the loan results in

B. a joint stock company.

Exotic Stuff Company and First Pier, Inc., form a business organization to engage in importing and exporting. Its property is held in the names of the members and its shareholders have personal liability. This business organization is a. a business trust. b. a joint stock company. c. a joint venture. d. a syndicate.

True

Express powers of a corporation can be found in the corporate bylaws.

True

Express powers of a corporation can be found in the law of the state of incorporation.

A. a consolidation.

Eye Appliance Company and Fast Courier, Inc., wish to combine all of their assets, stock, and personnel into a new firm to be called Glasses2Go Corporation. This is a. a consolidation. b. a merger. c. an exchange of assets. d. a takeover.

B. Fab only

Fab is the owner and manager of a business trust. Gilly is the beneficiary. Responsibility for the debts and obligations of the trust rest with a. Fab and Gilly. b. Fab only. c. Gilly only. d. neither Fab nor Gilly.

D. A shareholder of a corporation

Fay is a member of Garden Groves LLC. Like other members of limited liability companies, Fay's liability for Garden Grove's obligations resembles the liability of A. A member of a joint venture B. An owner of a sole proprietorship C. A partner of a partnership D. A shareholder of a corporation

Only liable for the debt up to the amount of his capital contribution

Fay is admitted to Global Associates, an existing partnership. A partnership debt incurred before the date of her admission comes due. Fay is

False

Federal law dictates the requirements for the formation of a limited liability company

A certificate of limited partnership is file

Fern and Gray want to form a limited partnership to manage two restaurants: Cafe Latte and Deli Delite. In most states, a limited partnership will be created when

D. state law.

Finn and Glenda want to form and do business as Hobby Crafts Corporation. A corporation is a legal entity created and recognized by a. a central federal administrative agency. b. a city or county clerk's office. c. an artificial legal person. d. state law.

A. Dissociation

Flip is a member of Great States Trucking LLC. Flip's relationship to Great States ends, but he firm continues to do business. This is A. Dissociation B. Dissolution C. Winding up D. Wrongful

True

For federal income tax purposes, a limited liability company can choose to be taxed like a corporation

False

For federal jurisdictional purposes, a limited liability company can choose to be treated like a corporation

False

For most purposes, the law recognizes a partnership as an aggregate of its members

True

Forming a limited liability company requires filing articles of organization in a state office

Natural persons or persons acting as fiduciaries for natural persons

Gallop Western Ranch is a family limited liability partnership (FLLP). In an FLLP, all of the partners must be

True

General principles of agency law pertain to a partner's authority to bind a partnership in contract

False

Generally, there is a uniform body of national corporate law.

D. responsible if the sale is actually a merger or consolidation

Giant Lift Corporation purchases all of the assets of Heavy Hydraulics Corporation. With respect to Heavy Hydraulics's liabilities, Giant Lift is a. automatically responsible. b. not responsible under any circumstances. c. responsible if Heavy Hydraulics is a competitor of Giant Lift. d. responsible if the sale is actually a merger or consolidation

True

Giving control of a joint venture to one of its participants does not affect the status of the relationship

An aggregate of the individual partners

Grady and Hedy do business as Island Tours. For federal income tax purposes, Island Tours would be treated as

C. An owner

Greta is a member of Hovercraft LLC. As a member, Greta is A. A manager or officer, but not an owner B. An investor, but not a manager, officer, or owner C. An owner D. A participant, but not an investor, manager, officer, or owner

In the absence of an express agree

Guy and Hanna do business as G-H Associates. If G-H is a partnership, it is governed by the Uniform Partnership Act

Hal, Ira, Jill, and Kappa

Hal, Ira, and Jill are partners in Kappa Accessories, a computer peripherals firm. Hal signs a contract with Lycra Chips, a retail component supplier, allegedly on Kappa's Behalf. The contract is binding on

Hal, Jill, and Kappa only

Hal, Ira, and Jill are partners in Kappa Accessories, a computer peripherals firm. Ira dissociates from Kappa. Jill signs a contract with Micro Drives, a wholesale component supplier, allegedly on Kappa's behalf. Micro knows of Ira's dissociation. The contract is binding on

C. A legal Entity apart from the owners

High Pointe LLC's members include Irvin. For purposes of holding title to property, High Point is A. An aggregate of Irvin and the other members B. A natural person in the members' "family." C. A legal entity apart from the owners D. A non-participating third party

False

In a consolidation, the consolidating corporations become subsidiaries of the new corporation.

False

In a family limited liability partnership, only persons related to each other may be partners

True

In a limited liability company, members do not have to participate in its management

False

In a limited liability company, members must participate in the management of the company

True

In a limited liability limited partnership, the liability of general partner is the same as the liability of a limited partner

True

In a limited liability partnership, a partner can be exempt from personal liability for partnership obligations

False

In a limited partnership, the liability of a general partner is limited to the amount of capital he or she invested in the partnership

False

In a merger, only the surviving corporation's shareholders are entitled to appraisal rights.

False

In a share exchange, neither corporation's directors need to approve the exchange.

True

In a short-form merger, neither corporation's shareholders need to approve the merger.

True

In most cases, merging corporations' officers and employees do not need to approve the merger.

True

In most states, a general partner is jointly and severally liable for all partnership obligations

True

In some states, business trusts pay corporate taxes

True

In winding up a general partnership, creditors are paid before partners receive their capital contributions

False

In winding up a general partnership, partners receive distributions of profits non-partner creditors are paid.

A. the board of directors.

Inez and Jason are the shareholders and directors of Kleen Kustodial Corporation. Lily and Moe are Kleen's officers. As in other corporations, the responsibility for the overall management of Kleen rests with a. the board of directors. b. the officers. c. the owners. d. the shareholders.

Jack and Kyra

Jack and Kyra are partners in Law Firm, LLP, a limited liability partnership. Jack supervises Kyra, who negligently fails to appear in court on behalf of Milo, a client. Liability to Milo rests with

B. To the extent of his capital contribution

Jay is a member of Kappa, LLC, a limited liability company. Jay is liable for Kappa's debts A. In proportion to the total number of members B. To the extent of his capital contribution C. To the extent that the other members do not pay the debts D. To the full extent

Any partnership obligation

Jay is considering forms of business organization for Jay's Designs, an architectural firm. An advantage of a limited liability partnership is that partners can avoid personal liability for

C. Luminous

Jen files a suit against Kopper Kettle Company. While the suit is pending, Kopper Kettle merges with Luminous Pans, Inc., with Luminous absorbing Kopper Kettle. Now, liability in the suit, if any, rests with a. Jen. b. Kopper Kettle. c. Luminous. d. no one

Dissolves immediately unless the partners change its business

Jim and Kyle are partners in J&K Sales, which exports technical equipment under a three-year partnership agreement. The U.S. government declares that the equipment can no longer be exported. J&K

D. Pool their resources to gain an advantage in the market

Jin, Karlo, and other consumers form Metro Purchasing Cooperative. This form of business organization makes it possible for these individuals to A. Avoid personal liability for the acts of the cooperative B. Obtain an exemption from state laws governing corporations C. Pay no taxes on their business income D. Pool their resources to gain an advantage in the market

False

Joint ownership of property in and of itself creates a partnership

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

Kelly, Lars, and Mona agree to be partners in Neighborhood Delivery Services (NDS), splitting the profits equally. Kelly contributes 67 percent of the capital. When NDS is dissolved, its liabilities are greater than its assets. The losses area paid by

C. To any extent

Kristal is a member of Laboratory CSI Services, LLC, a limited liability company. Kristal can participate in the firm's management A. Only to the extent that she assumes liability for the firm's debts B. Only to the extent of her investment in the firm C. To any extent D. To no extent

True

Like a corporation, the ownership of a joint stock company is represented by shares of stock

B. a purchase of a controlling interest in another corporation.

Like other corporations, Workaday Personnel Corporation can expand its operations through a. a liquidation and distribution of its assets. b. a purchase of a controlling interest in another corporation. c. articles of dissolution filed voluntarily with the state. d. a purchase of raw materials to be converted into finished goods.

C. were adopted at its first organizational meeting.

Like the bylaws of other corporations, the bylaws of Retail Sales, Inc., a. establish the operating name of the corporation. b. establish the value and classes of corporate stock. c. were adopted at its first organizational meeting. d. were submitted for approval to the public official in charge.

B. Every state in which its members are citizens

Location! Realty LLC is a limited liability company. Like other LLCs, for federal jurisdictional purposes, Location! Realty is most likely a citizen of A. All states B. Every state in which its members are citizens C. No state D. Only the state in which it was formed

D. Trustees

Loni, Michel, and Nita are investors in Oceanic Exploration, a business trust. A business trust is managed by its A. Directors and officers B. General partners C. Managing members D. Trustees

To the extent of her capital contribution

Lucy is a limited partner in Metro Contractors, a limited partnership, which cannot pay its debts. Lucy is personally liable for the debt

Liable for breach of the duty of loyalty

Mabel and Nicol do business as One World Realty. In acting on the firm's behalf in a deal with Property Acquisition Company, Mabel fails to account for the profit. To her firm, Mabel is

C. a short-form merger.

Mall Stores Corporation owns 95 percent of the shares of Niche Retail Corporation. Mall Stores combines with Niche Retail, but only Mall Stores continues to exist. This transaction was a. a consolidation. b. a share exchange. c. a short-form merger. d. a termination.

Dissolution

Mead, Nero, and Olen do business as Pipe & Plumbing Services. After Mead's relationship to the firm ends, Nero and Olen agree to discontinue the business. This is

B. New Jersey and New York

Mit-E Mart LLC was formed in New Jersey. Mit-E Mart's members are Odel, who is a citizen of New Jersey, and Pola, who is a citizen of New York. For federal diversity jurisdictional purposes, Mit-E is a citizen of A. All states B. New Jersey and New York C. New Jersey only D. No State

True

Most limited liability company (LLC) statutes provide that unless the members agree otherwise, all profits of the LLC will be divided equally

False

Most limited liability company statutes have strict provisions regulating members' meetings

B. shares of stock.

National Capital Corporation and International Investments, Inc., form a joint stock company. The ownership of a joint stock company is represented by a. partnership certificates. b. shares of stock. c. title documents. d. trust certificates.

B. a perpetual existence.

Neverend Music Company and Monotonous Metronome Corporation form a joint stock company. A joint stock company can be formed for, at the most, a. an implied duration of not more than six months. b. a perpetual existence. c. a single activity or transaction. d. a stated duration of not more than one year.

C. a piercing of O.K.'s corporate veil.

Niki owns O.K. Oil Corporation. Niki uses O.K.'s funds to pay her personal expenses, creates Pure Fuel Corporation to engage in the same business as O.K., transfers O.K.'s assets to Pure Fuel, and petitions O.K. into bankruptcy. This most likely warrants a. a bonus to Niki for financial maneuvers. b. a discharge for O.K. in bankruptcy. c. a piercing of O.K.'s corporate veil. d. a review of Pure Fuel's articles of incorporation.

An entity

Noah and Orin do business as Personnel Partners. In most states, for purposes of suing and being sued, Personnel Partners would be treated as

C. A Joint Venture

Omega Corporation and Precision Coding, Inc., two software firms, wish to combine their research and development capabilities to make a special, limited edition computer came. The most appropriate legal entity for this project might be A. Business Trust B. Joint Stock Company C. Joint Venture D. Syndicate

True

On a partner's dissociation, his or her interest in the partnership must be purchased

True

On a partner's dissociation, his or her right to participate in the management and conduct of the business terminates

Entrepreneur

One who initiates and assumes the financial risks of a new enterprise and undertakes to provide or control its management

False

Only a board of directors can initiate the dissolution of a corporation.

False

Only a limited partnership's limited partners have a fiduciary obligation to the other partners

D. a syndicate.

Owen, Paula, Quinn, and Rita combine to finance the building of Super Stores, a shopping mall. Their selected form of business organization is an investment group, or a. a business trust. b. a joint stock company. c. a joint venture. d. a syndicate.

At any time by either partner

Pat and Quint sign a fiver-year partnership agreement to do business as "Pat's Landscaping Service." At he end of the fifth year, they decide to continue without specifying a new term. This partnership is terminable

B. Pink and Purple's officers and employees.

Pink Boutique Company and Purple Kiosk Company decide to consolidate. This corporate combination does not require the approval of a. Pink and Purple's directors. b. Pink and Purple's officers and employees. c. Pink's shareholders. d. Purple's shareholders.

C. one or more natural persons.

Pola and Quincey want to form and do business as River Tours Corporation. A corporation can consist of a. no natural persons. b. one natural person but not more. c. one or more natural persons. d. only more than one natural person.

B. Precise and Quality's officers and employees.

Precise Device Corporation and Quality Instruments, Inc., decide to merge. This corporate combination does not require the approval of a. Precise and Quality's directors. b. Precise and Quality's officers and employees. c. Precise's shareholders. d. Quality's shareholders.

False

Promoters, not incorporators, must execute the articles of incorporation.

Major Disadvantage of Sole Proprietorship

Proprietor alone bears the burden of any losses or liabilities incurred by the business enterprise

C. A partnership

Quizbooks LLC is a limited liability company. Like any other LLC, unless QuizBooks chooses otherwise, the firm will be taxed as A. A corporation B. A joint venture C. A partnership D. A sole proprietorship

A. a consolidation.

Raven is a shareholder of Quantum Mechanix Corporation. Raven could normally exercise appraisal rights if Quantum participated in a. a consolidation. b. a dissolution. c. a takeover. d. a winding up.

B. Raw Resources and Stefan

Raw Resources Corporation authorizes Stefan, its employee, to oversee its mining operation. In the course of this employment, Stefan disposes of the mine's waste illegally. Liability for this crime most likely rests with a. neither Raw Resources nor Stefan. b. Raw Resources and Stefan. c. Raw Resources but not Stefan. d. Stefan but not Raw Resources.

B. A corporation or a partnership

Ray, Sully, and Toma form a syndicate to buy a professional football team. This syndicate could be set up as A. A corporation only B. A corporation or a partnership C. A partnership D. Neither a corporation nor a partnership

C. the state's secretary of state.

Realty Credit Company and Second Mortgage Corporation plan to consolidate. Most likely, the articles of consolidation will be filed with a. the county recording office. b. the Securities and Exchange Commission. c. the state's secretary of state. d. the U.S. Department of Justice.

Participate in the firm's management

Rick and Sandy are limited partners in Total Profit Enterprises, a limited partnership. To avoid personal liability for partnership obligations, they must not

Not Liable

Rona and Stiv do business as Treasure Island Traders. In acting on the firm's behalf in a deal with Unlimited Potential, Inc., Rona makes an honest error in overestimating the profit. To her firm, Rona is

A. no penalties or sanctions.

Ruby Red Corporation has six shareholders, four of whom are members of the same family. All of Ruby's shareholders agree in writing to operate without shareholders' meetings. Under the Revised Model Business Corporation Act, this most likely warrants a. no penalties or sanctions. b. the imposition of a fine on Ruby. c. the imprisonment of Ruby's shareholders. d. the piercing of Ruby's corporate veil.

D. a tender offer.

Ruff Games, Inc., wishes to acquire a controlling interest in Smart Toy Company by buying its stock. A public offer by Ruff Games to Smart Toy share-holders is a. a buyout notice. b. a golden parachute. c. an acquisition call. d. a tender offer.

Without more

Sabin and Tyler agree while talking on the phone to form a partnership. Their partnership agreement is legally binding

C. make a tender offer to the shareholders of Pepper.

Salt Corporation wants to acquire or merge with Pepper Corporation. The board and the shareholders of Pepper are resisting. Salt should a. file a plan of merger with the secretary of state. b. file an article of merger with Pepper. c. make a tender offer to the shareholders of Pepper. d. make a tender offer to the shareholders of Salt.

B. Partnership Law

Serious Gamers, LLC, is a limited liability company. Among the members, a dispute arises that their operating agreement does not cover. No statute applies. The dispute is governed by the principles of A. Corporate Law B. Partnership Law C. Sole proprietorship Law D. Syndicate Law

False

Shareholder approval is required when a corporation buys all of the assets of another company.

False

Sharing of profits from the sale of the good will of a business creates a presumption that a partnership exists

Sole Proprietorship

Simplest form of business organization, in which the owner is the business. The owner reports business income on his or her personal income tax return and is legally responsible for all debts and obligations incurred by the business.

D. the Revised Model Business Corporation Act.

Skyla and Terry want to form and do business as Unique Boutique Corporation. The state statute governing the formation and operation of their corporation is most likely guided by a. city or county corporate codes. b. the Entrepreneur's Corporate Handbook. c. the federal Administrative Procedure Act. d. the Revised Model Business Corporation Act.

Income Taxes

Sole Proprietor pays only personal ___________ __________ on the business's profit, which are reported as personal income on the proprietor's personal income tax return.

C. a de jure corporation.

Stable Foundation Construction Corporation's articles list an incorrect address for its incorporator. Under this circumstance, Stable is most likely a. a corporation by estoppel. b. a de facto corporation. c. a de jure corporation. d. ultra vires.

D. perpetual existence.

Stan incorporates his scientific products business as Tech Supply, Inc. Unless the articles of incorporation state otherwise, Tech Supply most likely has a. a finite, yet-to-be-determined existence. b. a one-year, nonrenewable existence. c. a one-year, renewable existence. d. perpetual existence.

C. itself, through its shareholders and directors, or the state.

Standard Business Corporation can be compelled to dissolve by a. its creditors only. b. itself, through its shareholders and directors, only. c. itself, through its shareholders and directors, or the state. d. the state only.

D. perform all acts reasonably appropriate and necessary to accomplish its corporate purposes.

Superior Home Products, Inc., is a corporation. Superior's implied powers enable it to a. amend the articles of incorporation. b. bring a derivative suit. c. declare dividends. d. perform all acts reasonably appropriate and necessary to accomplish its corporate purposes.

B. a professional association.

The abbreviation "P.A." in the name "Painless Dental, P.A." means that this organization is a. a private association. b. a professional association. c. a public association. d. a publicly administered corporation.

False

The beneficiaries of a business trust are personally liable for its obligations

True

The choice of a corporate name is subject to state approval.

False

The death of a limited partner dissolves a limited partnership

True

The dissociation of a member of a limited liability company in violation of the operating agreement is legally wrongful

False

The extent of implied authority is generally broader for agents than for partners

True

The maximum amount of money at risk by a limited partner is the amount of his or her investment in the limited partnership

False

The members, managers, and agents of a limited liability company are liable for its obligations by virtue of their status

True

The owners of a joint stock company are personally liable for its obligations

False

The owners of an incorporated cooperative are personally liable for its obligations

True

The owners of an unincorporated cooperative have joint liability for its obligations

False

The participants in a joint venture have more implied and apparent authority than the partners in a partnership

Major Advantage of Sole Proprietorships

The proprietor owns the entire business and has a right to receive all of the profits (because he or she assumes all of the risks).

B. a share exchange.

Through a certain transaction, Corporate Properties, Inc., acquires all of the shares of Downtown Realty Corporation for some of Corporate's shares. Both Corporate and Downtown continue to exist. This is a. a consolidation. b. a share exchange. c. a short-form merger. d. a termination.

A. must be a corporation formed by professionals.

To qualify as a professional corporation, Medical Clinic, P.C., a. must be a corporation formed by professionals. b. must grant all shareholders voting rights. c. must have at least thirty-five shareholders. d. all of the choices.

Personally liable to the full extent of the debt

Tundi is a partner in YooHoo! Amusement, a new partnership. A YooHoo! debt comes due. Tundi is

False

Uniform Commercial Code governs the operation of partnerships

True

Uniform Partnership Act has done much to reduce controversies in the law relating to partnerships

True

Unless otherwise agreed, the participants in a joint venture have an equal voice in controlling the enterprise

True

Unless otherwise agreed, the participants in a joint venture share its profits equally

C. the state's secretary of state.

Vacation Destination, Inc., and Wonder Resort Corporation plan to merge. Most likely, the articles of merger will be filed with a. the county recording office. b. the Securities and Exchange Commission. c. the state's secretary of state. d. the U.S. Department of Justice.

B. a cooperative

Vela and other farmers in Washington County form a business organization to provide, without profit, an economic service to its members. This is a. a business trust. b. a cooperative. c. a corporation. d. a joint stock company.

Acts as the firm's manager

Venture Capital, LP, is a limited partnership. A Venture limited partner loses his or her limited liability if he or she

A. Capital Contributions

Waste Management Services, LLC, is a member-managed limited liability company. If the law in Waste's state is like the law in most states, unless the members have agreed otherwise, voting rights are apportioned according to A. Capital contributions B. Participation in management C. Seniority D. Transactions with the firm

False

When a sale of assets amounts to what in effect is a consolidation, the acquiring corporation does not inherit the selling corporation's liabilities.

False

Winding up a corporation's affairs can only be performed under court supervision.

True

With a few exceptions, all of the rules that govern partnerships apply to limited liability partnerships