Business Organizations

The earnings and losses from a sole proprietorship are reported on ________

the proprietor's personal income tax filing

An act by a corporation that is beyond its express or implied powers

ultra vires act

The sole proprietor has ________ liability

unlimited personal

________ is a general rule of corporate law that provides that generally shareholders are liable only to the extent of their capital contributions for the debts and obligations of their corporation and are not personally liable for the debts and obligations of the corporation.

Limited liability of shareholders

Orlando opened a hot dog stand in Brooklyn which unfortunately did not earn him a profit. He had borrowed $5,000 from the bank to set it up, which had to be repaid to the bank in two days. However, Orlando's friend, Bob, agreed to partner with him starting the subsequent month. From which of the following sources can the bank recover its $5,000 with interest?

Orlando's savings account

a model act that provides comprehensive and uniform laws for the formation, operation, and dissolution of LLCs

ULLCA

Which of the following characteristics of an LLC is similar to that of limited partnerships and S corporations? Select one: a. An LLC has flow-through taxation. b. An LLC does not have to file a form with the IRS to obtain flow-through taxation. c. An LLC can have more than one class of stock, thereby permitting a more complex capital structure. d. An LLC may not own more than 80 percent of another corporation.

a. An LLC has flow-through taxation.

Which of the following is true of an LLC formation? Select one: a. Doctors and lawyers cannot operate practices as LLCs. b. An LLC has to be organized in every state that it operates. c. "Inc." and "Ltd." can both be used to denote an LLC. d. An LLC can conduct business only in the state where it is organized.

a. Doctors and lawyers cannot operate practices as LLCs.

Which of the following statements is true about an agent? Select one: a. It refers to a party who agrees to act on behalf of another. b. It refers to a party who employs another person to act on his or her behalf. c. It refers to a party that directs a worker under an express or implied contract of employment. d. It refers to a party who receives the services of another for remuneration.

a. It refers to a party who agrees to act on behalf of another.

Which of the following constitutes an agency? Select one: a. principal-agent relationship b. agent-agent relationship c. principal-principal relationship d. agent-independent contractor relationship

a. principal-agent relationship

Which of the following can dismiss the existence of a corporation? Select one: a. voluntary termination by shareholder b. death of a shareholder c. bankruptcy of a shareholder d. voluntary termination by the corporation's creditors

a. voluntary termination by shareholder

a fiduciary relationship which results from the manifestation of consent by one person to another that the other shall act in his behalf and subject to his control, and consent by the other so to act.

agency

Which of the following is true of operating an LLC? Select one: a. An LLC has to file a form with the IRS to obtain flow-through taxation. b. An LLC can have any number of member-owners. c. An LLC cannot have shareholders other than estates, certain trusts, and individuals. d. An LLC cannot have nonresident alien member-owners.

b. An LLC can have any number of member-owners.

Which of the following is true of an LLC? Select one: a. An LLC is a creature of federal law. b. An LLC is regarded a separate legal entity. c. An LLC cannot hold title to or transfer property. d. The owners of an LLC are called general partners or specific partners.

b. An LLC is regarded a separate legal entity.

Which of the following is true of the ULLCA? Select one: a. It fails to cover problems that arise in the formation and operation of LLCs. b. It provides uniform laws for the dissolution of LLCs. c. It has been adopted by all the states as their LLC law. d. It governs the operation of proprietorships and LLPs.

b. It provides uniform laws for the dissolution of LLCs.

Which of the following would be considered an express power of a corporation? Select one: a. opening a bank account b. issuing notes and bonds c. purchasing advertisement d. purchasing insurance

b. issuing notes and bonds

A panel of persons who are elected by the shareholders that make policy decisions concerning the operation of a corporation

board of directors

Which of the following elect members of the board of directors for a corporation? Select one: a. the CEO b. corporate officers c. shareholders d. employees

c. shareholders

An LLC differs from a sole proprietorship in that it ________.

can be owned by one owner in most states and can thus obtain limited liability

a fictitious legal entity that is created according to statutory requirements

corporation

Which of the following is true of LLC taxation? Select one: a. An LLC is taxed as a corporation in all general cases. b. An LLC can be taxed only as a partnership. c. Members of an LLC are subject to double taxation. d. An LLC is not taxed at the entity level.

d. An LLC is not taxed at the entity level.

Which of the following statements about corporations is true? Select one: a. The corporate officers appoint directors to run the corporation's day-to-day operations. b. The death, insanity, or bankruptcy of a director or an officer of a corporation dissolves the corporation. c. Corporations can be put in prison for violations of the law. d. Corporations usually have a centralized management composed of the board of directors and officers of the corporation.

d. Corporations usually have a centralized management composed of the board of directors and officers of the corporation.

Which of the following is true of LLPs? Select one: a. LLPs are creatures of federal law. b. The state legislature does not have the authority to amend LLP statutes. c. Articles of limited liability partnership are statutes that regulate the operation and dissolution of LLPs. d. Nonprofessionals cannot use the LLP form of partnership.

d. Nonprofessionals cannot use the LLP form of partnership.

a document that is filed with the state that designates a trade name of a business.

fictitious business name statement

powers beyond express powers that allow a corporation to accomplish its corporate purpose.

implied powers

A sole proprietorship does not pay taxes at the business level because ________

it does not have a separate legal personality.

The owner of an LLC is called a ________

member

A party who employs another person to act on his or her behalf

principal

Owners of a corporation who elect the board of directors and vote on fundamental changes in the corporation

shareholders

Jonathan Lopez wants to be his own boss and ventures into retailing fruit in the neighborhood after borrowing some money from his mother. While obtaining a license to carry out business in his city, Jonathan mentions the money he borrowed but forgets to specify what type of business undertaking his store will be. Under which of the following major forms of business is Jonathan's store listed by default?

sole proprietorship