BE 325 Final

Advantages of sole proprietorship

-more flexibility -only pay personal income taxes on business profits -tax exempt retirement accounts

Disadvantages of sole proprietorship

-unlimited liability -automatically dissolves upon owner's death -struggles to raise capital

Types of Franchises?

1. distributorship: i.e. car dealership 2. chain style business operation: i.e. McDonalds, Hilton 2. manufacturing or processing plant: i.e. Pepsi or Coke

Title VII of the Civil Rights Act of 1964 applies to which of the following? An employer with five employees A labor union with twelve members An employer with ten employees A labor union with twenty-five members

A labor union with twenty-five members

A corporation does not possess the same right of access to the courts as natural persons. T/F

False

A corporation whose security does not qualify for an exemption can avoid the cost and complexity associated with registration. T/F

False

A corporation's officers and other employees are hired by its shareholders. T/F

False

A disclosed principal is a principal whose identity is not known by the third party at the time the contract is made by the agent. T/F

False

A limited liability company must be managed by its members. T/F

False

A partner's profit from a partnership is taxed as income to the firm. T/F

False

A plaintiff who proves unlawful discrimination may be awarded reinstatement, back pay, but not retroactive promotions. T/F

False

A price-fixing agreement is an agreement by two or more sellers to boycott a particular person or firm. T/F

False

A price-fixing agreement that is reasonable does not violate antitrust law. T/F

False

A sharing of profits and losses is the only requirement of a partnership. T/F

False

A sole proprietorship continues after the death of the proprietor. T/F

False

An independent contractor is an employee. T/F

False

An operating agreement must be formed for a limited liability company to exist. T/F

False

Any employee, except an undocumented alien, can bring an action for employment discrimination. T/F

False

Before filing a registration statement, an issuer must offer to sell securities. T/F

False

Employees are entitled to overtime pay only at their employer's discretion. T/F

False

Federal law does not prohibit employers from engaging in gender-based wage discrimination. T/F

False

Federal law governs drug tests of private-sector employees. T/F

False

Generally, employers can monitor employees' electronic communications made in the ordinary course of business, as well as employees' personal communications. T/F

False

In a limited partnership, a limited partner is personally liable for all partnership debts. T/F

False

In a sole proprietorship, the proprietor shares the burden of any losses or liabilities incurred by the business enterprise with the government. T/F

False

Normally, a franchisee determines the territory that it will serve. T/F

False

Only federal statutes protect employees and their families from the risk of accidental injury, death, and disease resulting from their employment. T/F

False

Sales of securities must occur within five days of registration. T/F

False

Securities of nonprofit, educational, and charitable organizations are not exempt from the registration requirement of the 1933 Securities Act. T/F

False

Sexual harassment occurs only if sexual favors are demanded of an employee. T/F

False

The Civil Rights Act of 1964 does not prohibit job discrimination in the hiring process. T/F

False

The basis for an employee's contribution to Social Security is the employee's age. T/F

False

Title VII of the Civil Rights Act of 1964 prohibits only intentional discrimination. T/F

False

Under the Age Discrimination in Employment Act of 1967, a plaintiff must prove that he or she was replaced by a person "outside the protected class." T/F

False

Lita replaces Manny in his job at Neighborly Business Corporation (NBC). Refer to Fact Pattern 17-1. Manny believes that he has been discriminated against on the basis of his age. For the Age Discrimination in Employment Act of 1967 to apply Lita must be forty years of age or older. Manny must be forty years of age or older. all parties must be forty years of age or younger. NBC must have been in existence for at least forty years.

Manny must be forty years of age or older.

Julie works as an employee for Organic Produce Express, Inc. (OPI). Rowan, who is unemployed, collects unemployment compensation. This compensation is provided by a tax on Julie and other employees. Julie, OPI, and other employees and employers. not Julie, OPI, or other employees or employers. OPI and other employers.

OPI and other employers.

A free-writing prospectus may be used before the Securities and Exchange Commission completes its review of a related registration statement. T/F

True

A key employee is defined as an employee whose pay falls within the top 10 percent of the firm's workforce. T/F

True

A limited liability company can be taxed as a corporation. T/F

True

A principal owes an agent a duty of compensation. T/F

True

A registration statement must include a financial statement certified by an independent public accounting firm. T/F

True

A registration statement must state how a corporation plans to use the proceeds from the sale of the securities. T/F

True

A tangible employment action is a significant change in employment status or benefits. T/F

True

An act must substantially affect interstate commerce to violate antitrust law. T/F

True

An agent has a duty to keep and make available to the principal an account of all property and funds received and paid out on behalf of the principal. T/F

True

An employee's resignation must be the foreseeable result of an employer's discriminatory action to support a showing of constructive discharge. T/F

True

An employer may be liable for the harassment by nonemployees if the employer knew about the harassment and failed to take corrective action. T/F

True

An employer may hire a noncitizen worker if he worker is "self-authorized." T/F

True

An employer may not hire an illegal immigrant who lacks work authorization. T/F

True

Both employers and employees contribute to help pay for benefits that will partially make up for the employees' loss of income on retirement. T/F

True

Disparate-impact discrimination occurs when a protected class of individuals is adversely affected by an employer's practices, even though they do not appear to be discriminatory. T/F

True

Employers cannot forbid their employees from participating in any religious activity. T/F

True

Generally, stock offerings that are made in a limited manner during any twelve-month period are exempt from the registration requirement. T/F

True

Generally, stock offerings that involve a small dollar amount are exempt from the registration requirement. T/F

True

If a job applicant or an employee with a disability, with reasonable accommodation, can perform essential job functions, the employer must make the accommodation. T/F

True

In a limited liability partnership, a partner can be exempt from personal liability for the malpractice of other partners. T/F

True

Making out a prima facie case of discrimination means that a plaintiff has met his or her initial burden of proof. T/F

True

One of the most common forms of securities are bonds issued by corporations. T/F

True

Some states require franchisors to disclose certain material facts to prospective franchisees. T/F

True

The Civil Rights Act of 1964 prohibits job discrimination against majority group individuals, such as white males. T/F

True

The Fair Labor Standards Act extended wage and hour requirements to cover all employees engaged in interstate commerce. T/F

True

The Sherman Act, the Clayton Act and the Federal Trade Commission Act are all examples of legislation designed to curb anticompetitive business practices. T/F

True

The privacy rights of private-sector employees are governed by state law, which varies widely. T/F

True

Title VII of the Civil Rights Act of 1964 does not apply to employers with only five employees. T/F

True

When the harassment by co-workers creates a hostile working environment, an employee may have a cause of action against the employer. T/F

True

Edgy Engine Components, Inc., a maker of vehicle parts, refuses to sell to Fidgety Fix-It, Inc., a national vehicle service firm. Edgy Engine convinces Greasy Motor Parts Company, a competitor, to do the same. This is a group boycott. an exclusive-dealing contract. a market division. a joint venture.

a group boycott.

Gulf Air, Inc., is the major wholesale distributor of software in the state of Florida. Its closest competitor is Fluid Systems Company, another Florida firm. The two firms agree that Gulf Air will operate in south Florida and Fluid Systems will operate in north Florida. This is an exclusive-dealing contract. a market division. a group boycott. a joint venture.

a market division

Flip, Gordo, Haruko, and Inez are the members of Regional Gymnastics LLC. With respect to the management of the firm, the members can decide in their operating agreement to be none of the choices. a member-managed LLC or a manager-managed LLC. a member-managed LLC only. a manager-managed LLC only.

a member-managed LLC or a manager-managed LLC.

Thermo Gas, Inc., and Uno Oil Corporation refine and sell gasoline and other petroleum products. To limit the supply of gas on the market and thereby raise prices, Thermo and Uno agree to buy "excess" supplies from dealers and "dispose" of it. This is a per se violation of the Sherman Act. subject to analysis under the rule of reason. a legal restraint of trade. a deal that neither restrains trade or harms competition

a per se violation of the Sherman Act.

Squeaky Clean Corporation wants to make an offering of securities to the public. This offering is not exempt from registration under the Securities Act of 1933. Before Squeaky sells its securities, it must provide investors with an investment contract. samples of its products. a forward-looking financial forecast. a prospectus.

a prospectus.

Truman applies for a job at Skylight Canopy Corporation for which he is well qualified, but for which he is rejected. Skylight continues to seek applicants and eventually fills the position with a person who is not a member of a minority. Truman is most likely to succeed in a suit against Skylight for discrimination if he is a member of a majority group. a union. a protected class. an employers' association.

a protected class.

Jumbo Juice Inc. offers entrepreneurs the opportunity to operate a franchise under the Jumbo Juice trade name. For any projected earnings figures Jumbo Juice provides to potential franchisees, the franchisor must have a hypothetical basis. no basis. an actual basis. a reasonable basis.

a reasonable basis.

Julia owns and operates Collectable Dolls without creating a separate business organization. She receives all the profits from the doll sales. Collectable Dolls is most likely a sole proprietorship. a corporation. a limited liability company. a partnership.

a sole proprietorship.

Thor Power Products Corporation permits its directors to be elected by cumulative voting. This assures directors that they will be selected by their peers. ensures against persons who may "cloud" the corporate direction. allows minority shareholders to be represented on the board. guarantees Thor's executive officers of the final choice.

allows minority shareholders to be represented on the board.

RingTone Corporation is a public company whose securities are traded among investors. Under the Securities Act of 1933, a security is whatever a company represents to the public as a security. an investment that is guaranteed to make a profit. almost any stake in the ownership or debt of a company. only such common forms of debt and equity as bonds and stocks.

almost any stake in the ownership or debt of a company.

Ester is a lighting technician who hires out on a per-project basis to film and television production companies, as well as theatres and other venues that stage dramatic and musical performances. In this capacity, Ester is an agent. an independent contractor. a principal. an employee.

an independent contractor.

Kitsch Niche Corporation is a noninvestment company that wants to issue $3 million of stock in a twelve-month period. Kitsch Niche, with less than $20 million in annual sales, qualifies as a small business issuer. Before Kitsch Niche sells the stock, it must provide investors with a tombstone ad. a red herring prospectus. a notice of the issue. an offering circular.

an offering circular.

Robert owns Textbooks Plus, a sole proprietorship that sells textbooks. When Robert dies, Textbooks Plus will automatically dissolve. pass directly to the state. pass directly to his oldest child. be evenly divided among all Robert's heirs.

automatically dissolve.

Lisa brings a lawsuit against her employer for unlawful discrimination. Lisa is successful in proving that she was unlawfully discriminated against by her employer. Lisa may be awarded back pay, retroactive promotions and damages. retroactive promotions, but not back pay. damages, but not back pay. back pay, but not retroactive promotions.

back pay, retroactive promotions and damages.

Dag is an employee of Ridge Mining Company. Under federal labor law, Dag and other employees have the right to interfere with the efforts of others to form labor organizations. insist that Ridge require union membership as a condition of work. refuse to bargain with Ridge through their representatives. bargain collectively with Eagle through their representatives.

bargain collectively with Eagle through their representatives.

Tyrone is seventeen years old. Under the Fair Labor Standards Act, he must obtain a permit to work. cannot work during school hours. none of the choices. cannot work in a hazardous occupation.

cannot work in a hazardous occupation.

Paradise Footwear buys a franchise from Resilient Athletic Shoes Inc. This relationship, like all other franchise relationships, is governed by contract law. the Franchise Disclosure Document, or FDD. no law. the rules of the National Collegiate Athletic Shoe Association.

contract law

Olivia applies for a job with Petro Company. Petro does not hire Olivia because of her ethnicity, or national origin. This is not discrimination. disparate-treatment discrimination. disparate-impact discrimination. reverse discrimination.

disparate-treatment discrimination.

Julia is an agent who purchases wool for Kara's Knitting Company. In the course of her performance for Kara's Knitting Company, Julia pays for the gas for the company car and for some storage boxes for the wool. Kara's Knitting Company must reimburse Julia because of the principal's duty of reimbursement. duty of performance. duty of compensation. duty of loyalty.

duty of reimbursement.

Pork & Poultry Packing Corporation is a U.S. employer. Pork & Poultry, and other U.S. employers, must perform I-9 verifications for every other new hire. each new hire. new hires with certain racial or ethnic characteristics. a random selection of new hires.

each new hire.

Finance Professionals Union represents the workers of Business & Commerce Banking Corporation. The management of the firm refuses to bargain with the union. This violates no federal or state law. federal labor law. state right-to-work laws. federal wage and hour laws.

federal labor law.

Origami Paper Products Corporation meets all of the requirements to be subject to the federal employment discrimination laws. These laws restrict the ability of employers to discriminate against workers on the basis of intelligence. gender. skill. experience.

gender

Will and Jay form Northwest Air Express, a general partnership. The essential elements of this partnership do not include an equal right to management in the business. a joint ownership of the business. a sharing of profits and losses. goodwill.

goodwill

Eddie believes that Firewood Restaurant Corporation's rejection of his job application is discrimination on the basis of race. Eddie files a suit against Firewood under Title VII. To establish a prima facie case of employment discrimination, Eddie must show that other people of his race hold similar positions with other employers. Firewood stopped seeking applicants without filling the position. Firewood has never hired a person of Eddie's race. he applied and was qualified for the job in question.

he applied and was qualified for the job in question.

RayAnn is a corporate officer for Timmy's Trees, Inc. As a corporate officer, RayAnn is not involved in the daily business operations of Timmy's Trees. the head of the board of directors. involved in the daily business operations of Timmy's Trees. in charge of selecting members of the board of directors.

involved in the daily business operations of Timmy's Trees.

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 liable for breach of the duty of economic sense. liable for breach of the duty of loyalty. not liable. liable for breach of the duty of care.

liable for breach of the duty of loyalty.

Following a union election campaign by Service Employees International Union among the employees of Quality Hotels & Resorts, Inc., the union does not obtain a majority vote in the election. This most likely violates federal elections law. federal employment discrimination law. federal labor law. no federal law.

no federal law

Following a union election campaign by Service Employees International Union among the employees of Quality Hotels & Resorts, Inc., the union does not obtain a majority vote in the election. This most likely violates federal labor law. federal elections law. no federal law. federal employment discrimination law.

no federal law.

Employers can discriminate in the hiring or awarding of tenure to employees based on union affiliation under the Labor-Management Reporting and Disclosure Act. the Norris-LaGuardia Act. no federal or state law. the National Labor Relations Act.

no federal or state law.

Employers can discriminate in the hiring or awarding of tenure to employees based on union affiliation under the National Labor Relations Act. no federal or state law. the Labor-Management Reporting and Disclosure Act. the Norris-LaGuardia Act.

no federal or state law.

Phyllis intentionally injures herself while performing her job for Stone Cutters, Inc. Phyllis will be entitled to half of the normal workers' compensation. full workers' compensations. 10 percent of the normal workers' compensation. no workers' compensation.

no workers' compensation.

Newt is considering forms of business organization for Newton Design, an architectural firm. An advantage of a limited liability partnership is that partners can avoid personal liability for their own wrongful acts. their own negligence. supervising a party who commits a wrongful act. other partners' malpractice.

other partners' malpractice.

Sarah believes that she was rejected for a position at Trekking Travel Agency due to her race. Sarah files a suit against Trekking Travel Agency under Title VII on the basis of disparate-treatment discrimination. Sarah must show all of the following except that she was rejected by Trekking Travel Agency. she applied and was qualified for the job in question. she is a member of a protected class. other people of her race hold similar positions with other employers.

other people of her race hold similar positions with other employers.

Phillipa is the sole proprietor of Incredible Floral Arrangements. As a sole proprietor, on Incredible's profits, Phillipa does not pay income taxes. is taxed twice. pays only personal income taxes. pays both personal and sole proprietor income taxes.

pays only personal income taxes.

A court deems an agreement between Silver Saddles Saddlery and Time Tested Tack, Inc. to be a per se violation of the Sherman Act. The court is prevented from determining whether the agreement's benefits outweigh its anticompetitive effects. required to issue a formal complaint against Silver Saddles and Time Tested Tack. required to apply the rule of reason. required to unanimously decide whether the agreement's benefits outweigh its anticompetitive effects.

prevented from determining whether the agreement's benefits outweigh its anticompetitive effects.

Ruth is a supervisor for Subs & Suds, a restaurant. Tim is a Subs employee. The owner announces that some employees will be discharged. Ruth tells Tim that if he has sex with her, he can keep his job. This is quid pro quo harassment. not harassment. harassment on the basis of sexual orientation. same-gender harassment.

quid pro quo harrassment

Dick works for First City Bank. When his spouse Elin is diagnosed with Lou Gehrig's disease, Dick asks to take temporary leave to care for her. Instead, First City discharges him. He files a suit against the bank under the Americans with Disabilities Act of 1990. Most likely, Dick can not recover. recover for association discrimination. recover for disparate-impact discrimination. recover for reverse discrimination.

recover for association discrimination.

Dick works for First City Bank. When his spouse Elin is diagnosed with Lou Gehrig's disease, Dick asks to take temporary leave to care for her. Instead, First City discharges him. He files a suit against the bank under the Americans with Disabilities Act of 1990. Most likely, Dick can recover for association discrimination. recover for disparate-impact discrimination. recover for reverse discrimination. not recover.

recover for association discrimination.

Foamy Soap Corporation is a public company whose shares are traded in the public securities markets. The Securities Act of 1933 provides that, unless exempt, all of Foamy's securities transactions must be conducted through national stock exchanges. accredited by sophisticated investors. subjected to surveillance to deter undesirable practices. registered with the Securities and Exchange Commission.

registered with the Securities and Exchange Commission.

Pikabo files an employment discrimination suit against Quantitative Analysis, Inc., under the Civil Rights Act of 1964, based on its discharge of Pikabo. Possible relief includes an order to shutdown the employer's business. fines. imprisonment. reinstatement.

reinstatement

Auto Parts & Products Corporation is a public company whose shares are traded in the public securities markets. The purpose of the Securities Act of 1933 is to impose new responsibilities on chief corporate executives. require disclosure of all essential information concerning the issuance of securities. provide a "safe harbor" for companies that make forward-looking statements. prevent insiders from trading among themselves.

require disclosure of all essential information concerning the issuance of securities.

Conrad and Delilah are employees of AgriBio Feed & Seed Corporation. Under the Equal Pay Act of 1963, AgriBio can legitimately pay different wages on the basis of job descriptions. substantial equality of skill, effort, and responsibility. gender. seniority.

seniority

Melanie files an employment discrimination suit against Natural Gas Industries Corp. under Title VII on a disparate-impact theory. To succeed, Melanie must show that a protected group of people are adversely affected by any of the following except the employer's procedures. tests. practices. seniority system.

seniority system.

Dakota believes that Credit Services Corporation (CSC) has discriminated against her on the basis of gender. She files a suit against CSC under the Civil Rights Act of 1964. To establish a prima facie case of employment discrimination, Dakota must show that she is a member of a protected class. discriminatory intent motivated CSC's act. CSC has no legal defenses against the claim. no other firm in CSC's industry has committed a discriminatory act.

she is a member of a protected class.

Paula, a disabled person, applies for a job at Quantity Corporation for which she is well qualified, but for which she is rejected. Quantity continues to seek applicants and eventually fills the position with a person who is not disabled. Paula is most likely to succeed in a suit against Quantity for discrimination under the Americans with Disabilities Act of 1990 if she can show that she could not perform the job even with reasonable accommodation. her disability causes her undue hardship. she can function well with corrective devices or on medication. she was not hired solely because of her disability.

she was not hired solely because of her disability.

To fall under the Sherman Act, an activity must involve monopolization. promote competition. substantially affect interstate commerce. involve international trade.

substantially affect interstate commerce.

Elections for union officers are regulated by the Labor-Management Reporting and Disclosure Act. the Civil Rights Act. the Labor-Management Relations Act. no federal law.

the Labor-Management Reporting and Disclosure Act.

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 the owners. the officers. the board of directors. the shareholders.

the board of directors

Bernard is an expert on exotic flowers. Fine Floral Fixtures, Inc. (FFF) hires Bernard to order exotic flowers from various greenhouses. Bernard does not bother to examine the quality of the flowers he purchases on behalf of FFF. Bernard has breached the duty of loyalty. the duty of notification. no duty. the duty of performance.

the duty of performance.

When applying the rule of reason to determine whether an agreement violates Section 1 of the Sherman Act, a court will not consider the potential effect of the agreement on competition. the parties' market ability to implement the agreement. the purpose of the agreement. the effect of the agreement on international trade.

the effect of the agreement on international trade.

Network Industries, Inc., wants to monitor its employees' electronic communications. To avoid liability under laws related to employee monitoring, Network should announce the monitoring to the government. no one. the public generally. the employees.

the employees

Hu, Ivan, and Juana apply to work for Valley Groundskeeping Company. These individuals' identities and eligibility to work must be verified by the employer. the individuals. the U.S. Citizenship and Immigration Services. the individuals' countries of origin.

the employer.

Rhea is a director of Spex Corporation, which makes and sells sunglasses and other eyewear. As a Spex director, Rhea sits on the board, which is subject to the Spex shareholders. subject to the Spex officers. subject to the Spex incorporators. the ultimate authority in Spex.

the ultimate authority in Spex.

Erica is sixty-year-old woman with cerebral palsy. Erica is a member of one protected class. two protected classes. no protected classes. three protected classes.

three protected classes.

Jordana is a member of Klondike Coffee, LLC, a limited liability company. Jordana is liable for Klondike's debts in proportion to the total number of members. to the extent of her investment in the firm. to the full extent. to the extent that the other members do not pay the debts.

to the extent of her investment in the firm.

Jordana is a member of Klondike Coffee, LLC, a limited liability company. Jordana is liable for Klondike's debts to the full extent. to the extent that the other members do not pay the debts. in proportion to the total number of members. to the extent of her investment in the firm.

to the extent of her investment in the firm.

Flo-Thru Corporation is poised to issue securities that, under the Securities Act of 1933, are "exempt." This means that the securities can be sold on the basis of a material omission or misrepresentation. on the basis of nonpublic information. within any six-month period by certain insiders. without being registered.

without being registered.