Business Law Chapter 10

Hollister and Gladys do business as partners in Frothy Confections. For federal income tax purposes, Frothy Confections would be treated as

A "pass-through" entity

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's officers and other employees are hired by its shareholders.

False

A member of a limited liability company (LLC) has the power and the right to dissociate from the LLC at any time.

False

A partner's profit from a partnership is taxed as income to the firm.

False

A sole proprietorship continues after the death of the proprietor.

False

A third party cannot sue one of the partners of a partnership without suing all of the partners.

False

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

False

Chocolate Sundry LLC's members and managers are Devlin, Effie, and Flavia. After Devlin's relationship to the firm ends, Effie and Flavia agree to discontinue the business. This is

Optional

Open & Shutt Gates Corporation has a board of ten directors. Open & Shutt's bylaws do not state any quorum requirements. Normally, a quorum for Open & Shutt would consist of

Six directors

A limited liability company can be taxed as a corporation.

True

A partner owes to the partnership and the other partners a duty of loyalty.

True

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

True

In certain instances of fraud, a court may "pierce the corporate veil" to hold the shareholders individually liable.

True

Jody owns KuppaJava Kiosks, a sole proprietorship. Jody's liability is

Unlimited

Flip, Gordo, Haruko, and Inez are the member of Regional Gymnastics LLC. With respect to the management of the firm, the members can decide in their operating agreement to be

a member-managed LLC only

Thor Power Products Corporation permits its directors to be elected by cumulative voting. This

allows minority shareholders to be represented on the board

RayAnn is a corporate officer for Timmy's Trees, Inc. As a corporate officer, RayAnn is

involved in the daily business operations of Timmy's Trees

Josh is a director of Sippy Soups, Inc. Josh opposes a contract that is in Sippy's best interest because Josh would like to enter into the contract for his personal benefit. Josh is liable for a breach of

the duty of loyalty

Myron and Norah would like to form Originals, Inc., to do business in the art market. Generally, the articles of incorporation for a corporation do not include

the minutes of the organizational meeting