CH 18

_____ is a choice LLCs can make on their tax returns to be taxed as a corporation or a partnership. A. Check the box taxation B. Double taxation C. Pass through taxation D. Single taxation

A. Check the box taxation

Exclusive rights given to the creator of a literary or artistic work to make use of that work is called a: A. trade secret. B. copyright. C. trademark. D. patent.

B. copyright.

A person or entity being sued is referred to as _____. A. plaintiff B. defendant C. bailee D. petitioner

B. defendant

Which of the following forms of business requires no government permission to set up? A. Limited partnerships B. C Corporation C. Professional corporation D. Sole proprietorship

D. Sole proprietorship

Which of the following types of business form is the most popular for start-ups? A. Limited partnerships B. S corporations C. Professional corporations D. Sole proprietorship

D. Sole proprietorship

Which of the following is an advantage of corporations? A. They tend to be personal in nature. B. They incur the lowest incorporation fees and taxes. C. They require the owner's liability to exceed the owner's investment. D. They are better equipped in raising large amounts of money.

D. They are better equipped in raising large amounts of money.

Which of the following statements is true regarding a trademark? A. A trademark can sometimes also function as a service mark. B. A trademark once granted lasts for 25 years. C. A trademark can only be renewed every 5 years. D. A trademark is not an exclusive right to its creator.

A. A trademark can sometimes also function as a service mark.

_____ refers to the filing made with a state(s) in which the business operates disclosing the trade name or assumed name of the business along with the owners of the business. A. Fictitious name filing B. Evidential name filing C. Incorporation D. Adverse possession

A. Fictitious name filing

Martha got billed by her lawyer for 40 minutes of consultation. Which of the following ways did the lawyer charge Martha? A. Hourly fee B. Flat fee C. Contingency fee D. Retainer

A. Hourly fee

Which of the following types of legal fee does the attorney take a percentage of recovery as his or her fee? A. Statutory fee B. Contingency fee C. Flat fee D. Hourly fee

B. Contingency fee

_____ refers to property coming from some sort of original thought such as trademarks, patents, and copyrights. A. Trade property B. Real property C. Intellectual property D. Tangible property

C. Intellectual property

Which of the following dispute resolution methods is the least expensive and much faster to complete? A. Litigation B. Arbitration C. Mediation D. Piercing the veil

C. Mediation

Which of the following is true about trade name? A. There can be only one business using the same name within a state. B. Assumed name is completely different from trade name. C. Most states allow several firms to use the same trade name, as long as the firms are in different lines of business. D. Most states allow several firms to use the same trade name even if they are in the same town and have received a service mark.

C. Most states allow several firms to use the same trade name, as long as the firms are in different lines of business.

Which among the following steps in a negotiation process is considered to be the most difficult? A. Prepare B. Position C. Propose D. Pounce

C. Propose

Which of the following is true of limited partnerships? A. They are not dependent upon capital contributions of the partners. B. They allow double taxation of earnings generated. C. They require filings with the state in order to be set up and maintained legally. D. They are dependent upon assets and credit of a single proprietor.

C. They require filings with the state in order to be set up and maintained legally.

The Nike "swoosh" is an example of a _____. A. trade secret B. copyright C. trademark D. patent

C. trademark

_____ are an important source of information for start-ups. They compile legal information for their members, including laws particularly applicable to certain types of businesses in various jurisdictions and proposals for changing the laws that affect an industry. A. Academic journals B. Magazines C. News channels D. Trade associations

D. Trade associations

A(n) _____ is the name under which a business is operated. A. patent B. assumed name C. trademark D. copyright

B. assumed name

General partnerships are similar to limited partnerships in that: A. both don't require government permission to be set up. B. both dissolve when their respective partnership mix changes. C. both impose double taxation of income and business to individual partners. D. both must have at least one general partner and one limited partner.

B. both dissolve when their respective partnership mix changes.

A(n) _____ refers to a part of a contract in which a party to the contract states that he or she will not be responsible for certain actions. A. noncompete clause B. exculpatory clause C. hold harmless clause D. power of sale clause

B. exculpatory clause

A method of billing for lawyers in which a fixed amount is paid for a certain task is called: A. hourly fees. B. flat fees. C. retainers. D. contingency fees.

B. flat fees.

The two basic categories of information available to small business owners are: A. legal and commercial. B. free and paid. C. written and oral. D. online and in-print.

B. free and paid.

Except for _____, business forms are types of separate, legal entities. A. limited partnerships B. sole proprietorships C. limited liabilities companies D. C corporations

B. sole proprietorships

A(n) _____ is a type of contract by which a new party agrees to perform a duty that one of the original parties to a contract was already legally obligated to perform. A. exculpatory agreement B. subcontract C. unilateral contract D. option contract

B. subcontract

Copyrights for new works last for: A. the creator's life. B. the creator's life plus 70 years. C. 120 years after creation. D. 25 years after its first publication.

B. the creator's life plus 70 years.

A _____ is a type of intellectual property, not created by the government but is information known to certain people in a company that makes that company more competitive. A. copyright B. trade secret C. patent D. trademark

B. trade secret

When using a(n) _____, the attorney will be paid a specified amount every month regardless of the workload for that month. A. hourly fee B. flat fee C. retainer D. contingency fee

C. retainer

Which of the following forms of business is the easiest to set up? A. A limited liability company B. A corporation C. An S corporation D. A general partnership

A. A limited liability company

_____ is a dispute resolution process held instead of court cases in which both sides present their case to a legal professional. A. Litigation B. Arbitration C. Mediation D. Piercing the veil

B. Arbitration

A person or other entity filing a lawsuit is known as _____. A. plaintiff B. defendant C. sole proprietor D. retainer

A. plaintiff

Anderson and Anderson is a law firm that has been handed a job to take care of patent issues for Gantar Labs. Anderson and Anderson charges a fixed amount for patent-related cases. Which of the following types of fees will Gantar be paying Anderson and Anderson? A. Hourly fees B. Flat fees C. Retainers D. Contingency fees

B. Flat fees

Fees paid by a client to an attorney for legal services that is dependent upon the outcome of a case are referred to as: A. flat fees. B. hourly fees. C. contingency fees. D. retainers.

C. contingency fees.

_____ are persons working to achieve a certain goal without being subjected to substantial controls by another. A. Independent contractors B. Partners C. Defendants D. Retainers

A. Independent contractors

Which of these is a disadvantage of a corporation? A. It incurs relatively high incorporation fees and high taxes. B. It requires its owners to have unlimited liability to the firm's debt. C. It is considered a separate, legal entity from its owner. D. It is automatically terminated upon the death of its owner.

A. It incurs relatively high incorporation fees and high taxes.

Which of the following is true of a limited liability company (LLC)? A. It is not always subject to double taxation. B. It is relatively difficult to set up and tough to maintain once started. C. It does not have the option of single taxation. D. It cannot have more than one owner.

A. It is not always subject to double taxation.

Which of the following is a formal dispute resolution method that operates using the court system, typically with a lawyer representing each party? A. Litigation B. Arbitration C. Mediation D. Possession

A. Litigation

Which of the following refers to a part of a contract in which a person agrees not to open a certain type of business or seek employment doing certain things in a particular area for a period of time? A. Noncompete clause B. Exculpatory clause C. Hold harmless clause D. Interstate clause

A. Noncompete clause

Which of the following is true with regard to pricing of legal services? A. Pricing of legal services is based on supply and demand. B. Being diplomatic with the attorney is not at all recommended in negotiations on the issue of pricing. C. The attorney's fee schedule in all four types of pricing of services is non-negotiable. D. Pricing of legal services is mainly constant and fixed.

A. Pricing of legal services is based on supply and demand.

Which of these is an advantage of sole proprietorship? A. Unique tax advantages B. Longer life because the business and owner are legally the same C. Owner's liability for the firm's debt limited to his or her investment in it D. Ease of raising large amounts of capital

A. Unique tax advantages

Document setting forth information about a limited liability company that is filed with the state to establish an LLC is referred to as _____. A. articles of organization B. subcontract C. charter D. operating agreement

A. articles of organization

In the lease agreement signed by Arthur Fraser, a _____ clause exempts him from paying any restitution in case he causes accidental damage on the property. Which of the following types of contractual clauses protects Arthur Fraser from paying for such damages? A. hold harmless B. exculpatory C. noncompete D. power of sale

A. hold harmless

Someone who uses intellectual property without the permission of the owner is referred to as a(n): A. infringer. B. arbitrator. C. defaulter. D. retainer.

A. infringer.

A(n) _____ refers to a contract among LLC members outlining how the LLC will conduct itself. A. operating agreement B. mission statement C. charter D. articles of incorporation

A. operating agreement

The dissolution of a corporate form, making it back into a sole proprietorship or general partnership, if the court finds that the owner carelessly mixed up personal and business assets or finances is known as: A. piercing the veil. B. adverse possession. C. nonfeasance. D. easement.

A. piercing the veil.

Which of these arguments would be helpful in deflecting vicarious liability? A. Ignorance B. Independent contractor argument C. Financial inability argument D. Actions are within the scope of agency/employment argument

B. Independent contractor argument

Which of the following is true of partnerships? A. It does not get terminated upon the death of one or more partners. B. It does not allow one partner to obtain bonding protection against the acts of the other partner(s). C. It cannot obtain financial resources from more than one person. D. It does not incur unlimited liability on its partners for the firm's debt.

B. It does not allow one partner to obtain bonding protection against the acts of the other partner(s).

Which of the following is true about sole proprietorship? A. It is the most difficult kind of business form to set up. B. It is not considered as a legal entity separate from its owner. C. It does not incur unlimited liability on its owner. D. It is not supported by any unique tax advantages.

B. It is not considered as a legal entity separate from its owner.

Walter Bradham, the owner of Bradham Corporation muddled his personal finances with his business accounts. Following a suit into the financial irregularities at Bradham Corporation, a court subjected the Corporation to the decision of piercing the veil. Which of the following course is the court most likely to take in this case? A. It will convert Bradham Corporation into a separate legal entity. B. It will dissolve the corporation into a sole partnership under Bradham. C. It will change Bradham's liability in the business to one that of a limited partner. D. It will hold that Bradham has no personal liability for Bradham Corporation's debt.

B. It will dissolve the corporation into a sole partnership under Bradham.

Which of the following is true regarding a small-claims court? A. These courts will only accept cases where the stakes are as large as $50,000 or above. B. Most of these courts are designed so that ordinary citizens can bring their cases in. C. This legal option is only available to entrepreneurs who can afford an attorney. D. These courts are the only recourse for small business owners for litigation.

B. Most of these courts are designed so that ordinary citizens can bring their cases in.

Which federal law describes the steps publicly traded businesses must take to protect and provide their key financial information? A. Service Contract Act B. Sarbanes-Oxley Act C. Walsh-Healey Public Contracts Act D. Davis-Bacon Act

B. Sarbanes-Oxley Act

Brendon wants to sue Fitness Ace, a leading provider of fitness equipments, for negligence. He approaches Arthur Bailey Group, a law firm, which has good experience in handling product liability claims for victims of exercise equipment failure. Which of the following would be true if the attorney charges Brendon in the form of flat fees? A. The attorney would charge Brendon on an hourly basis. B. The attorney would charge separately for consultation and paperwork. C. The attorney would take a percentage of Brendon's recovery as his or her fee. D. The attorney would take monthly fee and additional fees if circumstances change.

B. The attorney would charge separately for consultation and paperwork.

A 20-year patent covering a process, machine, article of manufacture, composition of matter, or any new or useful improvement of an existing one is known as _____. A. plant patent B. utility patent C. design patent D. non-provisional patent

B. utility patent

Which of the following forms of business faces double taxation? A. S Corporation B. Professional corporation C. Corporation D. Limited liability companies

C. Corporation

Which of the following is one of the ways in which attorneys charge? A. Quarterly fees B. Annual fees C. Hourly fees D. Continuous fees

C. Hourly fees

Brendon wants to sue Fitness Ace, a leading provider of fitness equipments, for negligence. He approaches Arthur Bailey Group, a law firm, which has good experience in handling product liability claims for victims of exercise equipment failure. Which of the following would be true if the attorney charges Brendon in the form of contingency fees? A. The attorney would charge Brendon on an hourly basis. B. The attorney would charge separately for consultation and paperwork. C. The attorney would take a percentage of Brendon's recovery as his or her fee. D. The attorney would take monthly fee and additional fees if circumstances change.

C. The attorney would take a percentage of Brendon's recovery as his or her fee.

In a(n) _____, all partners are equally and fully responsible for the business's obligations. A. C corporation B. limited partnership C. general partnership D. S corporation

C. general partnership

A _____ is a unit recognized as having rights and duties apart from the owners of the company. A. retainer B. utility patent C. legal entity D. sole proprietorship

C. legal entity

According to the IRS, to be an independent contractor the person must: A. decide how the work must be done in consultation with an employer. B. have all his expenses paid for by an employer. C. perform a service that is not central to the operation of the business. D. not be employed for a distinct term or project.

C. perform a service that is not central to the operation of the business.

The name under which a business is operated is known as its _____. A. trademark B. inclusive name C. trade name D. copyright

C. trade name

Joshua suffered a serious knee injury at work after a machine he was using malfunctioned. Joshua plans to sue for compensation from Milch Enterprises, the company that built that machine. Joshua's attorney wants a percentage of the compensation if it is proven that Milch Enterprises' negligence caused the accident. Which of the following types of legal fee would Joshua be paying to his attorney? A. Retainers B. Hourly fees C. Flat fees D. Contingency fees

D. Contingency fees

Which of the following explains the difference between limited partnership and general partnership? A. In limited partnerships, all partners are equally liable to the firm's debt unlike general partnerships. B. In limited partnerships, partners incur single taxation on earnings unlike general partnerships. C. In general partnerships, whenever the mix of partners is changed, that partnership is dissolved unlike limited partnerships. D. In general partnerships, no government permission is required for the setup and maintenance of business unlike limited partnerships.

D. In general partnerships, no government permission is required for the setup and maintenance of business unlike limited partnerships.

Which among the following is a disadvantage of sole proprietorships? A. Its owner gets no specific tax advantages. B. Its owner has to share control with others. C. Its owner has to share profits. D. Its owner has unlimited liability for the firm's debt.

D. Its owner has unlimited liability for the firm's debt.

_____ is a dispute resolution method in which the decision is nonbinding on the parties involved. A. Arbitration B. Litigation C. Adverse possession D. Mediation

D. Mediation

_____ refers to earnings of the business that are taxed once with the owners paying the taxes. A. Pass through taxation B. Double taxation C. Check the box taxation D. Single taxation

D. Single taxation

Brendon wants to sue Fitness Ace, a leading provider of fitness equipments, for negligence. He approaches Arthur Bailey Group, a law firm, which has good experience in handling product liability claims for victims of exercise equipment failure. Which of the following would be true if the attorney charges Brendon using a retainer? A. The attorney would charge Brendon on an hourly basis. B. The attorney would charge separately for consultation and paperwork. C. The attorney would take a percentage of Brendon's recovery as his or her fee. D. The attorney would take monthly fee and additional fees if circumstances change.

D. The attorney would take monthly fee and additional fees if circumstances change.

Which of the following countries is one of the most litigious societies in the world? A. France B. Japan C. Switzerland D. United States

D. United States

Agreement between the associates of a firm on matters pertaining to the formation and operation of the partnership is known as _____. A. articles of organization B. contracts of partnership C. articles of association D. articles of partnership

D. articles of partnership

Arbitration differs from mediation in that arbitration: A. works outside the court system. B. is less costly than mediation. C. requires that both parties represent themselves. D. has limited appeal possibilities.

D. has limited appeal possibilities.

In _____, the earnings of the business are distributed to the business owners and those owners pay individual tax on the earnings. A. check the box taxation B. double taxation C. single taxation D. pass through taxation

D. pass through taxation

A grant by the U.S. government to an inventor for an idea that is new, useful, and nonobvious, giving the inventor the exclusive right to make, use, or sell his or her idea is called a: A. trade secret. B. copyright. C. trademark. D. patent.

D. patent.

Responsibility for the actions of another is referred to as: A. direct liability. B. limited liability. C. exculpatory clause. D. vicarious liability.

D. vicarious liability.

A(n) _____ is part of a contract in which a party intentionally gives up legal rights or claims. A. retainer B. easement C. arraignment D. waiver

D. waiver