Business law exam 4

Movie notes: 1. They stole the ___________ 2. Her past job was an out of work __________ 3. __________ are the two young boys 4. the murder weapons was a ____________

1. tuna 2. hairdresser 3. youts 4. 357 magnum

Any of the managers in manager-managed LLC may be removed at any time by a vote of: a. 1/3 of LLC members b. 2/3 LLC members C. majority of LLC members d. No vote is required

C. majority of LLC members

Marcel and Sonja are the only members of the MS limited liability company. Marcel has invested $400,000 in MS, and Sonja has invested $200,000. This year, MS has earned $30,000. the parties has no written agreement on division of profits. Under the default rule of the ULLCA, how much is Marcel entitled to receive as his distribution of profits? a. $15,000, an equal share b. $20,000, a share in proportion to his investment (capital contribution) c. Nothing, unless the LLC articles of organization provide for distribution of earning d. Nothing, unless both Marcel and Sonja agree on a fair distribution of profits

a. $15,000, an equal share

General Widget partnership assets amount to be $34,000 after liquidation, Frank, Gene and Hank equal partners, each contributed $3,000 into the capital pool at the inception of the business. Gene later loaned the business $5,000, they owe $23,000 to creditors for inventory. What will Gene get in distribution, assuming there is no agreement on the distribution of profits? a. $7,000 b. $5,000 c. $8,000 d. $11,000

a. $7,000

Which of the following is NOT true with respect to the name of a partnership? a. A partnership must use a name that includes the word "partnership" b. The partnership name may be the name of the partners or of any of them c. The name should not be identical with any other existing business concern d. The partners may not operate under a fictions or assumed name

a. A partnership must use a name that includes the word "partnership"

Arthur, Betty, and Clara each inherit an undivided one-third interest in an apartment complex. Instead of selling it, they decide to continue to operate it for the next few years as a sideline to their other occupations just to see if they can earn some extra money. What are they? a. A partnership. b. Co-owners only. c. A corporation. d. Creditors of the apartment complex.

a. A partnership.

Anita and Betty agree to form a partnership. Anita agrees to contribute $30,000 in assets and to devote one-half time to the partnership. Betty is to contribute $10,000 and to devote full time to the partnership. How will Anita and Betty share in the division of net income or net loss, assuming there is no written partnership provision on the distribution of profits? a. Anita will get 3/4 and Betty 1/4 b. Anita will get 2/3 and Betty 1/3 c. They share profits and losses equally d. Anita will get 1/3 and Betty 2/3

a. Anita will get 3/4 and Betty 1/4

Franco, sal and luigi are partners in Castrogiovanni's pizza. They like hot peppers, hot sausage and hot spaghetti sauce - and they are all hot tempered! One day Sal gets angry at Luigi, throws a pizza at him and quits. What consequence to the partnership? a. It is dissolved, but Franco and Luigi may continue in business together b. it is dissolved, and the business must be liquidated c. There is no change and it continues until it is dissolved by a court d. It is dissolved by operation of law

a. It is dissolved, but Franco and Luigi may continue in business together

The UPA does not treat a partnership as a seperate legal entity in which one of the following respects? a. Separateness of partnership assets b. continued existence c. individual liability of partner d. Federal income tax purposes

a. Separateness of partnership assets

If max retires from XYZ partnership, may the parnership creditors collect from him for partnership debts? a. Yes, if the debt was made before he retired b. Yes, he is liable for the rest of his life c. No, after retirement only the remaining partners are liable d. No, only the partnership assets will be used

a. Yes, if the debt was made before he retired

Actual authority terminates upon: a. dissolution of the partnerships b. illness of one of the partners c. physical destruction of partnership papers d. all of the above

a. dissolution of the partnerships

While a "limited partnership association" interest is tranferable, the transferee will only become a limited partner if: a. he is elected by the other members b. he has paid fair market value c. he has also donated services d. He has consented to the organizational character

a. he is elected by the other members

A limited liability company: a. is either member-managed or manager managed b. may be formed without any formalities c. is allowed to exist in only five states in the country d. may be owned by share holders

a. is either member-managed or manager managed

A _______ is a form of temporary partnership organized to carry out a particular business enterprise for profit. a. joint venture b. joint stock company c. limited partnership d. limited partnership association

a. joint venture

A continuation agreement permits all but which of the following? a. paying a settlement to retiring partner b. continuing the business without a break c. keeping business property in the partnership d. allowing new partners to take over the business

a. paying a settlement to retiring partner

Under RULPA the capital contribution of a limited partner will be returned upon dissolution of the partnership: a. unless there is not enough money to return the contributions of all limited partners b. unless there is not enough money to return all the general limited partners' capital contributions c. unless there is not enough money to pay all creditors except general partners d. All of the above

a. unless there is not enough money to return the contributions of all limited partners

Sue, Barb, and Carlotta agree to put in $1,000 each to set up a shelter for lost animals. They each work two days a week. Donations fund the day-to-day operations. Do they have a partnership? a. yes, since each has control of the operation b. yes, because they are all co-equals in ownership of the shelter c. no, because they have made no formal agreement d. no, because there is no business

a. yes, since each has control of the operation

Marilyn, George and Christine pool their money to buy land for a vegetable garden. Are they partners? a. yes, since they co-own the land b. no, because they each control the use of the land c. yes, because if theres a loss in the land's value, they will all share that loss d. no, there is no intent to forma business for profit

a. yes, since they co-own the land

ABC partnership agrees to hire an "errand runner" 20 hours per week for the summer. Alan, a partner, interviews a lovely college girl and decides to offer her the job. But she says she needs a 40-hour a week job, so Alan agrees to make it 40 hours. what result? a. ABC partnership is not bound to hire her b. ABC partnership is bound to pay her for 40 hours per week c. Alan is bound to pay her for 20 hours per week d.Alan has to pay her for 40 hours per week

b. ABC partnership is bound to pay her for 40 hours per week

Max, Andy, and Rex are partners in a law partnership. They own a set of state and federal case reporters, three IBM personal computers and three desks. Which of the following is true regarding the partnership property? a. If max dies, the Andy and Rex partnership gets to keep the goods b. Any can update the case reporters and IBM computers without consulting Max and Rex c. Without asking Rex or Max, Andy can take home an IBM PC for the weekend. d. if Rex goes bankrupt, his creditors may sell on-third of the books, desk, and one PC

b. Any can update the case reporters and IBM computers without consulting Max and Rex

Which of the following is NOT an advantage of a partnership? a. Partners income taxes may be less than the income taxes would be on a corporation b. Each partner has limited liability c. It is possible to bring together more managerial skills than in a sole proprietorship d. It is possible to bring together more capital than in a sole proprietorship

b. Each partner has limited liability

Which of the following is correct regarding the fiduciary duties in a limited partnership? a. the general partner has a fiduciary duty to the limited partners b. Judicial authority seems to suggest that the limited partner has a good faith duty to the partnership c. the duty in a limited partnership allows limited partners to invest in other competing business organizations d. all of the above are correct

b. Judicial authority seems to suggest that the limited partner has a good faith duty to the partnership

First Bank has extended an open line of credit to ABC partners at an interest rate of prime plus 3%. Throughout the years, ABC has used the line many times, In May 2017, ABC agreed to dissolve the partnership and sent out notices to all the companies with which it dealt, including first bank. After the letter was sent and delivered, A decided he would need $10,000 to start up his new business and used the line of credit with First Bank. Who is responsible to pay the loan? a. Only A, since the partnership is dissolved b. Only A, since notice was mailed to the bank c. ABC, since A had actual authority to borrow d. ABC, since notice had not been actually delivered to the bank

b. Only A, since notice was mailed to the bank

Which of the following is correct regard to partnership property? a. Like partnership capital, it is a fixed amount set forth in the articles of partnership b. Unless the contrary intention appears, property acquired with partnership funds is partnership property c. Under the UPA title to real estate purchased with partnership funds cannot be taken in the partnership name d. If there is no express agreement whether property owned by a partner before formation of the partnership and used in the partnership business is an asset of the partnership

b. Unless the contrary intention appears, property acquired with partnership funds is partnership property

John, Samuel and thomas are partners in the development of an electric car. Thomas pours all his money into the project, but it never seems to work out. Eventually the partnership and thomas cannot meet their daily obligation and the partnership is dissolved. If the partnership assets do not satisfy the debts of partnership creditors, may they go after thomas' personal assets? a. No, they are reserved for personal creditors b. Yes, but only after personal creditors c. Yes, on the same basis as personal creditors d. Yes, they have priority over personal creditors

b. Yes, but only after personal creditors

Marty gives fred $2000 to start up a hot dog stand at the beach. Fred puts in no money but works every day at the stand. are they partners? a. Yes, because they share in a joint venture b. Yes, if they share in the profits and losses c. yes, if Marty intends to be repaid as soon as $3,000 of profit comes in d. Yes, but only if they have signed Articles of partnership

b. Yes, if they share in the profits and losses

Which of the following may a general partner do without the consent or ratification of the limited partners? a. admit a general partner b. act as an agent for the partnership c. change the partnership agreement d. decide to dissolve and wind up the partnership

b. act as an agent for the partnership

Daniel is a general partner in a real estate investment firm. Hank and Barry are limited partners. Daniel, without the consent or ratification of Hank and Barry, can: a. admit another limited partner. b. act as an agent of the partnership. c. rename the partnership using Hank's last name. d. not have almost exclusive managerial control of the business.

b. act as an agent of the partnership.

Unless otherwise agreed, under RULPA, a limited partner is entitled to repayment of his capital contribution under which of the following conditions? a. before general partners are repaid their capital contribution b. at the same time and on a pro rata basis with the general partners c. only after general partners have been repaid their capital contribution d. none of the above

b. at the same time and on a pro rata basis with the general partners

if four men form a partnership but make no agreement as to the sharing of profits and losses, how will profits and losses be shared? a. profits and losses will be shared in the ratio of their capital contributions b. profits will be shared equally, but losses will be shared in the ratio of capital contributions c. profits and losses will be shared equally by all the partners d. losses will be shared equally, and profits will be shared in some other ratio

b. profits will be shared equally, but losses will be shared in the ratio of capital contributions

Which of the following would have first priority in the distribution of limited partnership assets? a. return of general partner's capital contribution b. repayment of a loan by a limited partner to the partnership c. return of a limited partner's capital contribution d. payment of profits of the limited partner e. two of the above, a and b would have priority

b. repayment of a loan by a limited partner to the partnership

Which of the following liabilities of a partnership has the highest priority for payment out partnership assets? a. Amounts owing to partners in respect of profits b. Amounts owing to partners other than for capital c. Amounts owing to creditors other than partners d. Amounts owing to partners in respect of capital

c. Amounts owing to creditors other than partners

The Elm street partnership decided it would buy personal computers for use by all its partners. Elvis, a partner, had 50% share in computer would corporation and though he could get the computers for the partnership at the best price because of his inside position. He did, infact, obtain 10 computers at $1,500 each which was merely $200 over the manufacturer's price and which was $300 less than the next lowest bid. What consequence? a. because elvis did not tell his partners of his inside position with computer world, there will be no sale, absent ratification b. Since it was the lowest price, the deal will go through c. Elvis would have to give his part of the sales profits to the elm street partnership d. Elvis would have to rescind the contract and go with the next highest bidder

c. Elvis would have to give his part of the sales profits to the elm street partnership

Absent an agreement otherwise, under UPA upon dissolution, a partner is entitled to which of the following after payment of partnership creditors? a. A share of profits in proportion to his capital contribution b. A share of profits equal to that of each of the other partners c. Repayment of his capital contribution and a share of the profits equal to that of each of the other partners d. The UPA requires that the partners have an agreement or else they must seek a court order distributing the remaining assets

c. Repayment of his capital contribution and a share of the profits equal to that of each of the other partners

Which of the following would NOT give a partner grounds for obtaining a dissolution by court order: a. The Business can be carried on only at a loss b. One of the partners died c. The partner is guilty of conduct prejudicial to the business d. There is a lack of management due to partner conflict

c. The partner is guilty of conduct prejudicial to the business

Which of the following may a general partner do without the consent or ratification of the other partners? a. admit a general partner b. admit a limited partnership c. act as an agent for the partnership d. confess judgment in a claim against the partnership

c. act as an agent for the partnership

Paul partner is driving a car owned by the partnership on company business when he fails to stop for a red light and slams into the car infront of him. The driver is injured, sues the partnership and recovers a judgement against it. What kind of liability do the other partners have for paul's actions? a. limited personal liability b. joint liability c. joint and several liability d. no liability

c. joint and several liability

Which of the following is untrue of a limited partnership? a. limited partnerships must be formed under a state statute b. partners in limited partnerships can be named in the partnership business name. c. partners in a limited partnership must contribute services to the partnership d. partners in a limited partnership are generally not responsible for the debts of the partnership beyond their investment

c. partners in a limited partnership must contribute services to the partnership

Which of the following can be done with the consent of only a majority of the partners in a partnership? a. taking in a new client b. admission of a new partner c. sale of the office computer system d. all of the above

c. sale of the office computer system

Articles of partnership include all but which one of the following? a. The duties of partners b. The capital contribution of the partners c. the agreement for dividing tax liability of the partnership d. The division of profits and losses

c. the agreement for dividing tax liability of the partnership

Which of the following is the most convincing evidence of a partnership arrangement? a. two or more persons are joint tenants b. two or more persons have a written agreement regarding a fundraiser for charity c. two or more persons carry on a business for profit, but they have no formal agreement. d. two persons have a joint saving account in which they deposit money and share the interest

c. two or more persons carry on a business for profit, but they have no formal agreement

Which of the following is true with respect to a defective formation of a limited partnership? a. the formation only is defective if the certificate which is filed does not substantially meet the statutory requirements b. it jeopardizes the limited liability of the limited partner c. the latest version of RULPA reduces the risk of a limited partner for defective formation d. All of the above are correct

d. All of the above are correct

In deciding whether property owned by a partner before formation of the partnership and used in the business is a capital contribution that belongs to the firm, a court will consider which of the following? a. whether the property was improved with partnership funds b. whether the property was carried on the books of the partnership c. Admissions or declarations of the partners d. All of the above would be considered

d. All of the above would be considered

Ben starts an italian restaurant and hires his nephew, Rick, to run the "front end": hire the busboys and waiters, develop work schedules, etc. In return, Ben tells Rick he will pay him 20% of the profits. Are Ben and Rick partners? a. no, because they are not co-owners of the property b. no, because Rick's share is really payment of wages c. yes, because Rick effectively shares in the losses d. Both a and b are correct

d. Both a and b are correct

Chuck, Bob and Bert form CB&B partnerships to run a specialty grocery store. Bert is the day-to-day manager of the store, Bob buys the groceries and Chuck does all the administrative work. Chuck decides he would like a new car to go back and forth to the store. He makes a contract with Big Ben Motors in the name of CB&B without consulting Bob and Bert. What result? a. CB&B is bound by chucks actual implied authority to buy a car b. CB&B is bound by chucks apparent authority to buy a car c. CB&B is bound by chucks ostensible authority to buy a car d. CB&B is not bound because buying a car is outside the scope of the partnership business

d. CB&B is not bound because buying a car is outside the scope of the partnership business

A partner has all but which of the following rights with respect to his partnership? a. the right to return of his capital contribution upon his demand b. the right to demand an accounting of partnership profits c. the right to copy the books of the partnership d. The right to vote on new partnership admission

d. The right to vote on new partnership admission

Which of the following is true regarding an insolvent partnership? a. the partners must contribute their respective share to the losses in order to pay the creditors b. even with a contrary agreement, each partner must share equally in the profits after liabilites are satisfied c. when any partner has paid an amount in excess of his proper shre of the losses, he has a right to contribution against all partners who have not paid their share d. Two of the above a and c

d. Two of the above a and c

Which of the following is a principal characteristic of a tenancy in partnership? a. a partner may not make an individual assignment of his right in specific partnership property b. each partner has an equal right with his co-partners to possess partnership property for partnership purposes c. upon the death of a partner, his right in specific partnership property vests in the surviving partners d. all of the above

d. all of the above

David, Elvis and fred are partners in the DEF partnership. the partnership is being dissolved. It has $200,000 in cash assets out of which it must pay $410,000 to creditors. Profits and Issues of the partners are shared equally, although David contributed $100,000 in capital; Elvis contributed $50,000 in capital; and fred contributed $25,000 in capital. which of the following is correct with regard to the responsibility of each partner. a. each partner is responsible for $70,000 of the money owed to creditors b. Elvis will have to contribute additional capital in order to settle the partnership affairs c. David will have to contribute additional capital in order to settle the partnership affairs. d. all of the above are correct

d. all of the above are correct

Shannon has just become a partner in the A and R accounting partnership. Her capital contribution is $10,000, which she paid from her savings. Which of the following is correct with respect to Shannon's liability for partnership obligations? a. shannon has no liability for partnership debts that existed at the time of her admission as a partner b. shannon is liable only to the extent of her capital contribution for partnership debts that occur after her admission as a partner c. shannon has unlimited personal liability for all partnership debts regardless of whether they were incurred before or after she became a partner d. shannon has unlimited personal liability for all partnership obligations that occur after she became a partner, she has liability to the extent of her capital contribution for obligation that existed at the time she became a partner

d. shannon has unlimited personal liability for all partnership obligations that occur after she became a partner, she has liability to the extent of her capital contribution for obligation that existed at the time she became a partner`

David, a partner in the national express mail delivery partnership, negligently drove his delivery truck onto the curb during a rush hour package delivery. Marlene was injured. Against whom can Marlene collect? a. Only david b. only the other partners c. national express mail partnership d. any partner e. two of the above, C & D

e. two of the above, C & D