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255. A limited partnership is usually dissolved by the bankruptcy of: (A) a general partner, but not a limited partner (B) either a general partner or a limited partner (C) a limited partner, but not a general partner (D) the secretary of state (E) neither a general partner nor a limited partner
(A)
258. A ____ is an artificial person, or legal entity, created under state law. (A) corporation (B) limited partnership (C) legal partnership (D) sole proprietorship (E) business
(A)
164. A person doing business for himself or herself is a(n): (A) single proprietor (B) sole proprietor (C) only proprietor (D) partner (E) general proprietor
(B)
177. In a sole proprietorship, profits are taxed to the: (A) corporate owner of the proprietorship (B) individual owner of the proprietorship (C) general partners (D) state (E) none of the other choices
(B)
160. There are ____ businesses in the United States. (A) over 30 million (B) under 20 million (C) over 50 million (D) less than 500,000 (E) too many
(A)
161. The majority of businesses in the United States are: (A) sole proprietorships (B) non-taxable (C) corporations (D) non-profit (E) partnerships
(A)
171. In a sole proprietorship, the owner is: (A) the business (B) a corporation (C) a subsidiary (D) a partnership (E) an amalgamation
(A)
175. In a sole proprietorship, the capital usually: (A) must come from the owner's own resources or be borrowed (B) comes from the government (C) comes from investors (D) comes from the stock market (E) comes from taxes
(A)
181. Which of the following apply to a sole proprietorship: (A) a person is in business for himself (B) no government license usually required (C) no tax return required in the name of the business (D) a person is in business for himself and no government license usually required (E) none of the other choices
(A)
185. A general partnership is: (A) an association of two or more persons to carry on a business as co-owners for a profit (B) an association of two or more companies that help each other with business, but do not share profits (C) an understanding between a supplier and a distributor (D) a merger of two corporations (E) none of the other choices are correct
(A)
188. Under traditional common law rules, if you wanted to sue a partnership you had to: (A) sue each partner individually (B) sue the partnership as a group (C) sue the state on behalf of the partnership (D) have the state sue the partnership (E) wait until the partnership was incorporated to sue
(A)
190. In most circumstances, a partnership is now treated as: (A) a legal entity (B) a special entity with no ability to sue or be sued (C) a proxy (D) a sole proprietorship (E) none of the other choices are correct
(A)
195. A partnership can begin with either a(n) ____ or a(n) ____. (A) oral agreement: implied agreement (B) oral agreement: false agreement (C) oral agreement: forced agreement (D) implied agreement: default agreement (E) implied agreement: loan agreement
(A)
216. A complete termination comes about only after the partnership has been ____ and its affairs have been wound up. (A) dissolved (B) disillusioned (C) standardized (D) reorganized (E) finalized
(A)
221. The dissolution of a partnership occurs: (A) when an event takes place that precludes the partners from continuing in business (B) during the process of completing any unfinished business of the partnership (C) during the collection and distribution of the partnership's assets (D) when a certificate of limited partnership is executed (E) none of the other choices
(A)
227. During the course of a partnership's winding-up process, the partners owe each other: (A) a duty to disclose all finances of the partnership (B) a duty to compete fully (C) a duty to refrain from termination (D) a duty of discounting (E) a duty to mitigate
(A)
247. Limited partners are investors who: (A) may not participate in management of the business (B) are liable for all debts of the limited partnership (C) may take an active role in the management of the business (D) all of the other specific choices (E) none of the other choices
(A)
251. Which of the following is a right of a limited partner in a limited partnership: (A) the right to see the partnership books (B) the right to make hiring decisions (C) the right to take an active role in managing the business (D) both a and b are rights of a limited partner (E) none of the other specific choices are rights of a limited partner
(A)
259. A ____ is an artificial person, or legal entity, created under state law. (A) megabusiness (B) limited partnership (C) legal partnership (D) sole proprietorship (E) none of the other choices are correct
(E)
178. A disadvantage of the sole proprietorship form is often: (A) business profits are taxed to the owner personally (B) the limited alternatives for raising financial capital (C) the owner has sole responsibility for control, liabilities, and management (D) the record keeping formalities of the business are within the owner's discretion (E) none of the other choices
(B)
179. A disadvantage of the sole proprietorship form is often: (A) business profits are taxed to the owner personally (B) the owner is personally liable for all the business debts (C) the owner has sole responsibility for control, liabilities, and management (D) the record keeping formalities of the business are within the owner's discretion (E) none of the other choices
(B)
186. Under traditional common law rules, a partnership: (A) was always treated as a single legal entity (B) generally was not treated as a single legal entity (C) had the same legal personality as a corporation (D) was forbidden under the law (E) could only be formed with the consent of the state
(B)
191. The ____ provides "default rules" that determine the operation of partnerships when the partnership agreement is silent or where there is no formal agreement among the partners. (A) Revised Uniform Proprietorship Act (B) Revised Uniform Partnership Act (C) Revised Real Partnership Act (D) Revised Unified Partnership Act (E) Revised Universal Partnership Act
(B)
193. Which of the following is not true about a partnership? (A) it must be owned by two or more people (B) it is always an independent legal entity (C) partners co-own the business (D) partners share control over the business operation (E) all of the other choices are true
(B)
197. A written partnership agreement typically specifies the following except: (A) the ownership interests of the partners (B) that the partnership will be established under federal or state law (C) the name of the partnership business (D) the procedures for dissolution of the partnership (E) the method of accounting to be used
(B)
203. Compared to the U.S., new businesses in Japan: (A) are created more frequently than they are in the U.S. (B) are created much less frequently than they are in the U.S. (C) are greatly encouraged by banking regulations (D) are greatly encouraged by Japanese tax rates (E) may operate with less money than U.S. businesses
(B)
212. Gary and Sue start a consulting firm. They are co-owners of it and have joint control over its operation and the right to share in its profits. Their organization is most likely a: (A) proprietorship (B) partnership (C) business trust (D) corporation (E) syndicate
(B)
214. A change in the relationship of the partners that shows an unwillingness or an inability to continue with business may bring about ____ of the partnership. (A) finalization (B) termination (C) composition (D) revitalization (E) retaliation
(B)
228. A business organization made up of two or more persons who have entered into an agreement to carry on a business venture for a profit, and not all persons have the right to participate in management decisions is a: (A) proprietorship (B) limited partnership (C) cooperative (D) general partnership (E) none of the other choices
(B)
231. A business organization in which some of the partners are not liable for partnership debts is called a: (A) no liability partnership (B) limited liability partnership (C) partial liability partnership (D) local liability partnership (E) unlimited liability partnership
(B)
235. Which of the following are not required to be in a certificate of limited partnership: (A) the type or character of the business (B) the business positions to be held by each partner (C) the proportion of profits to be earned by each partner (D) the business positions to be held by each partner and the proportion of profits to be earned by each partner (E) the business positions to be held by each partner and the proportion of profits to be earned by each partner and the proportion of profits to be earned by each partner
(B)
252. Which of the following is a right of a limited partner in a limited partnership: (A) the right to make hiring decisions (B) the right to participate in the dissolution of the business (C) the right to take an active role in managing the business (D) both a and b are rights of a limited partner (E) none of the other specific choices are rights of a limited partner
(B)
256. In the final dispersal of the assets of the limited partnership, creditors' rights: (A) do not precede partners' rights (B) precede partners' rights (C) are immaterial (D) precede some precede partners' rights, but not others (E) only precede general partners' rights
(B)
163. The most common form of business organization is: (A) joint venture (B) partnership (C) proprietorship (D) corporation (E) none of the other choices
(C)
173. A person doing business for herself is a ____: the business is a ____. (A) partner: partnership (B) general partner: limited partnership (C) sole proprietor: proprietorship (D) shareholder: corporation (E) member: syndicate
(C)
183. A ____ is an association of two or more persons to carry on a business as co-owners for profit. (A) proprietorship (B) corporation (C) partnership (D) cooperative (E) all of the other choices
(C)
207. Partners in a partnership owe each other: (A) direct interest responsibility (B) a duty to contribute direct assets (C) a fiduciary duty (D) a duty of ordinary care (E) none of the other choices
(C)
208. The duty of partners to a partnership is: (A) to elect one partner as managing partner (B) to place the assets in a blind trust (C) based on extraordinary trust and loyalty to the partnership (D) to elect one partner as managing partner and is based on extraordinary trust and loyalty to the partnership (E) to elect one partner as managing partner and to place the assets in a blind trust and is based on extraordinary trust and loyalty to the partnership
(C)
209. A ____ requires that each partner act in good faith for the benefit of the partnership. (A) partnership relationship (B) contractual relationship (C) fiduciary relationship (D) contractual promise (E) none of the other choices are correct
(C)
210. Unless otherwise stated by contract, the law of partnership presumes which of the following not to be true? (A) each partner has an equal voice in partnership management (B) a majority vote controls ordinary business decisions (C) only managing partners are fully responsible for debts of the partnership (D) regardless of the amount invested in the partnership, each partner has an equal vote (E) all of the other choices are true
(C)
218. The ____ of partnership affairs involves completing any unfinished business and then collecting and distributing the partnership's assets. (A) winding down (B) resetting (C) winding up (D) terminating (E) dissolution
(C)
219. In general, if a partnership agreement does not specify what happens in case of the death or departure of a partner, one looks to: (A) Federal Partnership Act (B) Robinson-Patman Act (C) Uniform Partnership Act (D) Partnership Termination Act (E) Partnership Operation Act
(C)
223. Dissolution of a partnership takes place, unless otherwise provided for by contract, in the following instances except: (A) bankruptcy of a partner (B) withdrawal of a partner (C) change in financial condition of a partner (D) death of a partner (E) all of the other choices would require dissolution
(C)
229. The business organization that has at least one general partner and other investors who have limited liability is a: (A) corporation (B) general partnership (C) limited partnership (D) limited liability company (E) proprietorship
(C)
234. In most states a limited partnership does not have to file what information with the appropriate state official? (A) name of the business (B) names and addresses of all partners (C) bankruptcy history of each partner (D) the share of profits to be paid to each partner (E) all of the other choices must be filed
(C)
240. Which of the following statement(s) is (are) true? (A) a partnership may consist entirely of limited partners (B) a limited partner may exercise control over the business in proportion to his interest in it (C) a limited partnership must have at least one general partner (D) all of the other specific choices are true (E) none of the other choices
(C)
241. General partners in a limited partnership: (A) have no liability (B) have limited liability (C) are personally liable to the partnership's creditors (D) are personally liable to the secretary of state (E) are personally liable to the partnership's creditors only if they choose to be
(C)
243. In a limited partnership the ____ are investors who may not participate in managing the business. (A) restricted partners (B) general partners (C) limited partners (D) nonvoting partners (E) real partners
(C)
245. Limited partners are similar to corporate shareholders in that: (A) both have unlimited liability (B) there is no liability for either (C) both are liable to the extent of their investment (D) there must be one general partner (E) none of the other choices
(C)
249. In general, limited partners lose their limited liability status by: (A) being a limited partner in another partnership (B) denying association with the partnership (C) participating in managerial decisions in the partnership (D) being a partner in another partnership or by participating in managerial decisions in the partnership (E) being a partner in another partnership or by participating in managerial decisions in the partnership or by denying association with the partnership
(C)
257. Unless the limited partnership agreement holds otherwise, when a limited partnership is dissolved the limited partners receive their share of the profits and their capital contributions: (A) after the general partners get theirs (B) after the general partners, but before the creditors (C) before general partners receive anything (D) before creditors receive anything (E) none of the other choices are correct
(C)
168. A(n) ____ is any name other than the name of the individual who owns the business. (A) fake name (B) illegitimate name (C) false name (D) fictitious name (E) confusing name
(D)
169. A sole proprietorship comes into existence when: (A) a person in business hires at least one employee (B) two or more persons join together to work at a business (C) a charter is received from the secretary of state (D) a person begins to do business for herself (E) when a federal tax identification number is issued for the business
(D)
180. Which of the following is a disadvantage of a sole proprietorship: (A) business profits are taxed to the owner personally (B) the owner is personally liable for all the business debts (C) the limited alternatives for raising financial capital (D) both b and c are disadvantages of a sole proprietorship (E) both a and c are disadvantages of a sole proprietorship
(D)
201. In Zhou v. Bickley, Zhou helped Bickley start a motorcycle repair shop. When they got into a dispute later, the courts held that: (A) Zhou and Bickley were partners, so each was owed the fair market value of his share in the organization (B) Bickley was a partner but breached his duty to Zhou by not working, so could be fired from the partnership (C) Bickley was not a partner, he was an employee subject to wrongful dismissal and could sue for damages for that (D) Zhou and Bickley were not partners, Bickley owed Zhou for money received to start the business run by Bickley (E) none of the other choices
(D)
204. In Japan small businesses are: (A) greatly favored by the government (B) exempt from most taxes (C) considered very desirable places to work (D) considered less desirable places to work (E) formed at a much faster rate than in the United States
(D)
205. In Japan small businesses are: (A) greatly favored by the government (B) exempt from most taxes (C) considered very desirable places to work (D) discriminated against by government policy (E) formed at a much faster rate than in the United States
(D)
213. Which of the following is a decision that would most likely require the consent of all partners: (A) changing the nature of the partnership's business (B) admitting new partners (C) selling the business (D) all of the other specific choices are correct (E) none of the other specific choices are correct
(D)
225. Which of the following could lead to the dissolution of a partnership: (A) withdrawal of a partner (B) death of a partner (C) bankruptcy of a partner (D) all of the other specific choices are correct (E) none of the other specific choices are correct
(D)
230. A limited partnership is different from a general partnership because: (A) a limited partnership can have only two people in active management (B) there are limits to annual capital gains in limited partnership (C) all partners in a limited partnership must actively participate in major managerial decisions (D) a limited partnership may have only one general partner (E) none of the other choices
(D)
250. Which of the following is a right of a limited partner in a limited partnership: (A) the right to see the partnership books (B) the right to participate in the dissolution of the business (C) the right to take an active role in managing the business (D) both a and b are rights of a limited partner (E) none of the other specific choices are rights of a limited partner
(D)
254. Which of the following is not true about the termination of a limited partnership? (A) the bankruptcy of a limited partner does not force termination (B) the business may continue to operate during dissolution (C) creditors' rights come before partners' rights to funds (D) limited and general partners share assets equally at the same time after the creditors are paid (E) all of the other choices are true
(D)
162. The majority of businesses in the United States are: (A) partnerships (B) non-taxable (C) corporations (D) non-profit (E) none of the other choices are correct
(E)
165. A person doing business for himself or herself is a: (A) registered proprietor (B) manager (C) corporate proprietor (D) partner (E) none of the other choices are correct
(E)
166. The oldest and simplest form of business organization is: (A) joint venture (B) partnership (C) syndicate (D) cooperative (E) none of the other choices
(E)
167. The oldest and simplest form of business organization is the: (A) joint venture (B) limited partnership (C) syndicate (D) cooperative (E) proprietorship
(E)
170. A sole proprietorship comes into existence when: (A) a person in business hires at least one employee (B) two or more persons join together to work at a business (C) a charter is received from the secretary of state (D) when a federal tax identification number is issued for the business (E) none of the other choices
(E)
172. In a sole proprietorship, the owner is: (A) the business (B) a corporation (C) a subsidiary (D) a partnership (E) none of the other choices
(E)
174. A person doing business for herself is a ____: the business is a ____. (A) partner: partnership (B) general partner: limited partnership (C) member: syndicate (D) shareholder: corporation (E) none of the other choices
(E)
176. In a sole proprietorship, the capital usually: (A) comes from taxes (B) comes from the government (C) comes from investors (D) comes from the stock market (E) none of the other choices are correct
(E)
182. The owner of a sole proprietorship: (A) is legally the same as the business (B) is taxed the same as the business (C) may hire any number of employees (D) is legally the same as the business and is taxed the same as the business (E) is legally the same as the business and is taxed the same as the business and may hire any number of employees
(E)
184. A ____ is an association of two or more persons to carry on a business as co-owners for profit. (A) proprietorship (B) corporation (C) sole proprietorship (D) cooperative (E) none of the other choices are correct
(E)
187. Under traditional common law rules, a partnership: (A) was always treated as a single legal entity (B) could only be formed with the consent of the state (C) had the same legal personality as a corporation (D) was forbidden under the law (E) none of the other choices
(E)
189. Under traditional common law rules, if you wanted to sue a partnership you had to: (A) wait until the partnership was incorporated to sue (B) sue the partnership as a group (C) sue the state on behalf of the partnership (D) have the state sue the partnership (E) none of the other choices
(E)
192. The ____ provides "default rules" that determine the operation of partnerships when the partnership agreement is silent or where there is no formal agreement among the partners. (A) Revised Uniform Proprietorship Act (B) Revised Universal Partnership Act (C) Revised Real Partnership Act (D) Revised Unified Partnership Act (E) none of the other choices are correct
(E)
194. A partnership can begin with: (A) an implied agreement that can be inferred from the conduct of the parties doing business (B) a written agreement (C) an oral agreement (D) a written agreement or an oral agreement only (E) a written agreement or an oral agreement or an implied agreement that can be inferred from the conduct of the parties doing business
(E)
196. A written partnership agreement typically specifies the following except: (A) the ownership interests of the partners (B) the method of accounting to be used (C) the name of the partnership business (D) the procedures for dissolution of the partnership (E) all of the other choices are usually included in the agreement
(E)
198. Which of the following are usually included in a written partnership agreement: (A) name of the partnership (B) the allocation of ownership shares (C) accounting rules (D) voting rights of the partners (E) all of the other specific choices are usually included
(E)
199. Which of the following are usually included in a written partnership agreement: (A) place and date of formation (B) the distribution of profits (C) priority rights in payments (D) how partnership shares will be valued (E) all of the other specific choices are usually included
(E)
200. Which of the following are usually included in a written partnership agreement: (A) state law that applies to the partnership (B) contributions of the partners (C) limits on transfers of partnership shares (D) how partnership shares will be valued (E) all of the other specific choices are usually included
(E)
202. In Zhou v. Bickley, Zhou helped Bickley start a motorcycle repair shop. When they got into a dispute later, the courts held that: (A) Zhou and Bickley were partners, so each was owed the fair market value of his share in the organization (B) Bickley was a partner but breached his duty to Zhou by not working, so could be fired from the partnership (C) Bickley was not a partner, he was an employee subject to wrongful dismissal and could sue for damages for that (D) Zhou and Bickley were partners, as Zhou provided funds needed to start the business that was largely run by Bickley (E) none of the other choices
(E)
206. In Japan small businesses are: (A) greatly favored by the government (B) exempt from most taxes (C) considered very desirable places to work (D) formed at a much faster rate than in the United States (E) none of the other choices are correct
(E)
211. Unless otherwise stated by contract, the law of partnership presumes which of the following not to be true? (A) each partner has an equal voice in partnership management (B) a majority vote controls ordinary business decisions (C) profits are to be divided among the partners (D) regardless of the amount invested in the partnership, each partner has an equal vote (E) all of the other choices are true
(E)
215. A change in the relationship of the partners that shows an unwillingness or an inability to continue with business may bring about ____ of the partnership. (A) finalization (B) retaliation (C) composition (D) revitalization (E) none of the other choices are correct
(E)
217. A complete termination comes about only after the partnership has been ____ and its affairs have been wound up. (A) finalized (B) disillusioned (C) standardized (D) reorganized (E) none of the other choices are correct
(E)
220. In general, if a partnership agreement does not specify what happens in case of the death or departure of a partner, one looks to: (A) Federal Partnership Act (B) Robinson-Patman Act (C) Partnership Operation Act (D) Partnership Termination Act (E) none of the other choices
(E)
222. The dissolution of a partnership may occur: (A) if a partner is found to be bankrupt (B) if the business of the partnership is made unlawful (C) if a partner dies (D) if a partner is found to be bankrupt or if a partner dies (E) if a partner is found to be bankrupt or if a partner dies or if the business of the partnership is made unlawful
(E)
224. Dissolution of a partnership takes place, unless otherwise provided for by contract, in the following instances except: (A) bankruptcy of a partner (B) withdrawal of a partner (C) death of a partner (D) withdrawal or death of a partner only (E) bankruptcy, withdrawal or death of a partner
(E)
226. During the course of a partnership's winding-up process, the partners owe each other: (A) a duty to mitigate (B) a duty to compete fully (C) a duty to refrain from termination (D) a duty of discounting (E) none of the other choices
(E)
232. A business organization in which some of the partners are not liable for partnership debts is called a: (A) no liability partnership (B) unlimited liability partnership (C) partial liability partnership (D) local liability partnership (E) none of the other choices are correct
(E)
233. In most states a limited partnership does not have to file what information with the appropriate state official? (A) name of the business (B) names and addresses of all partners (C) contributions each partner has made (D) the share of profits to be paid to each partner (E) all of the other choices must be filed
(E)
236. Under the Uniform Limited Partnership Act, a written partnership agreement must include: (A) the name of the business (B) the type or character of the business (C) the contributions of each partner (D) the name of the business and the type or character of the business (E) the name of the business and the type or character of the business and the contributions of each partner
(E)
237. Which of the following must be contained in a certificate of limited partnership under the Uniform Limited Partnership Act: (A) name of the business (B) type or character of the business (C) the address of an agent who is designated to receive legal process (D) duration of the limited partnership (E) all of the other choices are correct
(E)
238. Which of the following must be contained in a certificate of limited partnership under the Uniform Limited Partnership Act: (A) contributions of each partner (B) names and addresses of each general and limited partner (C) the address of an agent who is designated to receive legal process (D) the proportion of the profits that each partner is entitled to receive (E) all of the other choices are correct
(E)
239. Which of the following statement(s) is (are) true? (A) a partnership may consist entirely of limited partners (B) a limited partner may exercise control over the business in proportion to his interest in it (C) a partnership must obtain a charter from the state to be recognized as a legal entity (D) all of the other specific choices are true (E) none of the other choices
(E)
242. General partners in a limited partnership: (A) have no liability (B) have limited liability (C) are personally liable to the partnership's creditors only if they choose to be (D) are personally liable to the secretary of state (E) none of the other choices are correct
(E)
244. In a limited partnership the ____ are investors who may not participate in managing the business. (A) restricted partners (B) general partners (C) investment partners (D) nonvoting partners (E) none of the other choices are correct
(E)
246. Limited partners are similar to corporate shareholders in that: (A) both have unlimited liability (B) there is no liability for either (C) tax rates are the same (D) there must be one general partner (E) none of the other choices
(E)
248. Limited partners are investors who: (A) must have a net worth of at least $200,000 (B) are liable for all debts of the limited partnership (C) may take an active role in the management of the business (D) all of the other specific choices (E) none of the other choices
(E)
253. Which of the following is a right of a limited partner in a limited partnership: (A) the right to make hiring decisions (B) the right to give performance reviews to employees (C) the right to take an active role in managing the business (D) both a and b are rights of a limited partner (E) none of the other specific choices are rights of a limited partner
(E)
