MODULE 3 PRACTICE QUESTIONS

A(n) ________ is an association of two or more persons in an unincorporated entity to do business and share profits and losses. a. general partnership b. corporation c. limited partnership d. S-corporation e. limited liability company

A. General partnership

Which of the following is true about shareholders? a. If a company is unable to pay its debts, it seeks protection from creditors in bankruptcy court, in which case shareholders lose the value of their stock. b. Shareholders' personal assets, such as their own homes or bank accounts, are liable to creditors. c. It's important to note that shareholders do not own any stock in the company, but enjoy legal rights to the company's assets. d. Shareholders should be human beings and not corporate entities, such as partnerships or corporations. e. In a closely held corporation, the body of shareholders tends to be large.

A. If a company is unable to pay its debts, it seeks protection from creditors in bankruptcy court, in which case shareholders lose the value of their stock.

Which of the following statements is true about limited liability? a. It is any type of investment where the investor's maximum possible loss is the amount invested. b. It is full liability for the debt and other obligations of a legal entity. c. It is an undesirable situation where, if the debts of the business exceed its ability to pay, creditors may reach the personal assets of the business owners. d. With limited liability, all it takes is one successful personal injury lawsuit, not covered by insurance, to destroy years of hard work by an individual business owner. e. It is the liability of the owner of a business for all the obligations of the business.

A. It is any type of investment where the investor's maximum possible loss is the amount invested.

What is the most common form of doing business in the United States? a. sole proprietorship b. corporation c. general partnership d. limited liability company e. limited liability partnership

A. Sole proprietorship

Which of the following statements about discrimination on the basis of national origin is true? a. Workplace "English-only" rules are illegal unless they are required for the job being performed. b. English-only rules would not be a business necessity for police officers. c. Workplace "English-only" rules are legal. d. English-only rules might be a business necessity for late-night office cleaners. e. Discrimination on the basis of national origin is prohibited by Title VIII.

A. Workplace "English-only" rules are illegal unless they are required for the job being performed

Under the _______ doctrine, workers in the United States are free to work for whomever they want, and employers are free to hire whomever they want, as well as fire them at will. a. constructive dismissal b. employment-at-will c. affirmative action d. individual freedom e. work ethic

B. Employment-at-will

What is the one truism that binds all businesses together? a. communication b. the need to make a profit c. risk d. the need to spur new business development e. competency

B. the need to make a profit

What was the main purpose of Title VII? a. to prevent discrimination by government agencies which receive federal funds b. to outlaw discrimination in public accommodations engaged in interstate commerce c. to integrate African Americans into the mainstream of society d. to protect women from being subject to sexual harassment e. to dismantle sex segregation by integrating women into work formerly reserved for men

C. to integrate African Americans into the mainstream of society

Businesses can best protect against employee claims of discrimination by _____. a. running a credit check for trustworthiness b. enacting a reverse discrimination policy c. setting a mandatory retirement age. d. conducting workplace training and implementing policies against discrimination

D. Conducting workplace training and implementing policies against discrimination

Many companies choose to incorporate in the tiny state of Delaware because __________. a. disputes heard in Delaware courts are seldom predictable, making it easy to manipulate business operations b. shareholders are given a right to sue a third party on behalf of the corporation c. the courts operate with the most experienced and knowledgeable jury d. the chancery courts there have developed a reputation for fairly and quickly applying a very well-developed body of corporate law e. disputes heard in Delaware courts are not usually transparent, providing the opportunity to make quick profits

D. The chancery courts there have developed a reputation for fairly and quickly applying a very ell-developed body of corporate law

Which of the following is a major advantage of sole proprietorships? a. If sole proprietors seek funding from banks, down payment requirements typically are low. b. Very few sole proprietors seek funding from outside sources. c. A range of options are available for raising working capital for sole proprietors. d. It is sometimes possible to bring others into the business. e. Autonomy comes with total ownership of the business's finances.

E. Autonomy comes with total ownership of the business's finances

_________ exists when there is intentional discrimination against a member of a protected class. a. Adverse impact b. Retaliation c. Unintentional discrimination d. Quid pro quo harassment e. Disparate treatment

E. Disparate treatment

The Civil Rights Act of 1964 has several provisions, but the most important for businesses is known widely as __________. a. Title I b. Title VIII c. Title II d. Title III e. Title VII

E. Title VII

Under older common law, shareholders could sue a company that conducted business beyond the scope of its articles. These actions are called __________. a. respondeat superior b. actus reus c. res ipsa loquitur d. mens rea e. ultra vires

E. Ultra Vires; An ultra vires act is one beyond the purposes or powers of a corporation.