MGMT 402 Exam 1

Executive branch

Enforces laws and administers programs of the federal government

Which of the following types of courts exists outside the three levels of judicial branch courts? a. Supreme court b. Appellate court c. Administrative court d. Trial court

c. Administrative court

By default, an LLC is taxed like a(n): a. nonprofit corporation. b. S corp. c. C corp. d. partnership.

d. partnership.

Legislative branch does _____

makes laws: writes new statues and votes on their enactment

Judicial branch

reviews laws for constitutionality

Forms of free speech:

talking to someone else, sending n email, burning a flag, publishing a video game, posting a photo, donating money to a political campaign

5 types of clauses

Full Faith and Credit Clause: requires states to recognize the laws of other states Necessary and Proper Clause: gives congress authority to exceed its enumerated powers Commerce Clause: gives Congress power to regulate interstate business transactions Privileges and Immunities Clause: prohibits states from unreasonable discriminating against residents of other states Supremacy Clause: Makes state and local laws subservient to federal laws Due Process Clause: found in the 5th and 14th amendment, laws must be clear and understandable, and to provide notice and a hearing before depriving anyone of life, liberty, or property

If Julie owns and operates a local Jamba Juice franchise, who will be held liable if a customer slips on a wet floor inside the store and injures himself? a. Julie, because she is an independent contractor. b. Julie, because Jamba Juice is not headquartered locally. c. Jamba Juice, because it has the greater ability to pay the damages. d. Jamba Juice, because it was in control.

a. Julie, because she is an independent contractor.

Which of the following types of courts are the most prevalent nationwide? a. State trial courts b. Federal appellate courts c. State appellate courts d. Federal trial courts

a. State trial courts

Which of the following does not fall within the definition of "speech" under the First Amendment? a. These are all speech. b. Publishing a novel c. Donating money to a political organization d. Sending an email

a. These are all speech.

Which of the following is not required for a director to prove they acted in accordance with their duty of care? a. They acted in accordance with industry best practices. b. They acted with the same degree of care that an ordinary, prudent person would use in the same situation. c. They acted in good faith. d. They acted in a manner they reasonably believed to be in the company's best interests.

a. They acted in accordance with industry best practices.

Choosing a corporation name requirements

Must contain one of the following words: company, corporation, corp., co., incorporated, inc., limited, or ltd.

Which provision in the U.S. Constitution requires a person to receive notice and a fair hearing before the government can deprive them of life, liberty, or property? a. Due Process Clause b. Equal Protection Clause c. Commerce Clause d. First Amendment

a. Due Process Clause

Tucson is a city that lies within Pima County in the state of Arizona. Suppose Tucson passes an ordinance prohibiting residents from keeping chickens on their properties. Pima County has no such ordinance. If you want to legally keep chickens on your property, where should you live? a. In Pima County but not in Tucson b. In either Tucson or Pima County c. In neither Pima County nor Tucson d. In Tucson but not in Pima County

a. In Pima County but not in Tucson

Isabella, Susan, and Ben form Sunny Solar LLC as a member-managed limited liability company, and all three become members. They decide Isabella will have the primary responsibility of managing the company on a daily basis. Without the knowledge or consent of Susan or Isabella, Ben signs a lease on behalf of Sunny Solar to rent some office space. Will the company have to abide by the contract that Ben signed? a. No, because the members decided that Isabella would manage the company. b. Yes, because members are the owners of an LLC. c. Yes, because all members of a member-managed LLC have the right to manage the company. d. No, because Ben is not the designated manager of the LLC.

c. Yes, because all members of a member-managed LLC have the right to manage the company.

The decision of whether to file a lawsuit in state court or federal court is a question concerning: a. statute of limitations. b. venue. c. forum. d. personal jurisdiction.

c. forum.

In a franchise, the __________ allows the ____________ to use its intellectual property to operate a separately owned and managed business. a. subfranchisor; franchisee b. subfranchisor; franchisor c. franchisor; franchisee d. franchisee; franchisor

c. franchisor; franchisee

Chen and Amanda are both shareholders and directors of We're All Nuts Snacks. Chen is also a We're All Nuts employee, but Amanda is employed by Behemoth Enterprises. Chen is an _____________ director, and Amanda is an ______________ director. a. outside; outside b. outside; inside c. inside; outside d. inside; inside

c. inside; outside

The president's tool to curtail Congress's power is known as: a. impeachment power. b. judicial review. c. veto power. d. appointment power.

c. veto power.

Checks and balances definition

constitutional provisions granting each branch permission to curtail the authority of the other two branches

Which of the following is not one of the steps in forming a limited liability company? a. Choose a name. b. Choose a tax structure. c. Choose a management structure. d. Choose whether the owners will be personally liable.

d. Choose whether the owners will be personally liable.

Which of the following would be an acceptable name for a new limited liability company? a. Electric Vehicles Ltd. b. Ford Motor LLC c. Hybrid Technologies Co. d. Green Car LC

d. Green Car LC

Suppose Colorado decided it didn't want to permit its residents to speak freely anymore and thus took away their First Amendment rights. Which doctrine would allow the Supreme Court to force Colorado to comply with the Bill of Rights? a. Free exercise b. Equal protection c. Due process d. Incorporation

d. Incorporation

Suppose the Nebraska state constitution contains a provision that allows employers to discriminate based on an applicant's race when making hiring decisions. If a federal administrative regulation issued by the U.S. Department of Labor prohibits discrimination based on race when making hiring decisions, which law will prevail: the state constitution or the federal administrative regulation? a. Citizens in Nebraska must follow both laws. b. The state constitution. c. Neither; they are equally important. d. The federal administrative regulation.

d. The federal administrative regulation.

Which of the following is not a requirement in order to have standing in a lawsuit? a. The harm in the case is not contingent upon some future event. b. There is an actual, and not just theoretical, dispute. c. The plaintiff has a personal stake in the case. d. The plaintiff must have witnessed the events giving rise to the lawsuit.

d. The plaintiff must have witnessed the events giving rise to the lawsuit.

Pia is a director of Great Big Games, Inc. Her husband owns a large parcel of vacant land near Great Big Games' current offices. As Great Big Games grows and starts to look for space to expand, Pia convinces the board to approve the purchase of her husband's property for their new headquarters building, but she doesn't disclose her husband's ownership of the land. Has Pia breached any of her fiduciary duties to the corporation? a. No, she has breached no duties. b. Yes, she breached the duty of obedience. c. Yes, she breached the duty of care. d. Yes, she breached the duty of loyalty.

d. Yes, she breached the duty of loyalty.

If Li, Charlie, and Donell form Recycled Sports LLC, and in the articles of organization they give the company perpetual existence, this is known as a(n): a. term LLC. b. indefinite LLC. c. perpetual LLC. d. at-will LLC.

d. at-will LLC.

In a derivative shareholder lawsuit, the plaintiff is the ____________, and any money recovered goes to the _____________. a. shareholder; shareholder b. shareholder; corporation c. corporation; shareholder d. corporation; corporation

d. corporation; corporation

The Environmental Protection Act was passed by Congress and signed by President Nixon in 1970. It created the federal Environmental Protection Agency (EPA). The EPA is authorized to regulate the amount of pollutants industrial facilities can legally emit. In this case, the Environmental Protection Act is the ________________ that empowers the EPA to create ________________ to control environmental pollution. a. administrative regulation; enabling legislation b. judicial decision; administrative regulations c. enabling legislation; statutes d. enabling legislation; administrative regulations

d. enabling legislation; administrative regulations

An officer's role in a corporation is to: a. decide on the compensation packages for the company's top executives. b. approve important corporate decisions such as whether to merge with another company. c. decide on the long-term strategy of the company. d. manage the day-to-day operations of the company.

d. manage the day-to-day operations of the company.

The primary difference between directors and officers when it comes to the duty of obedience is that directors must obey the _____________, and officers must obey the ______________. a. officers; shareholders b. shareholder; statutes c. law; directors d. shareholders; directors

d. shareholders; directors

When forming a corporation, _____________ appoint ____________, and then _____________ appoint _____________. a. promoters; shareholders; shareholders; officers b. shareholders; officers; officers; employees c. shareholders; officers; officers; directors d. shareholders; directors; directors; officers

d. shareholders; directors; directors; officers

A state may not pass a law that ______________ a resident of another state. a. grants special privileges to b. impacts c. discriminates in any way against d. unreasonably discriminates against

d. unreasonably discriminates against

Suppose Angel works for We're All Nuts Snacks and serves on the board of directors of MegaSnacks, Inc. Which of the following would be a reason why Angel might need to resign from MegaSnacks' board? a. We're All Nuts Snacks and MegaSnacks release products that directly compete with one another. b. We're All Nuts Snacks and MegaSnacks both operate in the same general industry. c. We're All Nuts Snacks decides to merge with a company in a different industry than both MegaSnacks and We're All Nuts Snacks. d. MegaSnacks offers Angel a job, which means he would have to leave his job at We're All Nuts Snacks.

a. We're All Nuts Snacks and MegaSnacks release products that directly compete with one another.

A lawsuit alleging an employee was fired in violation of Title VII of the Civil Rights Act of 1964, which is a law passed by the U.S. Congress, can be filed in federal court under the doctrine of: a. federal question jurisdiction. b. general jurisdiction. c. diversity jurisdiction. d. limited jurisdiction.

a. federal question jurisdiction.

Suppose the federal government does not have the power to regulate insurance rates within a state. If the federal government passes a law regulating such rates because that law enables it to effectively regulate matters within its enumerated powers, it is exercising its: a. necessary and proper power. b. tax and spend power. c. supremacy power. d. commerce power.

a. necessary and proper power.

Suppose someone wants to stand on a street corner and shout offensive things at passersby. This would usually be regarded as: a. partially protected speech. b. fully protected speech. c. quasi-protected speech. d. unprotected speech.

a. partially protected speech.

The rights of corporate officers are generally determined by: a. the contractual agreement between the officer and the corporation. b. the corporation statute in the company's state of incorporation. c. common law court decisions. d. a vote of the shareholders.

a. the contractual agreement between the officer and the corporation.

The fact that federalism is a characteristic of the U.S. government means that: a. the national government and state governments share authority to govern citizens. b. the national government has almost all of the power to govern citizens. c. citizens are free to govern themselves. d. the state governments have almost all of the power to govern citizens.

a. the national government and state governments share authority to govern citizens.

There are four open seats up for election at the Eco Energy annual shareholders meeting. Carla really wants her friend Penny to become a director. If Carla owns 500 Eco Energy shares, and Eco Energy practices cumulative voting, how many votes can she cast for Penny to win one of the open seats? a. 5,000 b. 2,000 c. 1,000 d. 500

b. 2,000

Which of the following is not one of the four key characteristics of a corporation? a. Free transferability of shares b. Distributed management c. Perpetual existence d. Limited liability of shareholders

b. Distributed management

In which situation would a Kansas court not have personal jurisdiction over Dottie? a. Dottie lives in New Hampshire but agrees in writing to be subject to personal jurisdiction in Kansas courts. b. Dottie drove through Kansas on vacation, but doesn't live there; however, she is sued there as a result of a car accident she caused in New Hampshire. c. Dottie lives in New Hampshire but is sued in Kansas as a result of a car accident she caused while driving through Kansas. d. Dottie lives in Kansas and is sued there as a result of a car accident she caused in New Hampshire.

b. Dottie drove through Kansas on vacation, but doesn't live there; however, she is sued there as a result of a car accident she caused in New Hampshire.

Your friend Jamal comes to you and is very frustrated because he owns stock in a corporation that is very profitable but is not paying any of its profits to the shareholders as dividends. Jamal asks you what he can do, as a shareholder, to be paid more dividends. What do you advise him to do? a. Appoint officers who will pay out dividends. b. Elect directors who will pay dividends. c. Nothing; the corporation is required to distribute profits to the shareholders. d. Vote to make the company pay dividends.

b. Elect directors who will pay dividends.

Which doctrine divides power between a national government and multiple state governments? a. Supremacy b. Federalism c. Separation of powers d. Checks and balances

b. Federalism

Suppose you obtain a judgment in Kentucky against someone who hit your car. If you try to enforce that judgment against the person where they live in Indiana, Indiana will honor the Kentucky judgment because of the: a. First Amendment. b. Full Faith and Credit Clause. c. Privileges and Immunities Clause. d. 14th Amendment.

b. Full Faith and Credit Clause.

Which of the following rights is not afforded to corporate directors? a. Right to be compensated for their work b. Right to recruit and hire new entry-level employees c. Right to inspect the corporate records d. Right to indemnification

b. Right to recruit and hire new entry-level employees

What is the biggest difference between S corporations and C corporations? a. C corps are separate legal entities from their shareholders. b. S corps avoid double taxation. c. C corps avoid double taxation. d. S corps provide their shareholders with limited liability.

b. S corps avoid double taxation.

If Susan sells her membership interest in Sunny Solar LLC to her friend Eliza, what rights will Eliza have with respect to the company? a. She will have neither the right to receive distributions of profits nor the right to vote. b. She will have the right to receive distributions of profits but not the right to vote. c. She will have the right to vote but not the right to receive distributions of profits. d. She will have both the right to vote and the right to receive distributions of profits.

b. She will have the right to receive distributions of profits but not the right to vote.

How prevalent are federal trial courts? a. There is one district for a group of several states. b. There are one to four districts in each state. c. There is one district in each county. d. There are three to eight districts in each state.

b. There are one to four districts in each state.

You and your colleagues want to form a corporation, but you all want to be shareholders and directors and officers. Can you do this? a. Yes, as long as they do not vote for themselves when electing directors. b. Yes, one person can be a shareholder, director, and officer of a corporation. c. No, because that would be unfair to the other shareholders. d. No, shareholders, directors, and officers must be different individuals.

b. Yes, one person can be a shareholder, director, and officer of a corporation.

The directors of We're All Nuts Snacks are considering a merger with MegaSnacks, Inc., so they put the merger to a vote of the shareholders. We're All Nuts' shareholders vote against the merger, but the directors decide to proceed with it because they reasonably, and in good faith, think it is in the best interests of the corporation. Have the directors violated a duty? a. Yes, they have violated the duty of care by taking an action that is detrimental to the corporation. b. Yes, they have violated the duty of obedience by not following the shareholders' vote. c. No, there is no duty that would apply in this situation. d. No, they are protected by the business judgment rule.

b. Yes, they have violated the duty of obedience by not following the shareholders' vote.

A manager-managed LLC that chooses not to be taxed as a pass-through entity looks and acts very similar to a: a. nonprofit corporation. b. corporation. c. partnership. d. sole proprietorship.

b. corporation.

The framers of the Constitution felt a new document was needed to replace the Articles of Confederation largely because: a. the Articles did not give enough power to the states. b. the federal government was too weak under the Articles. c. the federal government was too powerful under the Articles. d. the Articles automatically expired after 10 years.

b. the federal government was too weak under the Articles.

Which of the following situations is likely to result in a court piercing the corporate veil? a. A corporation takes out a large loan for a very ambitious new project, but the project fails and the company defaults on the loan. b. A director in a corporation steers the company's business toward a supplier owned by a family member, causing the corporation to lose money. c. A sole shareholder of a small corporation pays their personal expenses using the corporate checking account. d. A large, publicly traded corporation is found to have engaged in accounting fraud.

c. A sole shareholder of a small corporation pays their personal expenses using the corporate checking account.

The _____________ requires the government to provide you with notice and a hearing before it takes away your property. a. 14th Amendment b. Commerce Clause c. Due Process Clause d. Equal Protection Clause

c. Due Process Clause

The clause that prevents the government from treating one religion more favorably than another is the: a. Free Exercise Clause. b. Supremacy Clause. c. Establishment Clause. d. Incorporation Clause.

c. Establishment Clause.

Administrative regulations are laws created by which branch of government? a. Federal branch b. Judicial branch c. Executive branch d. Legislative branch

c. Executive branch

Trixie Trouble files a frivolous lawsuit against TIP Tech for employment discrimination. They go to court, have a trial, and TIP Tech wins. Huzzah! Trixie is very upset, however, and immediately after the trial verdict is read exclaims, "I'm taking this straight to the Supreme Court, and you'll be sorry!" Will the Supreme Court hear Trixie's appeal? a. Yes, because the Supreme Court is the highest court in the land. b. Yes, because everyone is entitled to appeal a losing verdict to the Supreme Court. c. No, because she can't appeal from the trial court to the Supreme Court. d. No, because the Supreme Court has discretion over the types of cases it hears, and it's unlikely to accept this case.

c. No, because she can't appeal from the trial court to the Supreme Court.

Suppose the Montana legislature passes a statute making it illegal to kill bison in the state, and the governor signs the legislation. Later a new governor is elected. The new governor believes there are too many bison in the state, so she issues an executive order requiring all of Montana's state park rangers to hunt bison to thin out their herds. (Park rangers are employees of the state's executive branch.) Which law should you follow if you are a park ranger in Montana? a. The executive order prohibiting killing bison b. The executive order requiring park rangers to hunt bison c. The state statute prohibiting killing bison d. The state statute requiring park rangers to hunt bison

c. The state statute prohibiting killing bison

4 characteristics of a corporation:

Limited liability, centralized management, free transferability of shares, perpetual existence

Steps to form a corporation: 4

Select the state of incorporation choose a corporate name draft and file articles of incorporation hold meetings of shareholders and directors

Suppose you and two friends want to be owners of the stock in a new corporation. You want to make sure that your friends can't sell their stock to some outsiders under any circumstances. Which of the following provisions should you include in your shareholders' agreement? a. A buy-sell agreement b. The right of first refusal c. Restriction on sale d. Preemptive rights

a. A buy-sell agreement

Sunny Solar is a franchisor that manufactures solar panels and ships them to franchised retailers, who then sell them to the public. Which type of franchise arrangement is this? a. A distributorship b. A chain-style franchise c. An area franchise d. A manufacturing arrangement

a. A distributorship

Which of the following might be a valid name for a brand-new corporation? a. Battery Specialists Company b. Tyler, Inez, and Paulo Investments c. McDonald's Ltd. d. Silver Dollar Ventures, LLP

a. Battery Specialists Company

Suppose your friend wants to start a new corporation. They come to you asking how to get started. What should you advise them to do first? a. Choose a corporate name. b. Appoint directors. c. Appoint officers. d. File the articles of incorporation.

a. Choose a corporate name.