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30 Cards in this Set
- Front
- Back
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Homer Higgins operates a delivery service in Tulsa, Oklahoma. He delivers packages, groceries and even children to locations throughout the city. Homer is worried about his personal liability in the event he has an accident while transporting children or if he fails to meet a delivery time. But, Homer does not have time to do a great deal of paperwork for his business. The only assets Homer owns are his car that he uses for the deliveries and his cell phone and radio for an answering service to contact him with pick-ups. What business structure would best suit Homer's needs?
a. partnership b. limited partnership c. Subchapter S or S corporation d. sole proprietorship |
c. Subchapter S or S corporation
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Which of the following forms of business structure can be created without compliance with statutory paperwork requirements?
a. limited liability company b. limited partnership c. S corporation d. general partnership |
d. general partnership
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Which of the following forms of business structure has management by its owners as opposed to centralized management?
a. general partnership b. corporation c. limited partnership d. foreign corporation |
a. general partnership
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Which of the following is NOT a requirement for the articles of incorporation for creating a corporation?
a. the name of the corporation b. the share structure of the corporation c. the names and addresses of the officers of the corporation d. the name of the corporation's statutory agent |
c. the names and addresses of the officers of the corporation
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DataGathering, Inc. is incorporated in California. It does business in Nevada, Washington, Oregon and Idaho. Its principal offices are located in Washington. DataGathering, Inc.:
a. is a domestic corporation in Washington only. b. is a domestic corporation in California only. c. is a domestic corporation in Washington. d. is a domestic corporation in California, Nevada, Washington, Oregon and Idaho, the states where it does business |
b. is a domestic corporation in California only.
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Joan Bennett, Clark Sorenson, and Ramsey Clifford operated Cookies Galore as a partnership for nearly 12 years. Clark has decided to leave the business. Clark's primary responsibilities were ordering the supplies for baking their cookies and contracting for equipment purchases and repairs. Joan and Ramsey buy out Clark's interest in Cookies Galore and he leaves the business. Some months later, a creditor from Bosch Mixers notifies Clark that $12,000 is owed on a mixer Cookies Galore purchased and that the amount has not been paid. Clark explains that he left the business and Bosch's accountant replies, "No one told us." In addition, Clark has been ordering cookie base from a Cookies Galore supplier to start a new business. The bills have gone to Joan and Ramsey who have refused to pay Dough Base, the supplier, because they say Clark did the ordering and is no longer a partner. Dough Base's accountant replies, "No one let us know. We thought he was still with you."
a. Clark is liable for the $12,000 and Cookies Galore is liable to Dough Base. b. Clark is not liable for the $12,000 but Cookies Galore is liable to Dough Base. c. Clark is liable for the $12,000 but Cookies Galore is not liable to Dough Base. d. Clark is not liable for the $12,000 and Cookies Galore is not liable to Dough Base. |
a. Clark is liable for the $12,000 and Cookies Galore is liable to Dough Base.
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Which of the following will NOT cause a loss of limited liability for a limited partner in a limited partnership?
a. allowing his or her name to be used in the limited partnership name b. participating as a manager in the business c. improper formation of the limited partnership d. consulting with or advising the general partner |
d. consulting with or advising the general partner
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Who elects the officers of a corporation?
a. the shareholders b. the incorporators c. the board of directors d. dissenting shareholders |
c. the board of directors
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What is the difference between a limited partnership and a limited liability partnership (LLP)?
a. There is no difference except in the name and designation. b. All partners have limited liability in an LLP. c. The limited partnership has pass-through income and losses and the LLP does not. d. An LLP must have 2 general partners and a limited partnership needs only one. |
b. All partners have limited liability in an LLP.
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The business judgment rule:
a. refers to the duties of a general partner in a limited partnership. b. is no longer followed. c. does not impose any duty on directors to attend meetings. d. applies to the duties and responsibilities of a director on a corporate board. |
d. applies to the duties and responsibilities of a director on a corporate board.
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Which of the following is not a duty of corporate directors?
a. personal liability b. fiduciary duty c. exercising sound business judgment |
a. personal liability
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Which of the following does not have limited liability for its owners?
a. LLC b. general partnership c. corporation |
b. general partnership
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Which of the following does not have ease of transferability of interest?
a. general partnership b. corporation c. limited partnership |
a. general partnership
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Which of the following can be created without some form of statutory filing?
a. general partnership b. corporation c. limited partnership |
a. general partnership
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A corporation formed in Nevada is a domestic corporation:
a. only in Nevada. b. anywhere in the United States. c. in Nevada and any state in which it registers to do business. |
a. only in Nevada.
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Stock which carries unpaid dividends forward from year-to-year is:
a. common stock. b. cumulative common stock. c. cumulative preferred stock. |
c. cumulative preferred stock.
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When do directors of corporations have personal liability?
a. always for incorrect decisions b. breach of fiduciary duty c. for service on the executive committee |
b. breach of fiduciary duty
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In which of the following business forms do the owners not manage the firm?
a. sole proprietorship b. general partnership c. limited partnership |
c. limited partnership
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In which of the following does the business itself pay income taxes?
a. corporation b. partnership c. LLC |
a. corporation
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T/F
Sole proprietors have complete personal liability for the debts of their businesses. |
True
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T/F
A partnership by implication still requires articles of partnership for valid formation. |
False
A partnership may arise even though there is no express agreement. |
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T/F
Sharing of profits is not relevant in determining whether a partnership exists. |
False
Sharing of profits is prima facie evidence of a partnership. |
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T/F
In a general partnership, all partners have unlimited personal liability. |
True
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T/F
Personal creditors of partners can attach partnership property. |
False
Creditors can attach partners' interests, not property. |
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T/F
General partners are mutual principals and agents of each other. |
True
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T/F
Dissolution of a partnership is another term for termination of a partnership. |
False
Dissolution is not necessarily termination. |
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T/F
A limited partnership must have at least one general partner. |
True
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T/F
A corporation is a domestic corporation in only one state. |
True
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T/F
An LLC is the same as a limited partnership. |
False
An LLC is not a partnership. All owners have limited liability, unlike a limited partnership. |
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T/F
Corporations can make a loan to officers only if the loan is backed by sufficient collateral. |
False
Corporations can no longer make loans to officers and directors. |
