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15 Cards in this Set

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1. Ownership in S corporations is limited to

1. 20 stockholders.
2. 25 stockholders.
3. 35 stockholders.
4. 100 stockholders.
1. (3) This is a disadvantage of S corporations as compared to limited liability companies.
(160)
2. Which of the following is NOT an advantage of the corporation form of ownership?

1. Limited liability
2. Centralized management
3. No income limitations
4. Double taxation
2. (4) Other disadvantages of a corporation include how capital gains and losses are treated. (159)
3. Which of the following statements does NOT correctly describe a limited partnership?

1. A limited partnership is a popular form of ownership for active brokerage firms.
2. Limited partners generally have no say in business operations.
3. The general partner has unlimited liability.
4. Limited partnerships are used primarily to acquire investments such as syndicates.
3. (1) The limited partners liability is limited to the amount of the investment. (160)
4. Which of the following is NOT a real estate franchise?

1. Electronic Realty Associates (ERA)
2. Fannie Mae
3. Century 21
4. Re/Max
4. (2) ERA, Century 21, and RE/MAX are all franchises. Fannie Mae is a strong player in the secondary mortgage market. (160-161)
5. A landlord-broker generally would be found in a

1. sole proprietorship.
2. limited partnership.
3. general partnership.
4. 100-percent commission office.
5. (4) The landlord-broker owns the office and rents the space to other brokers on a per-desk basis. (161)
6. Which of the following statements does NOT correctly describe the independent contractor relationship?

1. The salesperson is under limited supervision.
2. The salesperson is responsible for car and transportation expenses.
3. The broker must provide health insurance.
4. The broker may not withhold federal income taxes from commissions.
6. (3) The broker may not provide fringe benefits such as health insurance or pension plans. (162)
7. A broker has an annual overhead of $300,000, and there are ten desks, each accommodating two salespeople. The broker's desk cost is

1. $15,000.
2. $20,000.
3. $25,000.
4. $30,000.
7. (1) 10 desks x 2 salespeople = 20 salespeople $300,000 annual overhead / 20 salespeople = $15,000 (165-166)
8. The person who manages your brokerage firm exercises total control over the organization. This type of management style would be called

1. autocratic.
2. dictatorial.
3. participative.
4. laissez-faire.
8. (2) Laissez-faire is the least authoritarian management style. (163)
9. Which of the following statements does NOT correctly describe the methods of keeping financial records?

1. The cash method records income as it is received.
2. The accrual method records income when it is earned.
3. Most firms begin operating under the accrual method.
4. The accrual method records expenses when they are incurred.
9. (3) The accrual method is more complicated than the cash method. (164)
10. Which of the following is NOT an objective of a training program?

1. Increased profits
2. Better time management
3. Good habits
4. Preparation for passing the license exam
10. (4) Some of the larger firms maintain pre-licensing classes from which they recruit salespeople. (164)
11. Which of the following is NOT a benefit of a training program?

1. Supervision
2. Motivation
3. Morale
4. Handling of personal problems
11. (4) Personal problems are handled by the manager or owner on an individual basis. (164)
12. Which of the following is NOT included in a typical bookkeeping system?

1. Records of income
2. Accounts payable
3. Payroll cards
4. A policy manual
12. (4) The policy and procedure manual must be made available to new salespeople. (164-165)
13. Which of the following is NOT included in trust account notations?

1. The receipt of any monies belonging to others
2. A record of the date of the disbursement of the funds
3. The manner in which the funds are disbursed
4. A record of appointments to show homes
13. (4) Maintaining a record of showings would be included in the policy and procedures manual. (165)
14. Which of the following statements does NOT correctly describe trust accounts?

1. Commingling of business funds with escrow funds is illegal.
2. Trust funds should be deposited in a business account.
3. Trust account records must be kept of the names of the parties for whose benefit the trust account is created.
4. All disbursement notations should include the check number and the name of payee.
14. (2) Trust funds must be deposited in a special checking account. (165)
15. Which of the following is NOT a part of a broker's miscellaneous record?

1. Providing a policy manual.
2. Ensuring that salespeople are properly licensed.
3. Retaining an attorney to provide sound legal advice.
4. Ensuring that salespeople are staying up-to-date in their field of expertise.
15. (4) Brokers generally provide periodic meetings to present information allowing salespeople to stay up-to-date in their field. This type of material could also be included in advanced training programs. (165)