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74 Cards in this Set

  • Front
  • Back

A sole proprietor owns the entire business but does not receive all of the profits.

False

In choosing a form of business organization for a new enterprise, important factors include theliability of the owner.

True

A sole proprietor has unlimited liability for all obligations that arise in doing business.

True

In raising capital, a sole proprietor is limited to his or her personal funds—a personal loan is notpossible.

False

A franchisor can set the retail prices for the goods that a franchisee sells.

False

Good faith and fair dealing are important in terminating a franchise relationship.

True

A partner is entitled to make secret profits or put self-interest before his or her duty to theinterest of the partnership.

False

If a partnership’s liabilities are greater than its assets, the partners bear the losses.

True

Mello Coffee Shops, Inc., sells a franchise to Noah’s Arch, a café. Mello is;


a. a franchisee.


b. a franchisor.


c. a partner.


d. a sole proprietor.

B

A franchise agreement between Software2termination of the franchise. Software2 Company and Games3, Inc. is silent on a time for may:


a. never terminate.


b. terminate at any time.


c. terminate on reasonable notice.


d. terminate on three days notice.

C

Ben, who runs a livestock breeding business, owes the Circle C Ranch $40,000. Ben agrees topay the Circle C a percentage of his profits each month until the debt is paid. Because of this agreement, the Circle C is:


a. Ben’s creditor and partner.


b. Ben’s creditor only.


c. Ben’s partner only.


d. neither Ben’s creditor nor his partner.

B

Parker and Oscar sign a partnership agreement to do business as “Parker’s Plumbing” withoutspecifying a duration. This partnership is terminable;


a. at any time by either partner.


b. only after a reasonable term.


c. only if Parker dissociates from the firm.


d. only if Oscar dissociates from the firm.

A

Mead, Nero, and Olen do business as Pipe & Plumbing Services, a partnership. After Mead’srelationship to the firm ends, Nero and Olen agree to discontinue the business. This is;


a. dissociation.


b. dissolution.


c. gross negligence.


d. simple misconduct.

B

The owners of a limited liability company enjoy limited liability.

True

A limited liability company can sue or be sued, enter into contracts, and hold title to property.

T

The members of a limited liability company (LLC) are personally liable for the wrongful acts oromissions of the LLC.

F

State law governs the formation of a limited partnership.

T

State law governs the formation of a limited partnership.

T

China Bank is a foreign entity—a firm owned and operated by investors in a foreign country.With respect to an LLC in the United States, China Bank can:


a. act as a creditor, but cannot otherwise invest or participate.


b. become a member.


c. not become a member, but can participate in its operations.


d. not become a member or otherwise participate in its operations.

B

Fay is a member of Garden Groves LLC. Like other members of limited liability companies,Fay’s liability for Garden Groves’s obligations resembles the liability of:


a. a limited partner who manages a limited partnership.


b. an owner of a sole proprietorship.


c. a general partner of a limited partnership. d. a shareholder of a corporation.

D

Mit-E Mart LLC was formed in New Jersey. Mit-E Mart’s members are Odel, who is a citizen ofNew Jersey, and Pola, who is a citizen of New York. For federal diversity jurisdictional purposes, Mit-E is a citizen of;


a. all states.


b. New Jersey and New York.


c. New Jersey only.


d. no state.

B

Chocolate Sundry LLC’s members and managers are Devlin, Effie, and Flavia. After Devlin’srelationship to the firm ends, Effie and Flavia agree to discontinue the business. This is;


a. illegal.


b. optional.


c. required.


d. wrongful.

B

Rick and Sandy are limited partners in Terrific Profit Enterprises, a limited partnership. To avoidpersonal liability for partnership obligations, they must not:


a. acquire an interest in the firm.


b. contribute property to the firm.


c. engage in activities independent of the firm’s business.


d. participate in the firm’s management.

D

Genetic Innovations, LP, is a limited partnership. The partners sign an agreement purporting tostate how the firm’s profits and losses are to be divided. The profits and losses of the firm will be divided:


a. according to the agreement.


b. equally, despite the agreement.


c. in proportion to capital contributions, despite the agreement.


d. in proportion to each partner’s participation in the firm’s management, despite the agreement.

A

Gizelle, Haya, and Ivy do business as Janitorial Services, Limited Partnership. After Gizelle’srelationship to the firm ends, Haya and Ivy agree not to continue the business. This is;


a. dissociation.


b. dissolution.


c. gross negligence.


d. simple misconduct.

B

Bret is a general partner in Capitol Realty, LLLP, a limited liability limited partnership, whichcannot pay its debts. Bret is personally liable for the debts:


a. in proportion to the number of partners in the firm.


b. to no extent.


c. to the extent of his capital contribution.


d. to the full extent.

C

27. When a corporation earns profits, it must distribute them to shareholders.

F

A corporation is referred to as a domestic corporation by its home state.

T

The first step in the incorporation process is to select a state in which to operate.

T

The primary document needed to incorporate a business is the articles of incorporation.

T

Express powers of a corporation are found in its articles of incorporation.

T

In most states, one individual cannot be both an officer and a director.

F

The board of directors normally can remove a corporate officer at any time with or withoutcause.

T

Directors are entitled to use confidential corporate information for their personal advantage.

F

A director does not need to disclose any conflict of interest before voting on a proposedtransaction.

F

Shareholders must approve fundamental changes affecting the corporation before the changescan be implemented.

T

A shareholder’s right to inspect corporate books and records is unlimited.

F

In certain instances of fraud, a court may “pierce the corporate veil” to hold the shareholdersindividually liable.

T

Felicity and Gideon want to form and do business as Home Healthcare Corporation. Acorporation is:


a. a natural being.


b. a tangible thing.


c. an artificial person.


d. a visible radiance.

C

The abbreviation “P.A.” in the name “Painless Dental, P.A.” means that this organization is;


a. a private association.


b. a professional association.


c. a public association.


d. a publicly administered corporation.

B

Rapid Pest Control itself out to others as being a corporation but makes no attempt toincorporate. Ponce signs a contract with Rapid Pest Control that is not performed. Ponce files a suit against the firm. The court will likely hold that Rapid Pest Control is:


a. a corporation by estoppel.


b. an alien corporation.


c. an S corporation.


d. ultra vires.

A

Raul is chairman of the board of Swif-Vac Corporation. Pinky, a consumer, is injured whileusing a Swif-Vac product. Pinky sues Swif-Vac, and Raul individually. Swif-Vac may pay Raul’s legal fees under:


a. the director’s right to certification.


b. the director’s right to compensation.


c. the director’s right to indemnification.


d. no circumstances.

C

Sylvia is an officer of Triad Hotel Company. As an officer, with respect to the corporation, Sylviais:


a. a fiduciary.


b. a forum.


c. a proxy.


d. a quorum.

A

Rocco is a director of Spa Lids & Tubs,of a corporation, Rocco’s decisions must be:


a. unwavering and unquestionable.


b. arguable and defensible.


c. informed


d. perfect and unassailable.

C

Naomi and Ogden are shareholders of MediCare Residences, Inc. As shareholders, they mustapprove:


a. conducting a merger.


b. deciding to pursue new business opportunities.


c. terminating a managerial employee.


d. negotiating a contract between management and labor.

A

Zero Sum Games Corporation has forty-three shareholders. The minimum number that must bepresent at a meeting for a shareholders’ vote is:


a. all of the shareholders.


b. a quorum.


c. a proxy.


d. three of the shareholders.

B

Agency relationships do not exist between employers and employees.

F

48. An independent contractor may not act in the capacity of an agent.

F

An agent is required to notify the principal of all matters concerning the subject matter of theagency.

T

An agent has a duty to follow all clearly stated instructions of the principal, lawful or not.

F

Svetlana, a fifty-five-year-old member of a racial minority with a disability, believes that she is avictim of employment discrimination. Potentially the most widespread form of discrimination is based on;


a. age.


b. disability


c. gender.


d. race.

A

Dan has AIDS, Eve is blind, and both work for First National Bank. Considered disabled underthe Americans with Disabilities Act;


a. are Dan and Eve.


b. is Dan only.


c. is Eve only.


d. is neither Dan nor Eve.

A

Flynn is a drug addict who has completed a supervised drug-rehabilitation program. Gert useddrugs casually in the past. Both work for Home Credit Company. Considered to have a disability under the Americans with Disabilities Act of 1990;


a. are Flynn and Gert.


b. is Flynn only.


c. is Gert only.


d. is neither Flynn nor Gert.

B

Paolo has cerebral palsy, Quincy has kleptomania, and both work for Reality InsuranceCompany. Considered disabled under the Americans with Disabilities Act;


a. are Paolo and Quincy.


b. is Paolo only.


c. is Quincy only.


d. is neither Paolo nor Quincy.

B

An employer must verify documents establishing a prospective worker’s identity.

T

An independent contractor is not subject to the employment eligibility verification requirements.

T

If an employee presents false documentation of eligibility to work in the United States, his or heremployer is subject to deportation.

F

Businesses can hire foreign workers with special qualifications when there are not enoughqualified workers available in the United States.

T

A company seeking to hire a non-citizen worker may do so if the worker is “self-authorized.”

T

A closed shop is a workplace that requires union membership as a condition of employment.

T

A union shop is a workplace that requires union membership after a worker has been on a jobfor specified amount of time.

T

An employer may limit the campaign activities of union supporters during a union electioncampaign.

T

Forming a union requires the support from a majority of the employees in an appropriatebargaining unit.

T

A union that has been certified as the representative of a group of workers can later bedecertified.

T

A strike occurs when unionized workers leave their jobs and refuse to work.

T

115. Garth’s family came to the United States from Scotland in 1640. Hermann’s family came to this country from Germany in 1800. Ivy’s family came from Ireland in 1870. The United States did not have any laws restricting immigration until;


a. the early nineteenth century.


b. the late nineteenth century.


c. the twentieth century.


d. the twenty-first century.

B

Fruits & Vegetables, Inc., employs hundreds of seasonal and permanent workers, both skilledand unskilled, in seven states. Fruits & Vegetables can hire illegal immigrants:


a. if either the employer or the immigrants file special forms.


b. only if the employer files a special form.


c. only if the immigrants file special forms.


d. under no circumstances.

D

Socrates Software Corporation wants to hire Tomas, a non-citizen of “extraordinary ability.” Tohire Tomas, Socrates must petition;


a. U.S. Citizenship and Immigration Services.


b. the Social Security Administration.


c. U.S. Immigration and Customs Enforcement. d. the National Labor Relations Board.

A

General Assembly Corporation, a U.S. employer, may hire Hilo, a non-citizen, if Hilo is:


a. a lawful permanent resident of the United States.


b. an unlawful but hopefully permanent resident in the United States.


c. an unlawful but only temporary resident in the United States.


d. any of the choices.

A

During a dispute with Musicale Productions Inc., National Stagehands Union asks the NationalLabor Relations Board (NLRB) for a ruling. The NLRB rules against Musicale. The employer may appeal the decision to;


a. the appropriate state court.


b. the appropriate U.S. court of appeals.


c. the president of the United States, who has eighty days to make a decision.


d. the U.S. Department of Labor.

B

During a union election campaign, Sapphire Blue Finance Company prohibits on-site, work-hoursolicitations by Credit Workers Union, which is seeking the workers’ unionization, while permitting charities to solicit the same workers on-site and during work hours. This violates;


a. federal labor law.


b. federal election law.


c. federal solicitation law.


d. no federal law.

A

During a union election campaign at Retro Industry, Inc., the employer can


a. ask employees to publicly state their personal views on unionization.


b. promise to terminate the employees who vote for the union.


c. threaten to reduce the wages of employees who vote for the union.


d. do none of the choices.

D

After extensive collective bargaining, Rubber Workers Union and Super-Value Tire Companycannot agree on terms. The union may:


a. call a strike.


b. file an unfair labor practice complaint with the National Labor Relations Board.


c. file a suit in the appropriate federal court.


d. petition the president of the United States, who has eighty days to make a decision.

A

Pip, a clerk for a Quik Burger, Inc., restaurant goes out on strike with the other employees. Afterthe strike, Pip must be given his job back if there is still work at the restaurant, and the strike was:


a. a lawful, unfair labor practice strike.


b. an “excuse” for a few days off.


c. an unjustified strike.


d. an unlawful “economic” strike.

A