Business Law Final

Front 1

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

Back 1

False

Front 2

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

Back 2

True

Front 3

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

Back 3

True

Front 4

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

Back 4

False

Front 5

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

Back 5

False

Front 6

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

Back 6

True

Front 7

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

Back 7

False

Front 8

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

Back 8

True

Front 9

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.

Back 9

B

Front 10

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.

Back 10

C

Front 11

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.

Back 11

B

Front 12

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.

Back 12

A

Front 13

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.

Back 13

B

Front 14

The owners of a limited liability company enjoy limited liability.

Back 14

True

Front 15

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

Back 15

T

Front 16

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

Back 16

F

Front 17

State law governs the formation of a limited partnership.

Back 17

T

Front 18

State law governs the formation of a limited partnership.

Back 18

T

Front 19

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.

Back 19

B

Front 20

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.

Back 20

D

Front 21

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.

Back 21

B

Front 22

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.

Back 22

B

Front 23

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.

Back 23

D

Front 24

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.

Back 24

A

Front 25

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.

Back 25

B

Front 26

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.

Back 26

C

Front 27

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

Back 27

F

Front 28

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

Back 28

T

Front 29

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

Back 29

T

Front 30

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

Back 30

T

Front 31

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

Back 31

T

Front 32

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

Back 32

F

Front 33

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

Back 33

T

Front 34

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

Back 34

F

Front 35

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

Back 35

F

Front 36

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

Back 36

T

Front 37

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

Back 37

F

Front 38

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

Back 38

T

Front 39

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.

Back 39

C

Front 40

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.

Back 40

B

Front 41

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.

Back 41

A

Front 42

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.

Back 42

C

Front 43

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.

Back 43

A

Front 44

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.

Back 44

C

Front 45

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.

Back 45

A

Front 46

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.

Back 46

B

Front 47

Agency relationships do not exist between employers and employees.

Back 47

F

Front 48

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

Back 48

F

Front 49

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

Back 49

T

Front 50

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

Back 50

F

Front 51

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.

Back 51

A

Front 52

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.

Back 52

A

Front 53

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.

Back 53

B

Front 54

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.

Back 54

B

Front 55

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

Back 55

T

Front 56

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

Back 56

T

Front 57

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

Back 57

F

Front 58

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

Back 58

T

Front 59

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

Back 59

T

Front 60

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

Back 60

T

Front 61

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

Back 61

T

Front 62

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

Back 62

T

Front 63

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

Back 63

T

Front 64

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

Back 64

T

Front 65

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

Back 65

T

Front 66

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.

Back 66

B

Front 67

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.

Back 67

D

Front 68

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.

Back 68

A

Front 69

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.

Back 69

A

Front 70

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.

Back 70

B

Front 71

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.

Back 71

A

Front 72

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.

Back 72

D

Front 73

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.

Back 73

A

Front 74

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.

Back 74

A