Question 1

Which of the following is distinguishable from other forms of partnerships because the partners' liability for professional malpractice is limited to the partnership?

Accepted Answer

A)   General partnership
B)   Limited partnership
C)   Professional partnership
D)   Limited liability partnership
E)   Loss limiting partnershipF) C) and D)
G) D) and E)

Question 2

The Mexican limited liability company is derived from the model in which of the following countries?

Accepted Answer

A)   The United States
B)   Canada
C)   Italy
D)   Spain
E)   GermanyF) B) and D)
G) A) and C)

Question 3

Which of the following is a relationship between two or more persons or corporations created for a specific business undertaking?

Accepted Answer

A)   A business trust
B)   A joint venture
C)   A syndicate
D)   A franchise
E)   An enterpriseF) None of the above
G) A) and D)

Question 4

Cooperatives must be incorporated.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is false regarding cooperatives?

Accepted Answer

A)   Unincorporated cooperatives are treated like partnerships.
B)   In unincorporated cooperatives, members share joint liability for the cooperative's actions.
C)   Members of incorporated cooperatives enjoy limited liability just as do the shareholders of a corporation.
D)   Cooperatives are usually formed as syndicates.
E)   A cooperative is usually formed to market products.F) B) and C)
G) None of the above

Question 6

What type of business had Kitty initially set up?

Accepted Answer

A)   A franchise
B)   A sole proprietorship
C)   An individual proprietorship
D)   A general company
E)   An S corporationF) A) and E)
G) C) and D)

Question 7

Define a joint venture and set forth two differences under the law between a joint venture and a partnership.

Accepted Answer

A joint venture is a relationship betwee...

Question 8

Which of the following is true regarding Wally's assertion regarding tax?

Accepted Answer

A)   Wally is correct insofar as the corporation would be required to pay taxes on its profits, and the shareholders would also be required to pay taxes on dividends.
B)   Wally is incorrect because all businesses are taxed in the same manner.
C)   Wally is incorrect but only because the law involving taxation of corporations does not apply until there are at least 10 shareholders.
D)   Wally is incorrect but only because the law involving taxation of corporations does not apply until there are at least 75 shareholders.
E)   Wally is correct but only because his proposal does not involve a writing and the filing of paperwork with the secretary of their state.F) A) and B)
G) C) and D)

Question 9

Which of the following is false regarding franchises?

Accepted Answer

A)   The franchisor can set sales quotas and record-keeping requirements.
B)   The franchisor has the legal authority to ensure that the franchisee maintains the quality of goods and services associated with the franchise.
C)   The UCC does not apply in the realm of disputes between franchisors and franchisees.
D)   A franchise is a contractual relationship between the franchisor and the franchisee.
E)   If a franchisor exercises too much authority in the day-to-day affairs of the franchisee's business, the franchisor could be held liable for the torts of the franchisee's employees.F) None of the above
G) A) and C)

Question 10

Which of the following offers tax advantages of a partnership and liability advantages similar to a corporation,but allows for unlimited shareholders?

Accepted Answer

A)   A limited partnership
B)   A joint partnership
C)   A corporate partnership
D)   A limited liability company
E)   A cooperativeF) D) and E)
G) A) and D)

Question 11

What type of arrangement did Wally propose with his suggestion that they share control of the business and split profits equally,not bothering with a written agreement?

Accepted Answer

A)   A joint sole proprietorship
B)   A partnership
C)   A corporation
D)   An S corporation
E)   A limited partnershipF) A) and E)
G) A) and D)

Question 12

Describe a franchise that is a distributorship and give an example of a distributorship.

Accepted Answer

Distributorships are franchises in which...

Question 13

A sole proprietor is considered a separate legal entity.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is true regarding corporations?

Accepted Answer

A)   A corporation is not a separate legal entity.
B)   A corporation may not be sued.
C)   A corporation is created according to federal law.
D)   Shareholders may typically be held liable for debts of the corporation.
E)   The corporation must pay taxes on profits, and shareholders must pay taxes on dividends they receive from the corporation.F) C) and E)
G) All of the above

Question 15

Which of the following is not a type of partnership?

Accepted Answer

A)   Limited partnerships
B)   General partnerships
C)   Limited liability partnerships
D)   Limited liability company
E)   CooperativeF) A) and D)
G) D) and E)

Question 16

Which of the following is responsible for managing the business of a corporation?

Accepted Answer

A)   Investors
B)   Shareholders
C)   Officers
D)   Administrators
E)   Members of the board of directorsF) C) and D)
G) B) and C)

Question 17

Members of the board of directors of a corporation are elected by shareholders.

Accepted Answer

A) True 
 B)False

Question 18

In regard to the quest of Wally and Sally to find the best form of business organization,which of the following is true?

Accepted Answer

A)   An S corporation provides the tax advantages of a partnership but does not avoid personal liability for shareholders.
B)   A limited liability company combines the tax advantages of a partnership with the limited liability of a corporation.
C)   A double sole proprietorship avoids corporate double taxation and also shields assets of the owners from tort claims of third parties although creditors may reach the personal assets of the owners.
D)   An unincorporated cooperative combines the tax advantages of a partnership with the limited liability of a corporation.
E)   A joint venture is a type of undertaking involving joint stock which is treated as a corporation in regard to double taxation and limited liability.F) A) and E)
G) A) and B)

Question 19

Investor-owners of a corporation are called which of the following?

Accepted Answer

A)   Profit owners
B)   Profit and loss owners
C)   Approved investors
D)   Limited partners
E)   ShareholdersF) A) and E)
G) A) and B)

Question 20

Is Wally correct that with his proposal that they share control of the business and split profits equally there could be no personal liability for debts?

Accepted Answer

A)   Yes, he is correct so long as they do not reach an agreement in writing.
B)   Yes, because they will be considered a partnership regardless of whether any agreement is in writing.
C)   Yes, because so long as they have nothing in writing, their arrangement will be considered a joint venture.
D)   Yes, so long as they sign no contracts by which they agree to be personally liable.
E)   No, he is incorrect.F) C) and D)
G) C) and E)

Exam 35: Forms of Business Organizations

The Mexican limited liability company is derived from the model in which of the following countries?

Correct AnswerverifiedShow Answer

Which of the following is false regarding franchises?

Correct AnswerverifiedShow Answer

Which of the following is distinguishable from other forms of partnerships because the partners' liability for professional malpractice is limited to the partnership?

Correct AnswerverifiedShow Answer

Cooperatives must be incorporated.

Correct AnswerverifiedShow Answer

Which of the following is responsible for managing the business of a corporation?

Correct AnswerverifiedShow Answer

Which of the following is true regarding corporations?

Correct AnswerverifiedShow Answer

A sole proprietor is considered a separate legal entity.

Correct AnswerverifiedShow Answer

Which of the following is true regarding Wally's assertion regarding tax?

Correct AnswerverifiedShow Answer

Which of the following is false regarding cooperatives?

Correct AnswerverifiedShow Answer

In regard to the quest of Wally and Sally to find the best form of business organization,which of the following is true?

Correct AnswerverifiedShow Answer

What type of arrangement did Wally propose with his suggestion that they share control of the business and split profits equally,not bothering with a written agreement?

Correct AnswerverifiedShow Answer

Which of the following is a relationship between two or more persons or corporations created for a specific business undertaking?

Correct AnswerverifiedShow Answer

Describe a franchise that is a distributorship and give an example of a distributorship.

Correct AnswerverifiedDistributorships are franchises in which...View AnswerShow Answer

Which of the following offers tax advantages of a partnership and liability advantages similar to a corporation,but allows for unlimited shareholders?

Correct AnswerverifiedShow Answer

Which of the following is not a type of partnership?

Correct AnswerverifiedShow Answer

Define a joint venture and set forth two differences under the law between a joint venture and a partnership.

Correct AnswerverifiedA joint venture is a relationship betwee...View AnswerShow Answer

Members of the board of directors of a corporation are elected by shareholders.

Correct AnswerverifiedShow Answer

What type of business had Kitty initially set up?

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Is Wally correct that with his proposal that they share control of the business and split profits equally there could be no personal liability for debts?

Correct AnswerverifiedShow Answer

Investor-owners of a corporation are called which of the following?

Correct AnswerverifiedShow Answer

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Distributorships are franchises in which...
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A joint venture is a relationship betwee...
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