Question 1

Unless otherwise stated by contract, the law of partnership presumes which of the following not to be true?

Accepted Answer

A)   each partner has an equal voice in partnership management
B)   a majority vote controls ordinary business decisions
C)   profits are to be divided among the partners
D)   regardless of the amount invested in the partnership, each partner has an equal vote
E)   all of the other choices are trueF) B) and C)
G) C) and D)

Question 2

Directors of a corporation are held to a fiduciary duty of loyalty to the managers of the corporation.

Accepted Answer

A) True 
 B)False

Question 3

According to the IRS, a limited liability company must exist:

Accepted Answer

A)   in perpetuity
B)   only for ten years
C)   only for twenty years
D)   for no longer than fifty years
E)   none of theseF) A) and B)
G) C) and D)

Question 4

Dissolution of a partnership takes place, unless otherwise provided for by contract, in the following instances except:

Accepted Answer

A)   bankruptcy of a partner
B)   withdrawal of a partner
C)   death of a partner
D)   withdrawal or death of a partner only
E)   bankruptcy, withdrawal or death of a partnerF) A) and C)
G) A) and B)

Question 5

A ____ requires that each partner act in good faith for the benefit of the partnership.

Accepted Answer

A)   partnership relationship
B)   contractual relationship
C)   fiduciary relationship
D)   contractual promise
E)   none of the other choices are correctF) A) and B)
G) A) and C)

Question 6

Limited liability companies need no formal document to begin operations; an oral agreement can be sufficient.

Accepted Answer

A) True 
 B)False

Question 7

The most common form of franchise is the product distributorship.

Accepted Answer

A) True 
 B)False

Question 8

Certificates of limited partnership must include information about the proportion of the profits or compensation that partners are entitled to receive.

Accepted Answer

A) True 
 B)False

Question 9

A limited partnership is a special form of a general partnership.

Accepted Answer

A) True 
 B)False

Question 10

In Ironite Products v. Samuels, where a major shareholder of a company disputes changes in the bylaws, the appeals court held that the corporation was not due Fifth Amendment protection about producing documents that could be incriminating.

Accepted Answer

A) True 
 B)False

Question 11

The modern "liberal" general incorporation statutes that we have today were adopted in the 1930s.

Accepted Answer

A) True 
 B)False

Question 12

In most circumstances, a partnership is now treated as:

Accepted Answer

A)   a legal entity
B)   a special entity with no ability to sue or be sued
C)   a proxy
D)   a sole proprietorship
E)   none of the other choices are correctF) B) and D)
G) A) and D)

Question 13

The sole proprietorship is the most common business organization in the U.S.

Accepted Answer

A) True 
 B)False

Question 14

Like a general partnership, all partners in a limited partnership have unlimited personal liability for the debts of the business venture.

Accepted Answer

A) True 
 B)False

Question 15

The winding up of partnership affairs completes any unfinished business and distributing the partnership's assets.

Accepted Answer

A) True 
 B)False

Question 16

If partners in a partnership are in a dispute not covered in the partnership agreement, a court uses the Uniform Partnership Act, if the state has adopted it, to settle the matter.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is a right of a limited partner in a limited partnership:

Accepted Answer

A)   the right to make hiring decisions
B)   the right to give performance reviews to employees
C)   the right to take an active role in managing the business
D)   both a and b are rights of a limited partner
E)   none of the other specific choices are rights of a limited partnerF) C) and E)
G) B) and C)

Question 18

A ____ is a business organization that is treated like a corporation for liability purposes but like a partnership for federal tax purposes.

Accepted Answer

A)   nonprofit company
B)   limited liability corporation
C)   restricted liability company
D)   no liability company
E)   none of the other choices are correctF) A) and E)
G) None of the above

Question 19

Unless otherwise stated by contract, the law of partnership presumes which of the following not to be true?

Accepted Answer

A)   each partner has an equal voice in partnership management
B)   a majority vote controls ordinary business decisions
C)   only managing partners are fully responsible for debts of the partnership
D)   regardless of the amount invested in the partnership, each partner has an equal vote
E)   all of the other choices are trueF) A) and D)
G) B) and E)

Question 20

Many states now allow groups of doctors in practice together to form a particular legal entity allowed by statute called:

Accepted Answer

A)   a limited liability company
B)   a cooperative
C)   a professional corporation
D)   a limited partnership
E)   a physician associationF) A) and B)
G) D) and E)

Exam 12: Business Organizations

Like a general partnership, all partners in a limited partnership have unlimited personal liability for the debts of the business venture.

Correct AnswerverifiedShow Answer

The sole proprietorship is the most common business organization in the U.S.

Correct AnswerverifiedShow Answer

A ____ requires that each partner act in good faith for the benefit of the partnership.

Correct AnswerverifiedShow Answer

According to the IRS, a limited liability company must exist:

Correct AnswerverifiedShow Answer

In most circumstances, a partnership is now treated as:

Correct AnswerverifiedShow Answer

Many states now allow groups of doctors in practice together to form a particular legal entity allowed by statute called:

Correct AnswerverifiedShow Answer

In Ironite Products v. Samuels, where a major shareholder of a company disputes changes in the bylaws, the appeals court held that the corporation was not due Fifth Amendment protection about producing documents that could be incriminating.

Correct AnswerverifiedShow Answer

Limited liability companies need no formal document to begin operations; an oral agreement can be sufficient.

Correct AnswerverifiedShow Answer

The most common form of franchise is the product distributorship.

Correct AnswerverifiedShow Answer

Directors of a corporation are held to a fiduciary duty of loyalty to the managers of the corporation.

Correct AnswerverifiedShow Answer

The modern "liberal" general incorporation statutes that we have today were adopted in the 1930s.

Correct AnswerverifiedShow Answer

Which of the following is a right of a limited partner in a limited partnership:

Correct AnswerverifiedShow Answer

Unless otherwise stated by contract, the law of partnership presumes which of the following not to be true?

Correct AnswerverifiedShow Answer

The winding up of partnership affairs completes any unfinished business and distributing the partnership's assets.

Correct AnswerverifiedShow Answer

Certificates of limited partnership must include information about the proportion of the profits or compensation that partners are entitled to receive.

Correct AnswerverifiedShow Answer

Unless otherwise stated by contract, the law of partnership presumes which of the following not to be true?

Correct AnswerverifiedShow Answer

A ____ is a business organization that is treated like a corporation for liability purposes but like a partnership for federal tax purposes.

Correct AnswerverifiedShow Answer

Dissolution of a partnership takes place, unless otherwise provided for by contract, in the following instances except:

Correct AnswerverifiedShow Answer

A limited partnership is a special form of a general partnership.

Correct AnswerverifiedShow Answer

If partners in a partnership are in a dispute not covered in the partnership agreement, a court uses the Uniform Partnership Act, if the state has adopted it, to settle the matter.

Correct AnswerverifiedShow Answer

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