Business Law- Business Structure (Selection of a Business Entity)

Question 1 of 30

1

Which form of business entity has the following attributes?
I. Limited liability for all its owners
II. Can permit all its owners to participate in management and control of the entity
III. The consent of all the owners

Select one of the following:

A. A limited partnership
B. A limited liability company
C. A general partnership
D. A corporation

Explanation

Question 2 of 30

1

Two individuals are planning to form a business with equal ownership. The individuals would like to limit their personal liability, avoid double taxation, and be active in the business. Which of the following organizational structures would meet their requirements?

Select one of the following:

A. C corporation
B. Limited liability company
C. Limited partnership
D. General partnership

Explanation

Question 3 of 30

1

Under the Revised Model Business Corporation Act, which of the following statements regarding a corporation's bylaws is (are) correct?
I. A corporation's initial bylaws shall be adopted by either the incorporators or the board of directors.
II. A corporation's bylaws are contained in the articles of incorporation.

Select one of the following:

A. I only
B. II only
C. Both I and II
D. Neither I nor II

Explanation

Question 4 of 30

1

Which of the following actions may a corporation take without its stockholders' consent?

Select one of the following:

A. Consolidate with one or more corporations.
B. Merge with one or more corporations.
C. Dissolve voluntarily.
D. Purchase 55% of another corporation's stock.

Explanation

Question 5 of 30

1

Which of the following statements generally is correct regarding a general partner in a general partnership as compared to a general partner in a limited partnership?

Select one of the following:

A. A general partner in a general partnership has greater rights and powers than a general partner in a limited partnership.
B. A general partner in a general partnership has greater liability than a general partner in a limited partnership.

A. A general partner in a general partnership has greater rights and powers than a general partner in a limited partnership.

A. A general partner in a general partnership has greater rights and powers than a general partner in a limited partnership.
B. A general partner in a general partnership has greater liability than a general partner in a limited partnership.
A general partner in a general partnership has greater liability than a general partner in a limited partnership.
C. A general partner in a general partnership and a general partner in a limited partnership have the same rights and powers.
D. A general partner in a general partnership has rights and powers provided by articles of partnership, while a general partner in a limited partnership has rights and powers provided by statute.

Explanation

Question 6 of 30

1

Unless the partnership agreement prohibits it, a partner in a general partnership may validly assign rights to:

Select one of the following:

A. partnership property.
B. partnership distributions.
C. both partnership property and partnership distributions.
D. neither partnership property nor partnership distributions.

Explanation

Question 7 of 30

1

Which of the following forms of business generally provides all owners with limited liability while avoiding federal taxation of income at the entity level?

Select one of the following:

A. Subchapter C corporation
B. Subchapter S corporation
C. Partnership
D. Limited partnership

Explanation

Question 8 of 30

1

Assuming that all other requirements are met, a corporation may elect to be treated as an S corporation under the Internal Revenue Code if it has:

Select one of the following:

A. both common and preferred stockholders.
B. a partnership as a stockholder.
C. 100 or fewer stockholders.
D. the consent of a majority of the stockholders.

Explanation

Question 9 of 30

1

Under the Revised Uniform Partnership Act, which of the following statements concerning the powers and duties of partners in a general partnership is ?
I. Each partner is an agent of every other partner and acts as both a principal and an agent in any business transaction within the scope of the partnership agreement.
II. Each partner is subject to joint liability on partnership debts and contracts.

Select one of the following:

A. I only
B. II only
C. Both I and II
D. Neither I nor II

Explanation

Question 10 of 30

1

Which of the following statements is concerning the similarities between a limited partnership and a corporation?

Select one of the following:

A. Each is created under a statute and must file a copy of its certificate with the proper state authorities.
B. All corporate stockholders and all partners in a limited partnership have limited liability.
C. Both are recognized for federal income tax purposes as taxable entities.
D. Both are allowed statutorily to have perpetual existence.

Explanation

Question 11 of 30

1

Toby invested $25,000 in a limited partnership with Connor and Blair. Toby was a general partner in the limited partnership. The partnership failed to pay Kelly $45,000 for services on behalf of the partnership. Which of the following statements is generally regarding Toby’s liability under the Revised Uniform Limited Partnership Act?

Select one of the following:

A. Toby was liable for $25,000 because this was a limited partnership.
B. Toby was liable for zero because this was a partnership debt, not a personal debt.
C. Toby was liable for $45,000 because Toby was a general partner.
D. Toby was liable for $15,000 because this was a limited partnership.

Explanation

Question 12 of 30

1

Which of the following statements describes the same characteristic for both an S corporation and a C corporation?

Select one of the following:

A. Both corporations can have more than 100 shareholders.
B. Both corporations have the disadvantage of double taxation.
C. Shareholders can contribute property into a corporation without being taxed.
D. Shareholders can be citizens of either the United States or foreign countries.

Explanation

Question 13 of 30

1

A general partnership must:

Select one of the following:

A. pay federal income tax.
B. have two or more partners.
C. have written articles of partnership.
D. provide for apportionment of liability for partnership debts.

Explanation

Question 14 of 30

1

An S corporation must adhere to all of the following conditions except having:

Select one of the following:

A. no more than 100 shareholders.
B. a nonresident alien as a shareholder.
C. an individual as a shareholder.
D. one class of stock.

Explanation

Question 15 of 30

1

Which of the following actions may be taken by a corporation's board of directors without stockholder approval?

Select one of the following:

A. Purchasing substantially all of the assets of another corporation
B. Selling substantially all of the corporation's assets
C. Dissolving the corporation
D. Amending the articles of incorporation

Explanation

Question 16 of 30

1

Joint ventures are most similar to which of the following types of business organizations?

Select one of the following:

A. Limited partnerships
B. General partnerships
C. Business trusts
D. Subchapter S corporations

Explanation

Question 17 of 30

1

Fil and Breed are 50% partners in F&B Cars, a used-car dealership. F&B maintains an average used-car inventory worth $150,000. On January 5, National Bank obtained a $30,000 judgment against Fil and Fil's child on a loan that Fil had cosigned and on which Fil's child had defaulted. National sued F&B to be allowed to attach $30,000 worth of cars as part of Fil's interest in F&B's inventory. Will National prevail in its suit?

Select one of the following:

A. No, because the judgment was not against the partnership
B. No, because attachment of the cars would dissolve the partnership by operation of law
C. Yes, because National had a valid judgment against Fil
D. Yes, because Fil's interest in the partnership inventory is an asset owned by Fil

Explanation

Question 18 of 30

1

In a general partnership, a partner's interest in specific partnership property is:

Select one of the following:

A. transferable to a partner's individual creditors.
B. subject to a partner's liability for alimony.
C. transferable to a partner's estate upon death.
D. subject to a surviving partner's right of survivorship.

Explanation

Question 19 of 30

1

Jones, Smith, and Bay wanted to form a company called JSB Co. but were unsure about which type of entity would be most beneficial based on their concerns. They all desired the opportunity to make tax-free contributions and distributions where appropriate. They wanted earnings to accumulate tax-free. They did not want to be subject to personal holding tax and did not want double taxation of income. Bay was going to be the only individual giving management advice to the company and wanted to be a member of JSB through his current company, Channel, Inc. Which of the following would be the most appropriate business structure to meet all of their concerns?

Select one of the following:

A. Proprietorship
B. S corporation
C. C corporation
D. Limited liability partnership

Explanation

Question 20 of 30

1

Which of the following statements is with respect to a limited partnership?

Select one of the following:

A. A limited partner may not be an unsecured creditor of the limited partnership.
B. A general partner may not also be a limited partner at the same time.
C. A general partner may be a secured creditor of the limited partnership.
D. A limited partnership can be formed with limited liability for all partners.

Explanation

Question 21 of 30

1

Which of the following is (are) regarding the methods a target corporation may use to ward off a takeover attempt?
I. The target corporation may make an offer (self-tender) to acquire stock from its own shareholders.
II. The target corporation may seek an injunction against the acquiring corporation on the grounds that the attempted takeover violates federal antitrust law.

Select one of the following:

A. I only
B. II only
C. Both I and II
D. Neither I nor II

Explanation

Question 22 of 30

1

Eaton is the sole owner of a construction company. Eaton is concerned about personal liability. Which of the following entities will best allow Eaton to limit personal liability?

Select one of the following:

A. Sole proprietorship
B. C corporation
C. General partnership
D. Limited partnership

Explanation

Question 23 of 30

1

Which of the following statements best describes an advantage of the corporate form of doing business?

Select one of the following:

A. Day-to-day management is strictly the responsibility of the directors.
B. Ownership is contractually restricted and is not transferable.
C. The operation of the business may continue indefinitely.
D. The business is free from state regulation.

Explanation

Question 24 of 30

1

Locke and Vorst were general partners in a kitchen equipment business. On behalf of the partnership, Locke contracted to purchase 15 stoves from Gage. Unknown to Gage, Locke was not authorized by the partnership agreement to make such contracts. Vorst refused to allow the partnership to accept delivery of the stoves and Gage sought to enforce the contract. Gage will:

Select one of the following:

A. lose, because Locke's action was not authorized by the partnership agreement.
B. lose, because Locke was not an agent of the partnership.
C. win, because Locke had express authority to bind the partnership.
D. win, because Locke had apparent authority to bind the partnership.

Explanation

Question 25 of 30

1

Which of the following may not own shares in an S corporation?

Select one of the following:

A. Individuals
B. Estates
C. Trusts
D. Corporations

Explanation

Question 26 of 30

1

Terry recently started a new business and is trying to decide what type of entity to form. Terry is part-owner and is active in running the business. What type of entity would best protect Terry, as one of the owners, from personal liability?

Select one of the following:

A. General partnership
B. Limited partnership
C. Joint venture
D. Limited liability company

Explanation

Question 27 of 30

1

Which of the following statements best describes the effect of the assignment of an interest in a general partnership?

Select one of the following:

A. The assignee becomes a partner.
B. The assignee is responsible for a proportionate share of past and future partnership debts.
C. The assignment automatically dissolves the partnership.
D. The assignment transfers the assignor's interest in partnership profits and surplus.

Explanation

Question 28 of 30

1

Which of the following is a requirement for a small business corporation to elect S corporation status?

Select one of the following:

A. It has only one class of stock.
B. It has at least one partnership as a shareholder.
C. It has international ownership.
D. It has more than 75 shareholders.

Explanation

Question 29 of 30

1

Golden Enterprises, Inc., entered into a contract with Hidalgo Corporation for the sale of its mineral hold¬ings. The transaction proved to be ultra vires. Which of the following parties, for the reason stated, may properly assert the ultra vires doctrine?

Select one of the following:

A. Golden Enterprises to avoid performance
B. A shareholder of Golden Enterprises to enjoin the sale
C. Hidalgo Corporation to avoid performance
D. Golden Enterprises to rescind the consummated sale

Explanation

Question 30 of 30

1

The CPA was preparing the financial statement for a limited liability company. To which of the following would the CPA's report be addressed?

Select one of the following:

A. Member
B. Shareholder
C. General partner
D. Limited partner

	Created by jagdishlehal88 almost 9 years ago

Advantages, Disadvantages, Implications, and Constraints

Business Law- Business Structure (Selection of a Business Entity)

Question 1 of 30

Which form of business entity has the following attributes? I. Limited liability for all its owners II. Can permit all its owners to participate in management and control of the entity III. The consent of all the owners

Select one of the following:

Explanation

Question 2 of 30

Two individuals are planning to form a business with equal ownership. The individuals would like to limit their personal liability, avoid double taxation, and be active in the business. Which of the following organizational structures would meet their requirements?

Select one of the following:

Explanation

Question 3 of 30

Select one of the following:

Explanation

Question 4 of 30

Which of the following actions may a corporation take without its stockholders' consent?

Select one of the following:

Explanation

Question 5 of 30

Which of the following statements generally is correct regarding a general partner in a general partnership as compared to a general partner in a limited partnership?

Select one of the following:

Explanation

Question 6 of 30

Unless the partnership agreement prohibits it, a partner in a general partnership may validly assign rights to:

Select one of the following:

Explanation

Question 7 of 30

Which of the following forms of business generally provides all owners with limited liability while avoiding federal taxation of income at the entity level?

Select one of the following:

Explanation

Question 8 of 30

Assuming that all other requirements are met, a corporation may elect to be treated as an S corporation under the Internal Revenue Code if it has:

Select one of the following:

Explanation

Question 9 of 30

Select one of the following:

Explanation

Question 10 of 30

Which of the following statements is concerning the similarities between a limited partnership and a corporation?

Select one of the following:

Explanation

Question 11 of 30

Select one of the following:

Explanation

Question 12 of 30

Which of the following statements describes the same characteristic for both an S corporation and a C corporation?

Select one of the following:

Explanation

Question 13 of 30

A general partnership must:

Select one of the following:

Explanation

Question 14 of 30

An S corporation must adhere to all of the following conditions except having:

Select one of the following:

Explanation

Question 15 of 30

Which of the following actions may be taken by a corporation's board of directors without stockholder approval?

Select one of the following:

Explanation

Question 16 of 30

Joint ventures are most similar to which of the following types of business organizations?

Select one of the following:

Explanation

Question 17 of 30

Select one of the following:

Explanation

Question 18 of 30

In a general partnership, a partner's interest in specific partnership property is:

Select one of the following:

Explanation

Question 19 of 30

Select one of the following:

Explanation

Question 20 of 30

Which of the following statements is with respect to a limited partnership?

Select one of the following:

Explanation

Question 21 of 30

Select one of the following:

Explanation

Which form of business entity has the following attributes?
I. Limited liability for all its owners
II. Can permit all its owners to participate in management and control of the entity
III. The consent of all the owners