Deck 14: The Law of Business

Question 1

Agency can be created

A) by express conduct.
B) by implied conduct.
C) after the party acts on behalf of another.
D) All of the above.

Answer 1

D

Question 2

A business in which one or more owners is not permitted to have input into the regular operations is a

A) general corporation.
B) limited partnership.
C) general partnership.
D) sole proprietorship.

Answer 2

B

Question 3

On a resolution to dissolve,a corporation

A) may continue to do business for 180 days.
B) must cease all new business immediately.
C) must cease all business of any nature immediately.
D) may continue to do regular business activity until all creditors are paid.

Answer 3

B

Question 4

A partnership is a business that

A) is owned by more than one person and is incorporated.
B) is owned by two persons and is not incorporated.
C) is owned by two or more persons and is not incorporated.
D) requires all profits and losses to be borne equally.

Question 5

Limited liability companies are

A) synonymous with limited partnerships.
B) a form of corporation.
C) a type of legal entity different from all others.
D) the same as a general corporation that limits liability of shareholders.

Question 6

Agency by ratification occurs

A) only in cases of corporations.
B) before the agent acts on behalf of the principal.
C) after the agent acts on behalf of the principal.
D) when the principal releases the agent from fiduciary duties.

Question 7

The theory of respondeat superior generally

A) describes the legal responsibility of the principal in an agency relationship.
B) describes the duties of the agent in an agency relationship.
C) is not related in any way to the concept of agency.
D) applies only in tort cases.

Question 8

A corporation's legal status

A) ends on the date stated in articles of incorporation unless renewed.
B) ends on death of the primary shareholder.
C) has no specific lifespan at its inception.
D) ends on the date established by the secretary of state when the articles are filed.

Question 9

On dissolution,a partnership requires

A) partners to share losses equally.
B) limited partners to assist in payment of debt of the partnership.
C) payment of debts before distribution of assets.
D) None of the above.

Question 10

Agency can be used in

A) partnerships.
B) corporations.
C) sole proprietorships.
D) All of the above.

Question 11

Liquidation is the process of

A) reducing assets to cash.
B) accumulating capital through sale of stock.
C) reducing cash to purchase assets necessary to start up business.
D) converting a partnership to a corporation.

Question 12

A de jure corporation has made

A) good faith efforts to maintain legal corporate status.
B) all necessary steps to maintain legal corporate status.
C) none of the necessary steps to maintain legal corporate status.
D) all necessary steps to create a limited liability company.

Question 13

Limited partners must have

A) less than 50 percent ownership.
B) less than 50 percent control of daily operations.
C) less than 50 percent responsibility for debts.
D) no control of daily operations.

Question 14

Inherent authority allows the agent to exceed the authority of the principal

A) when good opportunities arise.
B) for that which is reasonably necessary to accomplish the object of the agency.
C) only when specifically granted permission in advance.
D) None of the above.

Question 15

An agency occurs when one person

A) has authority to act on behalf of another.
B) acts on behalf of his or her own sole proprietorship.
C) has authority to act in nonlegally binding ways for another.
D) All of the above.

Question 16

A business that ends automatically with a change in the only member of ownership is a

A) partnership.
B) sole proprietorship.
C) general partnership.
D) corporation.

Question 17

Sole proprietorships can be

A) sold.
B) inherited.
C) granted by gift.
D) None of the above.

Question 18

A sole proprietorship is a business owned by

A) one or more persons and is not incorporated.
B) one person.
C) one person and is incorporated.
D) one or more persons,with one person who operates it.

Question 19

A bankruptcy filing by a business requires

A) dissolution of the business.
B) cessation of business activities until the bankruptcy is concluded.
C) creditors to cease collection attempts.
D) None of the above.

Question 20

Corporations

A) may be owned by one or more than one person.
B) may not be owned by only one person.
C) must be owned by a person different from the person who operates it.
D) must be owned and operated by the same persons.

Question 21

A corporation's life continues indefinitely.

Question 22

Partnership income is considered personal for tax purposes.

Question 23

Match the most appropriate term to the definition.
a.par value
b.dissolution
c.personal liability
d.indefinite life span
e.partnership
f.sole proprietorship
g.corporation
h.limited partnership
i.pooling agreement
j.ratification
Stated value

Question 24

Promoters are the same as the initial incorporators of a corporation.

Question 25

Match the most appropriate term to the definition.
a.par value
b.dissolution
c.personal liability
d.indefinite life span
e.partnership
f.sole proprietorship
g.corporation
h.limited partnership
i.pooling agreement
j.ratification
Ends automatically at the death of one of the owners

Question 26

Match the most appropriate term to the definition.
a.par value
b.dissolution
c.personal liability
d.indefinite life span
e.partnership
f.sole proprietorship
g.corporation
h.limited partnership
i.pooling agreement
j.ratification
A voluntary legal liability from the act of another who acted in the hope the liability would be assumed

Question 27

Corporations can issue various levels of stock with different values to prospective investors.

Question 28

Limited partners are not liable for debts of the partnership while it is doing business.

Question 29

A corporation always protects the owners from personal liability.

Question 30

Match the most appropriate term to the definition.
a.par value
b.dissolution
c.personal liability
d.indefinite life span
e.partnership
f.sole proprietorship
g.corporation
h.limited partnership
i.pooling agreement
j.ratification
Requires two types of ownership

Question 31

Bankruptcy can be used to create payment arrangements or eliminate debt.

Question 32

Match the most appropriate term to the definition.
a.par value
b.dissolution
c.personal liability
d.indefinite life span
e.partnership
f.sole proprietorship
g.corporation
h.limited partnership
i.pooling agreement
j.ratification
Ends automatically at the death of the owner

Question 33

Match the most appropriate term to the definition.
a.par value
b.dissolution
c.personal liability
d.indefinite life span
e.partnership
f.sole proprietorship
g.corporation
h.limited partnership
i.pooling agreement
j.ratification
Continues even through a change of ownership

Question 34

Match the most appropriate term to the definition.
a.par value
b.dissolution
c.personal liability
d.indefinite life span
e.partnership
f.sole proprietorship
g.corporation
h.limited partnership
i.pooling agreement
j.ratification
Method to obtain strength in ownership decisions

Question 35

Match the most appropriate term to the definition.
a.par value
b.dissolution
c.personal liability
d.indefinite life span
e.partnership
f.sole proprietorship
g.corporation
h.limited partnership
i.pooling agreement
j.ratification
Selling of assets and payment of creditors

Question 36

Income of corporations is considered personal for tax purposes.

Question 37

Match the most appropriate term to the definition.
a.par value
b.dissolution
c.personal liability
d.indefinite life span
e.partnership
f.sole proprietorship
g.corporation
h.limited partnership
i.pooling agreement
j.ratification
Responsibility of owners for debts of business

Question 38

Limited partners are those who have authority to operate the business.

Question 39

Match the most appropriate term to the definition.
a.par value
b.dissolution
c.personal liability
d.indefinite life span
e.partnership
f.sole proprietorship
g.corporation
h.limited partnership
i.pooling agreement
j.ratification
A characteristic unique to a corporation

Question 40

Partnerships can own property in the name of the partnership.

Question 41

A(n) is a hired fiduciary who recruits investors in a proposed or new corporation.

Question 42

A(n) is an entity as legally recognized as independent of its owners.

Question 43

A(n) is an agreement of two or more to engage in a business or enterprise where one or more partners have limits on how much loss they are responsible for,with the balance going to the other partners.

Question 44

is when one party acts on behalf of another.

Question 45

is the process of reducing assets to cash to pay creditors.

Question 46

shareholders are often entitled to higher and more frequent dividends.

Question 47

is a basis on which to pierce the corporate veil when a corporation is unreasonably underfunded.

Question 48

A(n) is an agreement of two or more to engage in a business or enterprise with shared profit or loss.

Question 49

is a corporation that meets all requirements of law for corporate status.

Question 50

is a corporation that makes good faith attempts to meet the requirements of law for corporate status.