Deck 40: Business Organizations

Question 1

What is a characteristic of a sole proprietorship?

A) Owned by one person
B) Unincorporated business organization
C) Single taxation
D) All of the above

Answer 1

All of the above

Question 2

What law regulates the creation and operation of sole proprietorships?

A) State statutes
B) No state statutes exist regulating the creation and operation of sole proprietorships
C) UCC
D) Administrative regulations

Answer 2

No state statutes exist regulating the creation and operation of sole proprietorships

Question 3

What term describes an association of two or more persons for the purpose of carrying on as co-owners in a business for profit?

A) Joint venture
B) Co-partnership
C) S corporation
D) LLC

Answer 3

Co-partnership

Question 4

What is the legal basis of partnership law?

A) Uniform Partnership Act
B) Revised Uniform Partnership Act
C) All of the above
D) None of the above

Question 5

What must partners do to create a limited partnership?

A) File a certificate of limited partnership with their state
B) Pay the required fees
C) All of the above
D) None of the above

Question 6

What is a characteristic of a general partnership?

A) Every partner is an agent of the partnership for business purposes
B) Every partner has equal management authority
C) Every partner has unlimited liability
D) All of the above

Question 7

What is a characteristic of a limited liability partnership?

A) Partners in an LLP have personal liability for their own negligence
B) Partners in an LLP have limited liability for other partners' negligence
C) Individual partners are not liable for the tort liabilities of the partnership
D) All of the above

Question 8

What term describes partners in name only?

A) Ostensible
B) Silent
C) Dormant
D) Secret

Question 9

What term describes a change in the relationship caused by a partner ceasing to be associated in carrying on the business?

A) Dissolution
B) Dissociation
C) Suspension
D) Postponement

Question 10

What happens during a winding-up period?

A) Value of each partner's share is determined
B) Assets are liquidated
C) Creditors are notified
D) All of the above

Question 11

What government document brings a corporation into existence?

A) Certificate of incorporation
B) Articles of incorporation
C) Charter
D) All of the above

Question 12

What term describes a corporation existing in fact but not by right?

A) De jure
B) De facto
C) Ex parte
D) Quasi in rem

Question 13

What term describes any corporate act done outside of the corporation's authority as set forth in its charter?

A) Ultra vires
B) Mala in se
C) Mala prohibita
D) Nudum pactum

Question 14

What is a common feature of LLCs and Subchapter S corporations?

A) Limited liability
B) Single taxation
C) All of the above
D) None of the above

Question 15

Who manages an LLC?

A) Officers
B) Managers
C) Board of Directors
D) Partners

Question 16

What other term describes a joint venture?

A) Joint enterprise
B) Co-venture
C) Syndicate
D) All of the above

Question 17

What is a characteristic of a joint venture?

A) Combining of labor and property
B) Single business undertaking
C) Both A and B
D) Limited liability

Question 18

What term describes a person or business who gives a franchise to another?

A) Franchiser
B) Grantor
C) Bailor
D) Consignor

Question 19

What is included in the franchise disclosure document?

A) Franchise costs and fees
B) Estimated initial investment requirements
C) Franchisor's litigation history
D) All of the above

Question 20

A sole proprietor owns and controls his or her business.

Question 21

Limited liability is one of the advantages of a sole proprietorship.

Question 22

In a general partnership, every partner is an agent of the partnership for business purposes.

Question 23

A limited partnership can be formed without a partnership agreement.

Question 24

In some states, only the LLP as a whole is liable for the contractual liabilities of the partnership.

Question 25

A limited liability partnership can be established unofficially, simply by an agreement among the partners.

Question 26

Partners can transfer their interest in the partnership to other people without the consent of all other partners.

Question 27

At the conclusion of the transitional period, the partnership is officially terminated.

Question 28

A corporation that is established in strict compliance with the law is called a de jure corporation.

Question 29

A corporation's advantage is single taxation.

Question 30

A type of business organization combining some aspects of a partnership and a corporation is an LLC.

Question 31

Members of an LLC are liable for the contractual or tort liabilities of the business.

Question 32

Like partners, joint venturers have unlimited liability.

Question 33

Joint venturers combine their labor or property for multiple business undertakings.

Question 34

Generally, fast-food chain restaurants use the franchise method of conducting business.

Question 35

A person or business to whom a franchise is given is called a franchiser.

Question 36

The biggest disadvantage of a sole proprietorship is that the proprietor has ________ liability.

Question 37

A partnership in which the parties carry on a business for the joint benefit and profit of all partners is called a(n) ________ partnership.

Question 38

The liability of ________ partners is limited to the extent of their financial investments.

Question 39

In a limited ________ partnership, only the partnership as a whole, and not the individual partners, is liable for the partnership's tort liabilities.

Question 40

Partners who are not known to the public as partners and who take no active part in the business are called ________ partners.

Question 41

An act or occurrence requiring the partnership to eventually terminate is called ________.

Question 42

People who begin a corporation by obtaining investors are called ________.

Question 43

Owners of a limited liability company are called ________.

Question 44

People who created a ________ venture have unlimited liability.

Question 45

Person or business giving a franchise to another is called the ________.

Question 46

Match the terms with their descriptions:

-Domestic corporation

A) Occurrence requiring the partnership to eventually terminate
B) Unincorporated business owned and controlled by one person
C) Partnership in which only the partnership is liable for the tort liabilities of the partnership
D) Corporation organized in the state in which it is operating
E) Form of business organization having the tax benefits of a partnership and the limited liability benefits of a corporation
F) Association of two or more persons for the purpose of carrying on as co-owners in a business for profit
G) Enterprise relationship in which two or more people combine their labor or property for a single business undertaking
H) Corporation existing in fact
I) Partners that manage the business and are personally liable for its debts and obligations
J) Person or business who gives a franchise to another

Question 47

Match the terms with their descriptions:

-Dissolution

A) Occurrence requiring the partnership to eventually terminate
B) Unincorporated business owned and controlled by one person
C) Partnership in which only the partnership is liable for the tort liabilities of the partnership
D) Corporation organized in the state in which it is operating
E) Form of business organization having the tax benefits of a partnership and the limited liability benefits of a corporation
F) Association of two or more persons for the purpose of carrying on as co-owners in a business for profit
G) Enterprise relationship in which two or more people combine their labor or property for a single business undertaking
H) Corporation existing in fact
I) Partners that manage the business and are personally liable for its debts and obligations
J) Person or business who gives a franchise to another

Question 48

Match the terms with their descriptions:

-Limited liability partnership

A) Occurrence requiring the partnership to eventually terminate
B) Unincorporated business owned and controlled by one person
C) Partnership in which only the partnership is liable for the tort liabilities of the partnership
D) Corporation organized in the state in which it is operating
E) Form of business organization having the tax benefits of a partnership and the limited liability benefits of a corporation
F) Association of two or more persons for the purpose of carrying on as co-owners in a business for profit
G) Enterprise relationship in which two or more people combine their labor or property for a single business undertaking
H) Corporation existing in fact
I) Partners that manage the business and are personally liable for its debts and obligations
J) Person or business who gives a franchise to another

Question 49

Match the terms with their descriptions:

-Franchiser

A) Occurrence requiring the partnership to eventually terminate
B) Unincorporated business owned and controlled by one person
C) Partnership in which only the partnership is liable for the tort liabilities of the partnership
D) Corporation organized in the state in which it is operating
E) Form of business organization having the tax benefits of a partnership and the limited liability benefits of a corporation
F) Association of two or more persons for the purpose of carrying on as co-owners in a business for profit
G) Enterprise relationship in which two or more people combine their labor or property for a single business undertaking
H) Corporation existing in fact
I) Partners that manage the business and are personally liable for its debts and obligations
J) Person or business who gives a franchise to another

Question 50

Match the terms with their descriptions:

-Co-partnership

A) Occurrence requiring the partnership to eventually terminate
B) Unincorporated business owned and controlled by one person
C) Partnership in which only the partnership is liable for the tort liabilities of the partnership
D) Corporation organized in the state in which it is operating
E) Form of business organization having the tax benefits of a partnership and the limited liability benefits of a corporation
F) Association of two or more persons for the purpose of carrying on as co-owners in a business for profit
G) Enterprise relationship in which two or more people combine their labor or property for a single business undertaking
H) Corporation existing in fact
I) Partners that manage the business and are personally liable for its debts and obligations
J) Person or business who gives a franchise to another

Question 51

Match the terms with their descriptions:

-De facto corporation

A) Occurrence requiring the partnership to eventually terminate
B) Unincorporated business owned and controlled by one person
C) Partnership in which only the partnership is liable for the tort liabilities of the partnership
D) Corporation organized in the state in which it is operating
E) Form of business organization having the tax benefits of a partnership and the limited liability benefits of a corporation
F) Association of two or more persons for the purpose of carrying on as co-owners in a business for profit
G) Enterprise relationship in which two or more people combine their labor or property for a single business undertaking
H) Corporation existing in fact
I) Partners that manage the business and are personally liable for its debts and obligations
J) Person or business who gives a franchise to another

Question 52

Match the terms with their descriptions:

-Limited liability company

A) Occurrence requiring the partnership to eventually terminate
B) Unincorporated business owned and controlled by one person
C) Partnership in which only the partnership is liable for the tort liabilities of the partnership
D) Corporation organized in the state in which it is operating
E) Form of business organization having the tax benefits of a partnership and the limited liability benefits of a corporation
F) Association of two or more persons for the purpose of carrying on as co-owners in a business for profit
G) Enterprise relationship in which two or more people combine their labor or property for a single business undertaking
H) Corporation existing in fact
I) Partners that manage the business and are personally liable for its debts and obligations
J) Person or business who gives a franchise to another

Question 53

Match the terms with their descriptions:

-Sole proprietorship

A) Occurrence requiring the partnership to eventually terminate
B) Unincorporated business owned and controlled by one person
C) Partnership in which only the partnership is liable for the tort liabilities of the partnership
D) Corporation organized in the state in which it is operating
E) Form of business organization having the tax benefits of a partnership and the limited liability benefits of a corporation
F) Association of two or more persons for the purpose of carrying on as co-owners in a business for profit
G) Enterprise relationship in which two or more people combine their labor or property for a single business undertaking
H) Corporation existing in fact
I) Partners that manage the business and are personally liable for its debts and obligations
J) Person or business who gives a franchise to another

Question 54

Match the terms with their descriptions:

-Syndicate

A) Occurrence requiring the partnership to eventually terminate
B) Unincorporated business owned and controlled by one person
C) Partnership in which only the partnership is liable for the tort liabilities of the partnership
D) Corporation organized in the state in which it is operating
E) Form of business organization having the tax benefits of a partnership and the limited liability benefits of a corporation
F) Association of two or more persons for the purpose of carrying on as co-owners in a business for profit
G) Enterprise relationship in which two or more people combine their labor or property for a single business undertaking
H) Corporation existing in fact
I) Partners that manage the business and are personally liable for its debts and obligations
J) Person or business who gives a franchise to another

Question 55

Match the terms with their descriptions:

-General partners

A) Occurrence requiring the partnership to eventually terminate
B) Unincorporated business owned and controlled by one person
C) Partnership in which only the partnership is liable for the tort liabilities of the partnership
D) Corporation organized in the state in which it is operating
E) Form of business organization having the tax benefits of a partnership and the limited liability benefits of a corporation
F) Association of two or more persons for the purpose of carrying on as co-owners in a business for profit
G) Enterprise relationship in which two or more people combine their labor or property for a single business undertaking
H) Corporation existing in fact
I) Partners that manage the business and are personally liable for its debts and obligations
J) Person or business who gives a franchise to another

Question 56

Define a sole proprietorship and identify its advantages and disadvantages.

Question 57

Define a general partnership and a limited partnership. Compare and contrast a general partnership and a limited partnership.

Question 58

Define a corporation and identify its main features as a business organization.

Question 59

Rose, Violet, and Daisy decided to open a greenhouse. They formed a limited partnership with Rose and Violet as general partners, and Daisy as a limited partner. Each partner invested $10,000 in the partnership. While Rose went away for a week, Violet made a contract for $10,000 for remodeling of a green house. When Rose returned, she disapproved the contract. Discuss who will be liable on this contract.

Question 60

David, Mike, and Peter want to create a general partnership. They would like their business to continue even after the death of one of them. How can they achieve this goal?