Deck 12: Business Organizations

Question 1

The income of proprietorships must be reported on a corporate income tax form.

Answer 1

True

Question 2

The majority of businesses are corporations.

Answer 2

False

Question 3

A general partnership is a business organization made up of four or more persons called limited partners.

Answer 3

False

Question 4

Many partnership agreements are subject to the Federal Partnership Act.

Question 5

Most large businesses are organized as proprietorships.

Question 6

Proprietorships must file a federal tax return in the name of the business, if there is positive income.

Question 7

In a sole proprietorship, legally the owner is the business and the business is the owner.

Question 8

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.

Question 9

Proprietorships must receive a license from the state be able to operate a business legally.

Question 10

Proprietorships are generally expected to follow the accounting guidelines set out in the Uniform Proprietorship Act.

Question 11

Many states allow partnerships to be treated as legal entities for certain purposes.

Question 12

Partnerships must begin with a written agreement, but not necessarily a contract, between two or more people to do business.

Question 13

About 80 percent of business revenues go to corporations.

Question 14

State laws, not federal, concern the forms of business organization.

Question 15

There are close to 30 million businesses in the U.S.

Question 16

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

Question 17

The income of proprietorships is often treated as personal income of the owner.

Question 18

About half the states have adopted the Uniform Partnership Act.

Question 19

Sole proprietorships must register with their state government to be able to operate a business legally.

Question 20

Sole proprietorships must register with their state government to be able to operate a business legally.

Question 21

The law specifies that partners owe a fiduciary duty to one another of the highest loyalty.

Question 22

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

Question 23

In a partnership, partners are presumed to place their individual interests above those of the partnership.

Question 24

In Zhou v. Bickley, Zhou helped Bickley start a motorcycle repair shop. When they got into a dispute later, the courts held that Bickley never acted as if Zhou was his partner, hence he was a proprietor who owed Zhou for the money he lent him.

Question 25

The formation of interstate limited partnerships is governed by the Federal Uniform Partnership Act.

Question 26

By law, partnership agreements must specify compensation arrangements for any partners paid by the partnership itself.

Question 27

To terminate a partnership, the partners must go through a deconstruction process.

Question 28

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

Question 29

By law, all partners in a general partnership must have equal votes.

Question 30

In Zhou v. Bickley, Zhou helped Bickley start a motorcycle repair shop. When they got into a dispute later, the courts held that Bickley was a sole proprietor who had borrowed money from Zhou for which he was liable

Question 31

Unless otherwise provided by contract, a partnership dissolves if a change in the composition of the partners takes place.

Question 32

In most states, limited partnerships must file certificates of limited partnership with the state.

Question 33

In Zhou v. Bickley, Zhou helped Bickley start a motorcycle repair shop. When they got into a dispute later, the courts held that they were not partners who had invested different sums of money in the business.

Question 34

In general, the law in Japan is more favorable to small businesses than it is in the U.S.

Question 35

The formation of limited partnerships is governed by state law, not common law.

Question 36

To terminate a partnership, the partners must go through "dissolution."

Question 37

Partnership agreements typically state what the voting rights of partners will be and how the profits will be shared.

Question 38

Most states have passed a Uniform Limited Partnership Act.

Question 39

Unless specified otherwise by contract, each partner's number of votes depends on his percent of total investment in the partnership.

Question 40

A partnership may be designed to continue even if a partner dies or quits.

Question 41

The articles of incorporation filed with the state must include the bylaws that will govern the operation of the corporation.

Question 42

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

Question 43

Corporate charters used by state governments many years ago often granted some special privilege.

Question 44

When a limited partnership dissolves, the general partner receives his share of the profits and capital contributions before the limited partners are paid.

Question 45

Limited partners may not participate in the management of the limited partnership or they lose certain legal protections.

Question 46

The states issue certificates of incorporation.

Question 47

Certificates of limited partnership must include information bout the contributions of each partner.

Question 48

The secretary of state in most state is the official who decides if corporations will be issued charters and rejects those believed to be unsound businesses.

Question 49

In a limited partnership, the general partner has sole responsibility for managing the business and may be personally liable to the partnership's creditors.

Question 50

The articles of incorporation filed with the state can provide minimal information about the structure of a corporation.

Question 51

Monopoly power was often granted by early corporate charters.

Question 52

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

Question 53

Certificates of limited partnership that are filed with the state must state what the plan is in case the partnership must be terminated.

Question 54

After reviewing a corporation's articles of incorporation for compliance with state standards, and its application, the state issues corporate bylaws.

Question 55

The articles of incorporation include the classes of stock to be issued and the purpose of the business.

Question 56

The federal government issues certificates of incorporation for corporations with over one billion dollars in assets, if the firm wishes to have federal registration.

Question 57

The bankruptcy of a limited partner in a partnership dissolves a limited partnership.

Question 58

The modern "liberal" general incorporation statutes that we have today were adopted in the late 1800s.

Question 59

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

Question 60

If a limited partner contributes services to the business, she may create an inference of managerial control and may be declared a general partner.

Question 61

In Ironite Products v. Samuels, where a major shareholder of a company disputes changes in the bylaws, the appeals court held that the bylaws of the company had been changed in violation of company bylaws, so the shareholder must be given control of the company.

Question 62

In Ironite Products v. Samuels, where a major shareholder of a company disputes changes in the bylaws, the appeals court held that the bylaws of the company had been properly changed by the board of directors, so the shareholder could not complain.

Question 63

Shareholders may usually grant their proxy for another party to vote on corporate matters on their behalf.

Question 64

The articles of incorporation set the rules that regulate the internal structure of a corporation.

Question 65

The officers and directors of corporations are not provided Fifth Amendment protection against self incrimination for business-related matters.

Question 66

By law, shareholders in a corporation must be given stock certificates as a sign of formal ownership.

Question 67

A close corporation is one with a capitalization or assets of less than $1 million.

Question 68

A close corporation is one that has a small number of shareholders.

Question 69

Shareholders have the right to instruct directors or top managers how to run the corporation.

Question 70

Shareholders are the owners of a corporation.

Question 71

Corporations are not provided Fifth Amendment protection against self incrimination.

Question 72

Corporations are "persons" that enjoy many of the same rights and privileges accorded real persons.

Question 73

Shareholders have a limited right to inspect the books and records of the corporation.

Question 74

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.

Question 75

The corporate bylaws are the rules that regulate the internal structure of a corporation.

Question 76

A public corporation is one that trades shares on stock markets.

Question 77

Corporations are legal entities that are due all of the same constitutional protections due to real persons.

Question 78

Shareholders may not authorize third parties to vote on their behalf at shareholder meetings.

Question 79

Corporations may sue and be sued in the name of the business itself.

Question 80

A close corporation does not have shares of stock traded in stock markets.