Deck 11: The Business Environment: Agency, Employment, Business Organizations, and Bankruptcy Laws

Question 1

What type of business entity is a business organization like a general partnership in that it consists of two or more people who are co-owners of a business for profit but not all of the co-owners of the business are involved in the management and operation of the business?

A) Limited partnership
B) Business corporation
C) Limited liability partnership
D) Limited liability company

Answer 1

A

Question 2

A sole proprietorship:

A) consists of a business owned and operated by one individual.
B) is a business form that protects the personal assets of the owner.
C) is a business form that requires several formalities.
D) is a business form that pays taxes as a business.
E) All of the above

Answer 2

A

Question 3

Which of the following factors are considered when one tries to pierce the corporate veil?

A) Did the corporation observe corporate formalities such as holding meetings?
B) Did the corporation keep separate bank accounts?
C) Were corporate funds used for corporate and not personal purposes?
D) Was the corporation undercapitalized?
E) All of the above

Answer 3

E

Question 4

What is the name for joining together of employees for the purpose of negotiating and often done by a union?

A) Collective bargaining
B) At-will employment
C) Respondeat superior
D) Vicarious liability

Question 5

What is the name of the government agency responsible for assuring safe working conditions for workers?

A) Occupational Safety and Health Agency (OSHA)
B) Securities and Exchange Commission (SEC)
C) Internal Revenue Service (IRS)
D) State secretary of state

Question 6

What is the name of the government agency responsible for enforcing the Securities Act of 1933 and the Securities Exchange Act of 1934?

A) Occupational Safety and Health Agency (OSHA)
B) Securities and Exchange Commission (SEC)
C) Internal Revenue Service (IRS)
D) State secretary of state

Question 7

What type of authority is the power given, in fact, to an agent by the principal or employer?

A) Actual authority
B) Express authority
C) Apparent authority
D) Ostensible authority

Question 8

Corporations are formed by filing which document with the secretary of state?

A) Bylaws
B) Articles of incorporation
C) Stock permit
D) Partnership agreement
E) Shareholder agreement

Question 9

What type of business entity is an organization providing limited liability to partners without restrictions of limited partnership often used by lawyers and accountants?

A) Limited partnership
B) General partnership
C) Limited liability partnership
D) Limited liability company

Question 10

A non-profit corporation:

A) cannot generate any income.
B) always has tax exempt status.
C) cannot distribute any profit to its members.
D) Both b and c
E) All of the above

Question 11

What type of business entity is a business where two or more persons co-own a business for profit where each partner is individually liable for all partnership debts?

A) Limited partnership
B) General partnership
C) Limited liability partnership
D) Limited liability company

Question 12

What type of business entity is a business owned and operated by one person?

A) Sole proprietorship
B) General partnership
C) Business corporation
D) Limited liability company

Question 13

The term "securities" is used to describe:

A) a financial interest in a business.
B) only shares of stock in a corporation.
C) only a partnership interest in a general partnership.
D) only a partnership interest in a limited partnership.
E) None of the above

Question 14

Actual authority of partners to enter contracts on behalf of the partnership:

A) means that authority is implied because the conduct of the parties have reasonably led third persons to believe that such authority exists.
B) means that other partners have approved the contract.
C) always exists for all partners.
D) All of the above
E) None of the above

Question 15

What type of business entity is a business organization providing limited liability to its owners, but not taxed as a corporation, which is a cross between a sole proprietorship or partnership and a corporation, having characteristics of each?

A) Limited partnership
B) General partnership
C) Limited liability partnership
D) Limited liability company

Question 16

In a limited partnership:

A) all partners have limited liability.
B) only general partners have limited liability.
C) only limited partners have limited liability.
D) limited partners have no liability.
E) no partner has any liability.

Question 17

Blue Sky laws refer to:

A) federal securities laws.
B) state securities laws.
C) federal bankruptcy laws.
D) state bankruptcy laws.
E) None of the above

Question 18

The owners of a corporation are known as:

A) officers.
B) shareholders.
C) directors.
D) members.
E) None of the above

Question 19

What type of employment is an employment arrangement without a fixed term?

A) Contract employment
B) Free-will employment
C) At-will employment
D) Temporary employment

Question 20

Equity securities are:

A) loans taken out by the corporation.
B) only owned by shareholders in public corporations.
C) only owned by shareholders in close corporations.
D) usually in the form of shares of stock for a corporation.
E) always regulated by the federal government.

Question 21

A limited liability company is a business organization providing limited liability to its
owners, but not taxed as a corporation.

Question 22

A fundamental principle in the law of agency is that the principal-agent relationship
creates _____ duties between the parties.

Question 23

In a partnership, each of the partners is liable to third parties for debts of the partnership in proportion to his or her ownership interest in the partnership.

Question 24

A business corporation files the articles of incorporation with which government agency?

A) Occupational Safety and Health Agency (OSHA)
B) Securities and Exchange Commission (SEC)
C) Internal Revenue Service (IRS)
D) State secretary of state

Question 25

A limited partnership must have at least one general partner.

Question 26

An owner of a sole proprietorship is not personally liable for business debts.

Question 27

Actual authority is authority created by conduct that leads a third person to believe that
authority exists.

Question 28

The law of agency holds that the principal is responsible for the torts of the agent that are committed in the course and scope of employment.

Question 29

In a business corporation, the board of directors is responsible for daily management.

Question 30

All debts are dischargeable in bankruptcy.

Question 31

State laws that govern the sale or transfer of securities within the state are known as blue-sky laws.

Question 32

A general partnership always has a managing partner.

Question 33

Exempt assets must be turned over to the Bankruptcy trustee and are used to satisfy the debts of the person filing bankruptcy.

Question 34

A corporation is sometimes called an artificial person.

Question 35

Each partner in a partnership is the agent of the other partners and is responsible for the torts of the other partners if committed in the course and scope of the partnership.

Question 36

In a limited liability partnership, partners have limited liability as long as they do not participate in the management of the business.

Question 37

An employment arrangement without a fixed term is an employment ________.

Question 38

Bankruptcy is governed primarily by federal law.

Question 39

In a limited liability company the individuals who own the company are generally not personally liable for the company debts.

Question 40

The Securities and Exchange Commission (SEC) is a federal agency that adopts rules that must be followed by corporations and other businesses that sell securities through any national exchange.

Question 41

What are the differences between a limited liability partnership and a limited liability company?

Question 42

Assume that you started a new business as a sole proprietor where you developed an app for smartphones and tablets. The app you developed has now become very popular. You now plan to develop more apps but want to limit your personal liability. Discuss why you would want to form a new business and what type of business entity you would select.

Question 43

State laws that govern the sale or transfer of securities within the state (intrastate) are known as ________ laws.

Question 44

The ______ is a federal agency that adopts rules that must be followed by corporations
and other businesses that sell securities through any national exchange or through any means of interstate commerce.

Question 45

The owner of a sole proprietorship in itself is fully _____ for any business debts.

Question 46

The board of ______of a business corporation have general management power over the corporation and are responsible for setting general business policies.

Question 47

In response to corporate abuse by Enron and other corporations, Congress enacted the ______________Act of 2002 that established the Public Company Accounting Oversight Board, which requires registration of auditors of public companies and imposes regulations regarding accounting methods and financial disclosures.

Question 48

The ______ are the internal rules and regulations for a corporation.

Question 49

Explain the roles of directors, officers, and shareholders in a corporation.

Question 50

If you were starting a new business entity with a relative for a new fast food franchise, which business entity would you select? There will be two owners of the business and you hope to be able to open more fast food franchises in the future, but for now you are planning to start just one franchise. Discuss the advantages and disadvantages of each business entity.

Question 51

A business owned by two or more persons who co-own a business for profit where each partner is individually liable for all partnership debts is a ___________ partnership.

Question 52

Unlike a general partnership, not all of the co-owners of a limited partnership are involved in the ______ and operation of the business.

Question 53

What are the factors considered by a court on whether the court should pierce the corporate veil?

Question 54

A ________ is a type of business organization that provides limited liability to its owners that is similar to a corporation but not taxed as a corporation.