Question 1

Without creating a separate business organization, Reynold starts up, and assumes the financial risk of, Sole Savers, a new, pre-owned auto sales enterprise. Reynold is

Accepted Answer

Reynold assumes the financial risk of the business and does not create a separate business organization, indicating that he is operating as a sole proprietor.

Question 2

​Nora and Owen do business as Profit & Property, a real estate investment partnership. In acting on the firm's behalf in a deal with Quaint Village Mall, Nora takes advantage of an opportunity to make a secret profit on her own behalf. To her firm, Nora is liable for

Accepted Answer

Nora owes a duty of loyalty to her partnership, and by making a secret profit without disclosing it to the partnership, she is breaching that duty of loyalty.

Question 3

IT Apps, LLC, is a limited liability company. Among its members, a dispute arises that the operating agreement does not cover. The dispute is governed by

Accepted Answer

Since IT Apps, LLC is a limited liability company, it is governed by the applicable state LLC statute. Each state has its own LLC statute that governs the formation, operation, and dissolution of LLCs. If an LLC operating agreement does not cover a particular dispute, the state LLC statute will provide guidance on how to handle the dispute.

Question 4

In a manager-managed LLC, the company is managed by

Accepted Answer

In a manager-managed LLC, the members designate specific individuals or entities to manage the company, rather than all members being involved in management.

Question 5

Rosalee is a general partner in Silver Dragon, a partnership consisting of the owners of a Chinese and American restaurant. Silver Dragon incurs debt for new dining tables and chairs. With respect to this debt, Rosalee is

Accepted Answer

As a general partner, Rosalee is personally liable for the debts of the partnership to the full extent, meaning her personal assets can be used to satisfy the partnership's obligations.

Question 6

Corbin organized, and owns and operates, Corbin's Deep Sea Fishing Tours in the simplest form of business organization. This is

Accepted Answer

The statement indicates that Corbin alone organized, owns, and operates the business. This is characteristic of a sole proprietorship.

Question 7

Smith & Jones, Accountants, is a limited liability partnership (LLP). The major features of an LLP are that it limits the personal liability of the partners and

Accepted Answer

The personal liability of partners is limited in an LLP, and it allows the partnership to continue as a pass-through tax entity, meaning the income and expenses flow through to the individual partners' tax returns. The other options are not accurate - LLP statutes can vary from state to state, and an LLP can do business in multiple states if it registers to do so. Additionally, many states have enacted LLP statutes.

Question 8

Narib and Olivia are limited partners in Physicians Medical Center, a limited partnership. As in a general partnership, in terms of the firm's books and information regarding partnership business, Narib and Olivia are entitled to

Accepted Answer

Limited partners, like general partners, are entitled to complete access to the partnership's books and information regarding the partnership business, despite their limited role in management.

Question 9

Greenway Corporation and Happy Trails, Inc., combine their efforts to build a network of biking and hiking trails along an unused railroad spur. Their form of business organization is

Accepted Answer

A joint venture is a business relationship between two or more parties, where they combine their resources and expertise to accomplish a specific project or goal, in this case building a network of trails. Each party contributes to the joint venture and shares in the profits or losses. A business trust, joint stock company, and syndicate are all different forms of business organizations that are not appropriate for this scenario.

Question 10

Dana is a member of Earthground Coffee, LLC, a limited liability company. Dana is liable for Earthground's debts

Accepted Answer

In a limited liability company (LLC), members are typically only liable for the company's debts up to the amount of their investment in the company. This means Dana's liability is limited to her investment.

Question 11

Orlando is a limited partner in Port of Call Exports, a limited partnership. By participating in the firm's management, Orlando is liable for its obligations

Accepted Answer

The answer of Orlando is a limited partner in Port...

Question 12

Wren owns and operates Yoga Center without creating a separate business organization. She receives all the profits from the fees for the classes and the sales of the center's merchandise. Yoga Center is most likely

Accepted Answer

Yoga Center is most likely a sole proprietorship as Wren owns and operates the business without creating a separate business organization. She is also receiving all the profits from the fees for classes and the sales of the center's merchandise.

Question 13

Jeremy is considering forms of business organizations, including the limited liability company (LLC), for his concessions business-Kettle Popt-Korn. Most states require that an LLC have

Accepted Answer

Most states require that an LLC have at least one member to be legally formed and recognized.

Question 14

All of the following are reasons a franchisor may wish to maintain some degree of control and supervision over the franchisee, except

Accepted Answer

The doctrine of respondeat superior holds an employer liable for the actions of an employee. Franchisors typically seek to avoid liability by distancing themselves from direct control over franchisees, not by maintaining control.

Question 15

Bob is the sole proprietor of ClamBooks, an electronic book subscription service. As a sole proprietor, on the business's profits, Bob pays

Accepted Answer

The answer of Bob is the sole proprietor of ClamBooks,...

Question 16

Custom Auto Body & Detailing, LLC, is a limited liability company. Its members include Dennis and Estelle. Like other LLCs with more than one member, unless indicated otherwise, the firm will automatically be taxed as

Accepted Answer

Since Custom Auto Body & Detailing, LLC has more than one member, it defaults to being taxed as a partnership. This means that the profits and losses of the business will pass through to the individual members' personal tax returns, rather than being taxed at the corporate level. Therefore, the correct answer is D - a partnership.

Question 17

Graham buys from Hook, Line & Sinker Corporation the exclusive right to sell Hook, Line & Sinker fishing gear in a certain area. Their franchise agreement requires Graham to pay certain administrative expenses. Their agreement may also require Graham to pay a percentage of the franchisor's

Accepted Answer

It is common for franchise agreements to require franchisees to contribute to the franchisor's advertising and promotional activities in order to maintain a consistent brand image and drive sales. The other options (B and C) are not typically included in franchise agreements. Option D is not a valid choice as it does not answer the question.

Question 18

Craig, Donna, and Eve do business as FasTrak Career Consultants. Eve's relationship to FasTrak ends, but the firm continues to do business. The termination of Eve's relationship to FasTrak is

Accepted Answer

Dissociation refers to the change in the relationship among partners when one partner ceases to be associated with the business, while the firm continues to operate.

Question 19

Teresa buys a franchise from Urgent Medical Clinics, LLC. If their agreement is like most franchise agreements, it will specify that Urgent Medical can terminate the franchise

Accepted Answer

Most franchise agreements specify that the franchisor can terminate the franchise for cause, meaning there must be a legitimate reason, such as breach of contract or failure to meet certain performance standards.

Question 20

Rural Residential Development Company and Suburban Real Estate Corporation form a joint stock company. The longest duration a joint stock company can be formed for is

Accepted Answer

A joint stock company can be formed for a perpetual existence, meaning it can continue indefinitely until it is dissolved or terminated by other means.

Quiz 19: The Entrepreneurs Options

Without creating a separate business organization, Reynold starts up, and assumes the financial risk of, Sole Savers, a new, pre-owned auto sales enterprise. Reynold is

Nora and Owen do business as Profit & Property, a real estate investment partnership. In acting on the firm's behalf in a deal with Quaint Village Mall, Nora takes advantage of an opportunity to make a secret profit on her own behalf. To her firm, Nora is liable for

IT Apps, LLC, is a limited liability company. Among its members, a dispute arises that the operating agreement does not cover. The dispute is governed by

In a manager-managed LLC, the company is managed by

Rosalee is a general partner in Silver Dragon, a partnership consisting of the owners of a Chinese and American restaurant. Silver Dragon incurs debt for new dining tables and chairs. With respect to this debt, Rosalee is

Corbin organized, and owns and operates, Corbin's Deep Sea Fishing Tours in the simplest form of business organization. This is

Smith & Jones, Accountants, is a limited liability partnership (LLP) . The major features of an LLP are that it limits the personal liability of the partners and

Narib and Olivia are limited partners in Physicians Medical Center, a limited partnership. As in a general partnership, in terms of the firm's books and information regarding partnership business, Narib and Olivia are entitled to

Greenway Corporation and Happy Trails, Inc., combine their efforts to build a network of biking and hiking trails along an unused railroad spur. Their form of business organization is

Dana is a member of Earthground Coffee, LLC, a limited liability company. Dana is liable for Earthground's debts

Orlando is a limited partner in Port of Call Exports, a limited partnership. By participating in the firm's management, Orlando is liable for its obligations

Wren owns and operates Yoga Center without creating a separate business organization. She receives all the profits from the fees for the classes and the sales of the center's merchandise. Yoga Center is most likely

Jeremy is considering forms of business organizations, including the limited liability company (LLC) , for his concessions business-Kettle Popt-Korn. Most states require that an LLC have

All of the following are reasons a franchisor may wish to maintain some degree of control and supervision over the franchisee, except

Bob is the sole proprietor of ClamBooks, an electronic book subscription service. As a sole proprietor, on the business's profits, Bob pays

Custom Auto Body & Detailing, LLC, is a limited liability company. Its members include Dennis and Estelle. Like other LLCs with more than one member, unless indicated otherwise, the firm will automatically be taxed as

Graham buys from Hook, Line & Sinker Corporation the exclusive right to sell Hook, Line & Sinker fishing gear in a certain area. Their franchise agreement requires Graham to pay certain administrative expenses. Their agreement may also require Graham to pay a percentage of the franchisor's

Craig, Donna, and Eve do business as FasTrak Career Consultants. Eve's relationship to FasTrak ends, but the firm continues to do business. The termination of Eve's relationship to FasTrak is

Teresa buys a franchise from Urgent Medical Clinics, LLC. If their agreement is like most franchise agreements, it will specify that Urgent Medical can terminate the franchise

Rural Residential Development Company and Suburban Real Estate Corporation form a joint stock company. The longest duration a joint stock company can be formed for is

Quiz 19: The Entrepreneurs Options

Without creating a separate business organization, Reynold starts up, and assumes the financial risk of, Sole Savers, a new, pre-owned auto sales enterprise. Reynold is

​Nora and Owen do business as Profit & Property, a real estate investment partnership. In acting on the firm's behalf in a deal with Quaint Village Mall, Nora takes advantage of an opportunity to make a secret profit on her own behalf. To her firm, Nora is liable for

IT Apps, LLC, is a limited liability company. Among its members, a dispute arises that the operating agreement does not cover. The dispute is governed by

In a manager-managed LLC, the company is managed by

Rosalee is a general partner in Silver Dragon, a partnership consisting of the owners of a Chinese and American restaurant. Silver Dragon incurs debt for new dining tables and chairs. With respect to this debt, Rosalee is

Corbin organized, and owns and operates, Corbin's Deep Sea Fishing Tours in the simplest form of business organization. This is

Smith & Jones, Accountants, is a limited liability partnership (LLP) . The major features of an LLP are that it limits the personal liability of the partners and

Narib and Olivia are limited partners in Physicians Medical Center, a limited partnership. As in a general partnership, in terms of the firm's books and information regarding partnership business, Narib and Olivia are entitled to

Greenway Corporation and Happy Trails, Inc., combine their efforts to build a network of biking and hiking trails along an unused railroad spur. Their form of business organization is

Dana is a member of Earthground Coffee, LLC, a limited liability company. Dana is liable for Earthground's debts

Orlando is a limited partner in Port of Call Exports, a limited partnership. By participating in the firm's management, Orlando is liable for its obligations

Wren owns and operates Yoga Center without creating a separate business organization. She receives all the profits from the fees for the classes and the sales of the center's merchandise. Yoga Center is most likely

Jeremy is considering forms of business organizations, including the limited liability company (LLC) , for his concessions business-Kettle Popt-Korn. Most states require that an LLC have

All of the following are reasons a franchisor may wish to maintain some degree of control and supervision over the franchisee, except

Bob is the sole proprietor of ClamBooks, an electronic book subscription service. As a sole proprietor, on the business's profits, Bob pays

Custom Auto Body & Detailing, LLC, is a limited liability company. Its members include Dennis and Estelle. Like other LLCs with more than one member, unless indicated otherwise, the firm will automatically be taxed as

Graham buys from Hook, Line & Sinker Corporation the exclusive right to sell Hook, Line & Sinker fishing gear in a certain area. Their franchise agreement requires Graham to pay certain administrative expenses. Their agreement may also require Graham to pay a percentage of the franchisor's

Craig, Donna, and Eve do business as FasTrak Career Consultants. Eve's relationship to FasTrak ends, but the firm continues to do business. The termination of Eve's relationship to FasTrak is

Teresa buys a franchise from Urgent Medical Clinics, LLC. If their agreement is like most franchise agreements, it will specify that Urgent Medical can terminate the franchise

Rural Residential Development Company and Suburban Real Estate Corporation form a joint stock company. The longest duration a joint stock company can be formed for is

Nora and Owen do business as Profit & Property, a real estate investment partnership. In acting on the firm's behalf in a deal with Quaint Village Mall, Nora takes advantage of an opportunity to make a secret profit on her own behalf. To her firm, Nora is liable for