Question 1

Which of the following was the result in the case in the text Mary Kay Inc.,v.Janet Isbell involving whether the defendant had a franchise that was wrongfully terminated?

Accepted Answer

The court ruled that "the business relationship entered into by Isbell and Mary Kay was not a franchise within the protection of the Arkansas Franchise Practices Act."

Question 2

Which of the following is false regarding limited liability companies?

Accepted Answer

LLC owners are referred to as members.

Question 3

Which of the following offers tax advantages of a partnership and liability advantages similar to a corporation,but allows for unlimited shareholders?

Accepted Answer

A limited liability company combines the tax advantages and management flexibility of a partnership with the limited liability of a corporation.

Question 4

Which of the following is a business organization governed by a group of trustees who operate the trust for the beneficiaries?

Accepted Answer

A business trust is a business organization governed by a group of trustees, who operate the trust for the beneficiaries.

Question 5

Which of the following is responsible for running the day-to-day business of a corporation?

Accepted Answer

Officers run the day-to-day business of a corporation.

Question 6

Which of the following is distinguishable from other forms of partnerships because the partners' liability for professional malpractice is limited to the partnership?

Accepted Answer

If the partners have created a limited liability partnership (LLP), all the partners assume liability for one partner's professional malpractice, but only to the extent of the partnership's assets; the other partners' personal assets cannot be taken.

Question 7

Which of the following is true regarding S corporations?

Accepted Answer

S corporations are often, though not always, formed under federal law.

Question 8

Which of the following is true regarding joint ventures?

Accepted Answer

The joint venture is not automatically terminated when one of the members dies.

Question 9

Which of the following is a relationship between two or more persons or corporations created for a specific business undertaking?

Accepted Answer

A joint venture is a relationship between two or more persons or corporations created for a specific business undertaking.

Question 10

Which of the following is a partnership agreement in which company members hold transferable shares,while all the goods of the company are held in the names of the partners?

Accepted Answer

A joint stock company is a partnership agreement in which company members hold transferable shares while all the goods of the company are held in the names of the partners.

Question 11

The Mexican limited liability company is derived from the model in which of the following countries?

Accepted Answer

Mexico adopted the limited liability company model from Germany.

Question 12

In China,which of the following is defined as "an organization which possesses civil legal capacity for civil acts and which,according to the law,independently enjoys civil rights and assumes civil obligations"?

Accepted Answer

The Civil Code of China defines a legal person as "an organization which possesses civil legal capacity for civil acts and which, according to the law, independently enjoys civil rights and assumes civil obligations."

Question 13

Which of the following is an organization formed by individuals,who usually pool their resources,to market products?

Accepted Answer

A cooperative is an organization formed by individuals who usually pool their resources to gain an advantage in the market.

Question 14

Which of the following is a group that comes together for the explicit purpose of financing a specific large project?

Accepted Answer

An investment group that comes together for the explicit purpose of financing a specific large project is a syndicate.

Question 15

Assuming requirements are met,which of the following,if any,is a way that a corporation can avoid double taxation?

Accepted Answer

One way to avoid the double taxation is by forming an S corporation.

Question 16

Which of the following is false regarding a limited partnership?

Accepted Answer

A limited partnership is a partnership consisting of one general partner and at least one limited partner who does not have any part in the management of the business.

Question 17

Which of the following is responsible for managing the business of a corporation?

Accepted Answer

The board of directors is responsible for managing the business of a corporation.

Question 18

Which of the following is true regarding corporations?

Accepted Answer

The corporation must pay taxes on its profits, and its shareholders must pay taxes on the dividends (distributions of those profits) they receive from it.

Question 19

Which of the following was the result in Cousins Subs Systems Inc.,v.Michael R.McKinney,the case in the text involving whether the defendant wrongfully terminated a franchise agreement with the plaintiff?

Accepted Answer

Refusing to credit the defendant's allegations of breached oral promises and finding that there was no breach of the franchise agreement, the court recognized that the defendant "expressly acknowledged in detailed written agreements negotiated with the assistance of counsel that his purchase of a franchise was not a risk-free endeavor."

Question 20

Investor-owners of a corporation are called which of the following?

Accepted Answer

Perhaps the most dominant form of business organization is the corporation, a legal entity formed by selling shares of stock to investors, who then become shareholders and the owners of the company.

Quiz 35: Forms of Business Organizations