Deck 6: Business Organization and Bankruptcy

Question 1

An employer may not fire an employee for any reason that violates a federal or state law.

Answer 1

True

Question 2

Partnership liability does not extend beyond partnership assets to individual assets of partners.

Answer 2

False

Question 3

There must be at least one general partner in a limited partnership.

Answer 3

True

Question 4

Both the board of directors and the shareholders must approve a sale of assets outside the ordinary course of business.

Question 5

A debtor must provide a certificate that he has completed credit counseling before filing a petition in bankruptcy but not after discharge.

Question 6

Corporations are known as domestic corporations in the state in which they are formed, and as foreign corporations in other states.

Question 7

The members can elect one or more of themselves to manage the affairs of the LLC, or may appoint an outside manager.

Question 8

A corporation must file a certificate of incorporation and appointment of an agent for service of process.

Question 9

A franchise is a contract which provides the franchisee access to the methods, marketing, trademark and licenses of the franchisor.

Question 10

A partner in a general partnership is liable for the conduct of other partners.

Question 11

Dischargeable debts include alimony, child support, taxes and student loans.

Question 12

Liquidation under bankruptcy law occurs under Chapter 11 for businesses and Chapter 13 for individual wage earners.

Question 13

A limited liability company is owned by its members who are not personally liable for the debts of the LLC.

Question 14

In a Chapter 7 bankruptcy, exempt assets are sold to pay creditors.

Question 15

A partnership does not survive the death of a partner, but a corporation has perpetual life.

Question 16

The board of directors carries out the day-to-day affairs of the business.

Question 17

A shareholder derivative suit is filed when the directors have refused to take action against a third party.

Question 18

Blue sky laws are state securities law, from which publicly traded companies are exempt.

Question 19

Subchapter S status provides a pass-through tax that allows the corporation to be taxed as a partnership.

Question 20

Subchapter S avoids double taxation and income is passed through the corporation and only taxed at the individual level.

Question 21

A general partnership

A)Is subject to double taxation
B)Enjoys limited liability
C)Is owned by the partners
D)All of the above.

Question 22

Dissolution and winding up occurs

A)upon the termination of a corporation.
B)during a hostile takeover
C)when a court orders a "Piercing of the corporate veil"
D)none of the above.

Question 23

Which of the following is created through the filing of Articles of Organization?

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

Question 24

Which one of the following types of business organizations requires governmental filings to be formed

A)Limited partnership
B)Limited liability company
C)Corporation
D)All of the above.

Question 25

Sarbanes-Oxley Act of 2002 (SOX) does not

A)require CEOs and CFOs of publicly-traded companies to personally certify financial information
B)require auditors to register
C)apply to closed corporations
D)All of the above are true.

Question 26

Under the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) if a debtor has less income than the state median, then it is presumed that the filing of bankruptcy is an abuse of the provisions of Chapter 7.

Question 27

The advantages of forming a limited liability company include

A)Double taxation
B)The ability to raise capital on a national securities exchange
C)Limited liability for members
D)All of the above

Question 28

Responsibility for handling the bankrupt estate and paying creditors in order of priority is the role of the

A)Debtor
B)Bankruptcy judge
C)Trustee
D)Consumer credit counseling

Question 29

Upon the filing of a bankruptcy petition, legal action against the debtor

A)Is transferred to bankruptcy court for trial
B)Is automatically stayed
C)Is conducted by the bankruptcy trustee
D)Prevents the debtor from claiming property is exempt