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?

Accepted Answer

A limited partnership is a business entity where there are two types of partners - general partners and limited partners. General partners are actively involved in the management and operation of the business, while limited partners are passive investors who do not participate in the management of the business. This is similar to a general partnership with the difference being that in a limited partnership, not all co-owners are involved in the management and operation of the business.

Question 2

A sole proprietorship:

Accepted Answer

A sole proprietorship consists of a business owned and operated by one individual. It is not a separate legal entity, and the owner is personally responsible for all debts and liabilities of the business.

Question 3

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

Accepted Answer

All of the factors listed (corporate formalities, separate bank accounts, use of funds, and undercapitalization) are typically considered when determining whether to pierce the corporate veil.

Question 4

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

Accepted Answer

Collective bargaining is the process of joining together of employees, often done by a union, for the purpose of negotiating working conditions and benefits from the employer.

Question 5

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

Accepted Answer

The Occupational Safety and Health Agency (OSHA) is the government agency responsible for assuring safe working conditions for workers. They set and enforce standards, provide training and outreach, and conduct inspections to ensure that employers are providing safe workplaces for their employees.

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?

Accepted Answer

The Securities and Exchange Commission (SEC) is the government agency responsible for enforcing the Securities Act of 1933 and the Securities Exchange Act of 1934. OSHA is responsible for workplace safety, the IRS is responsible for tax collection and enforcement, and the state secretary of state may have responsibilities related to business registration and filings.

Question 7

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

Accepted Answer

Actual authority refers to the power given to an agent by the principal or employer to act on their behalf. This can be explicitly stated or implied through the nature of the agent's role. Actual authority is distinguished from apparent or ostensible authority, which is based on the agent's apparent power to act on behalf of the principal.

Question 8

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

Accepted Answer

Corporations are formed by filing articles of incorporation with the secretary of state. Bylaws, stock permits, and shareholder agreements are documents created after the corporation is formed, while a partnership agreement is a document for a different type of business entity.

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?

Accepted Answer

A limited liability partnership (LLP) provides limited liability to partners but without the restrictions of a limited partnership, where there must be at least one general partner with unlimited liability. LLPs are often used by lawyers, accountants, and other professional service providers.

Question 10

A non-profit corporation:

Accepted Answer

Non-profit corporations can generate income but cannot distribute profits to members. They may have tax-exempt status, but it is not automatic.

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?

Accepted Answer

A general partnership is a business entity where two or more persons co-own a business for profit and are individually liable for all partnership debts. This means that each partner is personally responsible for the debts and obligations of the business, and their personal assets are at risk. However, there is no separate legal entity for the partnership, and the partners share in the profits and losses of the business. Limited partnerships and limited liability partnerships would offer some form of protection to the partners' personal assets, but they also come with specific requirements and formalities that may not be necessary or desirable for all businesses. A limited liability company would also offer protection for personal assets, but it is a separate legal entity and may not be the best choice for a simple partnership.

Question 12

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

Accepted Answer

A sole proprietorship is a type of business entity in which a single individual owns and operates the business. It is the simplest and most common form of business structure, and offers the owner complete control over the business and its operations. Additionally, a sole proprietorship is not taxed as a separate entity, which can be beneficial for tax purposes.

Question 13

The term "securities" is used to describe:

Accepted Answer

Securities refer to any type of financial investment that represents an ownership interest in a business or asset, including but not limited to stocks, bonds, and options. Therefore, option A is the best choice as it correctly describes securities. The other options are incorrect because they refer to specific types of investments rather than the broader category of securities.

Question 14

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

Accepted Answer

The answer of Actual authority of partners to enter contracts...

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?

Accepted Answer

A limited liability company (LLC) provides limited liability to its owners, similar to a corporation, but is not taxed as a corporation. It is a flexible business entity that combines features of a sole proprietorship or partnership (pass-through taxation) with features of a corporation (limited liability). Limited partnerships and general partnerships do not provide limited liability and limited liability partnerships (LLP) are taxed as partnerships, making LLC the correct choice.

Question 16

In a limited partnership:

Accepted Answer

In a limited partnership, only limited partners have limited liability. General partners, on the other hand, have unlimited liability for the partnership's debts and obligations. This means that limited partners are only responsible for the amount of their investment in the partnership and cannot be held personally liable for any debts or legal obligations of the partnership beyond that amount.

Question 17

Blue Sky laws refer to:

Accepted Answer

Blue Sky laws refer to state securities laws, which regulate the sale of securities to protect investors from fraud. The laws vary by state and cover areas such as registration and disclosure requirements for securities offerings, licensing requirements for brokers and investment advisers, and anti-fraud provisions.

Question 18

The owners of a corporation are known as:

Accepted Answer

Shareholders are the owners of a corporation. They own shares of stock in the company, which represents their ownership stake in the business. Officers are employees of the corporation who are responsible for managing its day-to-day operations. Directors are elected by the shareholders to oversee the management of the corporation. Members typically refer to owners of a limited liability company (LLC) or a partnership.

Question 19

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

Accepted Answer

At-will employment refers to an employment arrangement where the employer can terminate the employee at any time without a fixed term. It is commonly practiced in the United States, and most states consider all employment to be at-will unless there is a contract stating otherwise. Contract employment refers to an agreement between an employer and employee that specifies the employment terms and duration. Temporary employment is a type of employment that is for a fixed period, usually to cover a permanent employee's absence or while awaiting new hires. Free-will employment is not a recognized term in employment law.

Question 20

Equity securities are:

Accepted Answer

Equity securities refer to ownership shares in a corporation, which are typically represented by shares of stock. Therefore, choice D, "usually in the form of shares of stock for a corporation," is the best answer. Choices A, B, C, and E are all incorrect because they do not properly describe equity securities.

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