Question 1

Lauren,Marcella,and Norell form a syndicate to buy a professional soccer franchise.This syndicate could be set up as

Accepted Answer

The answer of Lauren,Marcella,and Norell form a syndicate to buy...

Question 2

Transworld Import Company and USA Export,Inc.,form a business organization to engage in importing and exporting.Its property is held in the names of the members and its shareholders have personal liability.This organization is

Accepted Answer

A joint stock company is a business entity where the property is held in the names of the members, and the shareholders have personal liability, fitting the description provided.

Question 3

Kalin,Liza,and other consumers form MuniMart Cooperative.This form of business organization makes it possible for these individuals to

Accepted Answer

MuniMart Cooperative allows the individuals to pool their resources, which gives them an advantage in the marketplace. This is the main benefit of forming a cooperative. Additionally, cooperatives typically have limited liability for their members (similar to corporations), but they do not receive tax exemptions.

Question 4

Arnie is a member of Bowling & Billiards,LLC,a limited liability company.Arnie can participate in the firm's management

Accepted Answer

As a member of a limited liability company, Arnie can participate in the firm's management to any extent. This is one of the main advantages of an LLC as it allows for flexible management structures and participation from all members. Arnie's liability for the firm's debts is limited to his investment in the company.

Question 5

Custom Auto Body & Detailing,LLC,is a limited liability company.Unless indicated otherwise on the Custom Auto's federal tax form,the firm will be taxed as

Accepted Answer

A limited liability company (LLC) is typically taxed as a partnership by default unless it elects to be taxed as a corporation by filing the appropriate forms with the IRS.

Question 6

Coco is considering forms of business organization for her concessions business-Coco's Cakes.Most states require that a limited liability company have

Accepted Answer

Most states require that a limited liability company have at least one member, so forming a single-member LLC would be the best choice for Coco's Cakes. This would provide the benefits of limited liability for Coco while allowing her to maintain control over the business.

Question 7

Dreem Land Corporation and EZ Investments Company transfer their property to Financial Managers,Inc.,which manages the property and distributes the profits to Dreem and EZ.This form of a business organization is

Accepted Answer

This is an example of a business trust, where the property of Dreem Land Corporation and EZ Investments Company is transferred to Financial Managers, Inc. to be managed and the profits distributed to the owners. A joint stock company and joint venture typically involve the joint ownership and management of a business venture, while a syndicate involves a temporary association of individuals or entities formed to undertake a specific business project.

Question 8

StartUp Investors,LLC,is a limited liability company without a written operating agreement.Among the members,a dispute arises concerning the division of profits.Under most LLC statutes,the profits will be

Accepted Answer

In the absence of a written operating agreement, most LLC statutes default to dividing profits equally among members.

Question 9

Qatar Global Investments is a foreign entity-a firm owned and operated by investors in a foreign country.With respect to a limited liability company in the United States,Qatar Global can

Accepted Answer

As a foreign entity, Qatar Global Investments can become a member of a limited liability company in the United States. This means they would have ownership and voting rights in the company.

Question 10

Bee Hive Honey,LLC's members include Chad,Dolores,and others.For purposes of suing and being sued,Bee Hive Honey is

Accepted Answer

Bee Hive Honey, LLC is a legal entity apart from its owners, meaning it can be sued and sue other parties in its own name.

Question 11

Otto is considering forms of business organization for Pro Tree Service,his landscaping firm.Like most states,Otto's state requires that to form a limited liability company,he must file with a central state agency

Accepted Answer

To form a limited liability company in most states, including Otto's state, articles of organization must be filed with a central state agency. Articles of certification and articles of formation are not the correct documents required for forming an LLC. There are specific documents required for forming an LLC, so option D is also incorrect.

Question 12

As the trustee of a business trust,Bertoldi is required to

Accepted Answer

As the trustee of a business trust, Bertoldi is primarily responsible for managing and investing the assets of the trust in a way that maximizes profits for the beneficiaries. Distributing the trust's profits is one of the key responsibilities of the trustee, and it is essential to ensure that the beneficiaries receive their rightful share of the trust's earnings. While the trustee may also assume some responsibility for the trust's debts, this is not their primary responsibility, and it may depend on the specific terms of the trust agreement. Drafting a written trust agreement is typically done by the grantor or their legal counsel, and it may be modified or amended by the trustee as needed over time.

Question 13

As the beneficiary of a business trust,Kevin's liability for trust debts and obligations is

Accepted Answer

The beneficiary of a business trust has no personal liability for the debts and obligations of the trust.

Question 14

Medical Professionals Supply Source is an unincorporated cooperative.Unincorporated cooperatives are often treated like

Accepted Answer

Unincorporated cooperatives are typically treated as partnerships for legal purposes. This means that the members are jointly liable for any debts or legal issues, but also have the benefit of pass-through taxation on their share of the profits.

Question 15

Oni's Adventure Travel and Paquito's Wild River Tours form a joint venture.Oni can participate in the venture's management

Accepted Answer

In a joint venture, each party shares both in the profits and in the management. Oni can participate in the joint venture's management to any extent. She doesn't have to assume liability for the venture's debts, nor is her participation limited by her investment in the venture.

Question 16

Gabriella is a beneficiary of a business trust.As a beneficiary,she is required to

Accepted Answer

As a beneficiary of a business trust, Gabriella is not required to distribute the trust's profits or assume responsibility for its debts. These responsibilities lie with the trustee of the trust. Gabriella also does not need to draft a written trust agreement as this is the responsibility of the trustee and the trust's legal team. Therefore, the correct answer is D – none of the choices.

Question 17

Dairy Products,Inc.,and Eden Farms Corporation form a joint venture to make and test-market Frosty Ice Cream.A joint venture is usually formed for

Accepted Answer

A joint venture is usually formed for a single transaction or project.

Question 18

Rafaela Art Gallery and Sequoia Exhibitions form a joint venture.When a dispute arises,Rafaela files a suit against Sequoia.The court is most likely to apply the same principles to this joint venture as it applies to

Accepted Answer

The joint venture is a type of partnership and, therefore, the court is most likely to apply the same principles to this joint venture as it applies to partnerships.

Question 19

Business Enterprise Company agrees to sell a commercial office building and parking garage to City Investments,Inc.,which assigns the rights to the realty to Downtown Properties,LLC.Downtown Properties does not yet exist,but once it is created and comes into existence,the contract on novation will most likely be

Accepted Answer

Novation is a valid transfer of rights and obligations from the original party to a new party. In this scenario, the contract on novation will most likely be enforceable because all of the parties involved have agreed to the transfer of rights to Downtown Properties, LLC. However, it is important to ensure that all legal requirements for novation have been met.

Question 20

Location! Realty,LLC,is a limited liability company.Like other LLCs,for federal jurisdictional purposes,Location! Realty is most likely a citizen of

Accepted Answer

For federal jurisdictional purposes, an LLC is considered a citizen of every state in which its members are citizens.

Quiz 31: Other Organizational Forms for Small Businesses