Business Law Quiz Answers – Flashcards

The case of Apcar v. Gaus illustrates that it is essential to comply with all the technicalities of a limited liability partnership statute.

Corporations have perpetual existence.

The most common form of business ownership is the corporation.

To be a close corporation, the business must be small, with under 20 owners and under $500,000 in gross annual income.

A partnership is a separate, taxable entity.

Limited liability is a major advantage of a partnership as compared to a corporation.

Dr. Wong, a dentist, and his wife, an attorney, can protect their personal assets with limited liability from their business dealings by creating and operating a professional corporation together.

Generally, a joint venture is a partnership created for one limited purpose.

To form an LLC, a charter and an operating agreement must be filed with the Secretary of State in the jurisdiction where the business will operate.

Franchise fees can be costly, but they are usually payable over a number of years, after profits are generated from the business.

The Federal Trade Commission will not allow the sale of franchises that are unfair to the franchisee

Filings are required to form and operate a limited liability partnership

1. All the business forms listed below have limited liability except the: a. limited liability company. b. general partnership. c. Subchapter "S" corporation. d. corporation.

The Federal Trade Commission requires franchisors to: a. give prospective franchisees an offering circular at least 14 business days prior to the signing of a contract or payment of any money. b. disclose the exact amount of the initial investment required. c. disclose any litigation the company has ever been involved in d. disclose how many franchisees have gone out of business in the prior five years.

The importance of a Subchapter S corporation is: a. its organizational structure. b. its treatment of shareholders for income taxation purposes. c. its requirement of restrictive transfer rights of the shares. d. its small cost of formation.

The business form that is taxed as a partnership and gives all owners limited liability, is: a. a close corporation. b. a limited partnership. c. a limited liability company. d. a general partnership.

All of the following are characteristics of a closely held corporation EXCEPT: a. the shares are publicly traded. b. the corporation can typically operate without a board of directors. c. the shareholders usually restrict share transfer. d. minority shareholders are provided more protection than in regular corporations.

The form of business ownership that is the most easily transferable is the: a. general partnership. b. corporation. c. limited liability company. d. limited partnership.