Chapter 35 (ki)

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Which of the following is true about partnership?
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It is a voluntary association between two or more persons who co-own a business for profit.
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Under which of the following forms of business organization do partners equally divide the profits and management responsibilities and share unlimited personal liability for the debts?
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General partnership
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Which of the following is true of limited partnerships?
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Limited partners pay taxes on their share of the profit.
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If the partners have created a _____, all the partners assume liability for one partner’s professional malpractice, but only to the extent of the partnership’s assets.
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limited liability partnership
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Which of the following is considered a separate legal entity?
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Corporation
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Which of the following should be formed to avoid double taxation?
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S corporation
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Which of the following statements about limited liability company is true?
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It combines the tax advantages and management flexibility of a partnership with the limited liability of a corporation.
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A cooperative:
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is an organization formed by individuals who usually pool their resources to gain an advantage in the market.
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A _____ 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.
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joint stock company
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A _____ is a relationship between two or more persons or corporations created for a specific business undertaking.
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joint venture
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A _____ is an investment group that comes together for the explicit purpose of financing a specific large project.
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syndicate
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Which of the following statements of joint venture is true?
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It is usually terminated when all the stock has been sold.
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In a _____, the franchise operates under the franchisor’s business name and is required to follow the franchisor’s standards and methods of business operation.
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chain-style business operation
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A car dealership is an example of a:
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distributorship.
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Which among the following is not part of the franchise agreement?
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Price at which the franchisee sells the goods
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A sole proprietor is considered a separate legal entity.
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False
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A limited partnership is one in which the partners share management responsibilities equally but some partners are limited in regards to the amount of profit distribution to which they are entitled.
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False
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A limited partnership and a limited liability partnership refer to the same type of business organization.
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False
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Members of the board of directors of a corporation are elected by shareholders.
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True
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Officers of a corporation are hired by the shareholders.
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False
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A regular corporation may only have up to 200 shareholders while an S corporation cannot have more than 75 shareholders.
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False
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For purposes of jurisdiction, an LLC is considered a citizen of every state in which its members reside.
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True
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Cooperatives must be incorporated.
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False
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A franchisee is the owner of a trade name or trademark who is a party to an arrangement whereby another party sells goods or services under the trade name or trademark.
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False
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The joint venture is not automatically terminated when one of the members dies.
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True
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A person who decides to go into business on his or her own without further formality forms a(n) ______.
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Sole proprietorship
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Which of the following is false regarding a sole proprietorship?
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A sole proprietor is not personally liable for obligations of the business.
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Which of the following is the most popular form of business ownership in the U.S.?
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Sole proprietorship
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Which of the following is Germany’s equivalent to the sole proprietorships?
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Sole traders
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Which of the following is a voluntary association between two or more persons who co-own a business for a profit?
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Partnership
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Which of the following governs partnerships in most states in the absence of an express agreement?
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The Uniform Partnership Act
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Which of the following is false regarding a partnership?
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In most cases partners do not have personal liability for losses.
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Which of the following is a type of partnership?
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Limited partnerships General partnerships Limited liability partnerships
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In which of the following may investors share in profits but do not share in management responsibilities and do not incur personal liability?
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Limited partnership
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Which of the following is not generally terminated on the death of the owner or partner?
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Limited partnerships
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Which of the following is distinguishable from other forms of partnerships because the partners’ liability for professional malpractice is limited to the partnership?
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Limited liability partnership
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Which of the following is false regarding a limited partnership?
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There must be at least two limited partners.
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Investor-owners of a corporation are called which of the following?
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Shareholders
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Which of the following is responsible for managing the business of a corporation?
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Members of the board of directors
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Which of the following is responsible for running the day-to-day business of a corporation?
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Officers
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Which of the following is true regarding corporations?
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The corporation must pay taxes on profits, and shareholders must pay taxes on dividends they receive from the corporation.
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Which of the following is a way that a corporation can avoid double taxation?
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By forming an S corporation.
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Which of the following is true regarding S corporations?
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They are often formed under federal law.
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Which of the following offers tax advantages of a partnership and liability advantages similar to a corporation, but allows for unlimited shareholders?
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A limited liability company
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Which of the following is false regarding limited liability companies?
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Owners of an LLC are referred to as incorporators.
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Which of the following generally has unlimited transferability of ownership interests?
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A corporation and a limited liability company, but not a general partnership.
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The Mexican limited liability company is derived from the model in which of the following countries?
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Germany
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Which of the following is an organization formed by individuals, who usually pool their resources, to market products?
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A cooperative
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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?
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A joint stock company
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Which of the following is a business organization governed by a group of trustees who operate the trust for the beneficiaries?
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A business trust
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Which of the following is a group that comes together for the explicit purpose of financing a specific large project?
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A syndicate
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Which of the following is a relationship between two or more persons or corporations created for a specific business undertaking?
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A joint venture
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Which of the following is true regarding joint ventures?
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The joint venture is not automatically terminated when one of the members dies.
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Which of the following is a business that exists because of an arrangement between the owner of a trade name or trademark and a person who sells goods or services under the trade name or trademark?
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Franchise
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In which of the following does the franchise operate under the franchisor’s business name and act subject to the franchisor’s standards and methods of business operation?
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Chain-style business operation
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Which of the following are franchises in which the franchisor manufactures a product and licenses a dealer to sell the product in an exclusive territory?
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Distributorship
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In which of the following does the franchisor provide the franchisee with the formula or necessary ingredient to manufacture a product?
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Manufacturing arrangement
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Which of the following is false regarding franchises?
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The UCC does not apply in the realm of disputes between franchisors and franchisees.
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Which of the following establishes how a franchise agreement will be terminated?
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The franchise agreement
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Which of the following may be created without a written document and without filing anything with the state?
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A general partnership
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Which of the following would likely be formed by farmers who want to pool certain crops together to ensure that they get a high market price for their crops?
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A cooperative
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Which of the following is false regarding cooperatives?
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Cooperatives are usually formed as syndicates.

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