A.Liability

B.Control

C.Taxation

All of the above are important factors to consider

Joint venture

4.Nelson and Jack are both avid sailors. When a sailing acquaintance put his older, but still highly desirable, boat up for sale, Nelson and Jack agreed to pool their resources to buy and fix up the boat, then sell it and split the profits. This is an example of a ____ .

 Joint venture                                               

5. Which of the following statements about the limited partner in a limited partnership is false?

Limited partners may participate fully in the management of the partnership.

6. limited partnership must have at least one general partner and one limited partner.

True

7.Investors favor using Limited Partnerships to invest in commercial real estate because they can use the depreciation of the property as a tax loss.

True

8.What kind of business organization is subject to the most regulation at the state and federal level?

Corporation

9.Limited Partnership must have at least one general partner.

 True

 False

10.Which of the following is NOT one of the recognized disadvantages of doing business as a corporation?

A corporation can be in existence for a maximum of ninety-nine years.

11.Why are corporations said to have a burden of "double tax"?

Profits are taxed at the corporate level as income and again at the shareholder level as dividends

12.Which of the following best describes the "double taxation" on corporate profits?

 Corporations pay taxes on the profits they distribute to the shareholders as dividends, and shareholders pay taxes on the same dividends a

 13.Premiums paid by corporations for the health insurance it provides to employees are tax-deductible expenses.

True

14.Subchapter S corporation will avoid double taxation if which of the following applies?

All the shareholders agree to be taxed as in a partnership

True

25.Under RUPA, a partnership may take title to real property as a tenancy in partnership.

True

26.AMJ Partnership has 3 partners: Amy made a 60,000 capital contribution; May, made a 20,000 capital contribution; and June made a 10,000 capital contribution. The partnership agreement is silent about how profits will be divided. If the partnership makes 90,000 in profits, how will it be distributed?

30,000 each to Amy, May and June

27If a partnership agreement does not say how losses will be shared, they will be shared

In whatever way the profits are shared.

28A buy and sell agreement normally specifies the terms under which a withdrawing or deceased partner's interest will be bought out.

True

29.A partner who does not participate in the management of the business is a ____ partner; a partner who participates in decisions and advises management, but whose partnership interest is not known to third parties is a ____ partner. 

 Silent----------------------Secret

30.Absent an agreement otherwise, each partner is entitled to compensation for his or her services in managing the business.

False

31.Which of the following is not a right of a partner?

 The right to draw yearly interest on his or her capital contribution

32.Phil has a partnership interest in Best Bike. He has been denied access to the books and records and he suspects that one of the partners is engaging in secret business transactions using partnership funds. Phil wants to know the status of the business. Phil should request an

Accounting

33.The court order directing that the share of profits due a partner be given to his or her creditor to satisfy a judgment is a ____ order.

Charging

34.Partner A defrauded a client of the partnership. Partners B and C are jointly and severally liable with A to the client, even though they were unaware of the fraud.

True

35.A partner in a trading partnership has the implied power to make warranties on goods sold by the partnership.

True

36.The bankruptcy of a partner will cause the dissolution of the partnership by operation of law.

True

37.Which of the following would bring about the dissolution of the partnership?

The time the partnership is to last, as stated in the partnership agreement,

has expired

All of the partners agree to end the partnership

 One of the partners dies.

All of the above would bring about the dissolution of a partnership

38.A partnerhsip cannot have a provision for the continuation of  the partnership upon the death of one of the partners.

 False

39.In a partnership for a term of years, each partner has both the power and the right to withdraw from the partnership at any time.

False

40.When a partnership ceases to exist, the process of reducing the firm's assets to cash, paying off the creditors, returning the capital contributions of the partners, and distributing profits is called ____ .  Winding up.

41Jim and Fred had been equal partners in J amp; F Industries for 20 years. Jim has died and Fred is now in the process of winding up the partnership. Which of the following statements about the winding up process is false?

 Jim's estate is entitled to participate in the winding up process.

42.Which of the following decisions would require a unanimous vote of the partners?

 Admitting a new partner into the partnership

43.A new partner is liable only to the extent of his or her capital contribution for the already existing debts of the partnership.

  true

44.What is the equitable rule that 1 distributes assets of an insolvent partnership first to creditors of the partnership and 2 does not let partnership creditors reach the assets of individual partners until the partners' personal creditors are satisfied?

Marshaling of assets

True

84.A corporation is a person for purposes of the due process clauses of the 5th and 14th Amendments.

True

85.The document that the state issues evidencing that a corporation has been duly formed is the corporation's

Charter

86.The person who is designated to receive notices and service of process for a corporation is its

Registered agent

87.Stock which has no stated value when it is sold is ____ stock.

No par value

88.Which of the following is FALSE about the name of a corporation?

The name can never be changed once it is registered with the state.

89.Acts of a corporation that goes beyond the powers granted to it by the state or in its charter are ____ acts.

 Ultra Vires

90.The rules that govern the corporation, including the number of directors it will have, the method of electing directors, the time and place of shareholder meetings, etc., are found in the corporation's

By laws

91.DEF Corporation, which is incorporated in Maryland, is a ____ corporation in Maryland.

Domestic 

92.Some states use the alter ego theory to require corporations to assume liability for contracts negotiated on their behalf by the promoters.

True

93.A promoter has a fiduciary responsibility toward the prospective corporation.

True

94.Courts will allow creditors to pierce the corporate veil of any corporation that has only one shareholder.

False

95.The theory under which courts pierce the corporate veil of corporations whose shareholders do not treat the corporation like a separate legal identity is the ____ theory.

Alter ego

96.A corporation ceases to exist as a legal entity when

The state issues a certificate of dissolution

97.Partnerships are required to give notice to creditors when they dissolve, but corporations are not required to give notice of their dissolution.

  False

98.States have the power to cancel or revoke the charters of corporations that engage in illegal activities. These forfeiture hearings are called ____ proceedings.

Quo warranto

99.Which of the following would not be grounds for dissolving a corporation?

 The corporation has not made a profit or declared dividends in two years.

100.Dominant shareholders in closely held corporations who exploit their control of the corporation to benefit themselves at the expense of minority shareholders are guilty

Oppressive conduct

101.States have statutes of limitations limiting the time after the dissolution of a corporation when creditors of the corporation may sue former shareholders on corporate debts.

True

102.The combination of two corporations that results in the dissolution of both corporations and the emergence of a new corporation is an ____

.  Consolidation

103.A shareholder who dissents from a merger is entitled to

Be paid the fair value of her stock

104.The merger that creates the greatest number of antitrust issues is a ____ merger.

Horizontal

105.The document that is written evidence of an ownership interest in a corporation is an _

Stock certificate___

106.When a corporation dissolves, holders of ____ stock have priority in the distribution of corporation assets.

Preferred

107.Preferred stock that is entitled to receive only the stated preferred dividend and no other is ____ preferred stock.

Non-participating

108.Shares that are issued with a face value are

Par value shares

109.A shareholder who holds watered stock is potentially liable to the creditors of the corporation should the corporation become insolvent and unable to meet its obligations.

True

110.The agreement to purchase stock in a future corporation is a pre-incorporation subscription.

True

111.The prerogative of existing shareholders to buy new issues of stock in the same proportion as their current holdings is their ____ right.

 Preemptive

112.Which of the following section of the Uniform Commercial Code governs the sale of securities

Article 8

113.Shareholders have virtually unrestricted access to corporate books and records

False

114.Shareholders are entitled to notice when a special meeting is called.

True

115.Minority shareholders have the best chance of electing directors in a corporation that uses the ____ method of voting.

Cumulative

116.A shareholder who cannot attend a shareholder meeting may give another person the right to vote her shares in that election. This temporary grant of authority is an __

Proxy__ .

117.Any money recovered in a successful derivative suit belongs to the shareholder who initiated the suit.

 False

118.Instead of giving shareholders a cash dividend, ABC Corporation gave each shareholder 2 shares of a new stock issue for each share of stock the shareholder already owned. This is an example of a Stock Dividend

119.In a closely held corporation, shareholders owe each other substantially the same fiduciary duties that partners owe one another.

True

120.Directors may vote on matters in which they have a personal interest.

False

121.Directors and shareholders may vote by proxy. 

False

122.Directors must be compensated for their services.

 False

123.The business judgment rule protects directors who are loyal and careful from liability for business decisions that result in loss to the corporation.

True

124.Directors are fiduciaries of the corporation and may have liability in both contract and tort.

True

125.The director's duty of loyalty continues after the director's resignation.

True

126.A director's duty of care under the business judgment rule is a lower standard that that of professional negligence.

False

127.If a director discovers illegal acticity he or she must report the activity or problem, and if the officers of the corporation refuse to take action, the director must resign and notify the appropriate authorities.

True

128.. Boards of directors normally have the power to purchase insurance to indemnify directors who are sued personally for corporation-related actions.

True

129.LLC combine the limited liability of the partnership and the tax advantages of corporations.

False

130.LLC are taxed as partnerships unless the owners choose to be taxed as a corporation.

True

True

133.In the majority of states an LLC can be both formed and managed by only one member.

True

134.If you form an LLC you are required to have a written operating agreement.

False

135.In a member-managed LLC all members participate in management.

True

136.In a manager-managed LLC, only the manager-members have access to the LLCs books.

False

137.An artisan's lien is a special lien that applies exclusively to the liens artist receive on artwork they personally performed.

 False

138.Bob voluntarily surrender's a watch that he repaird back to the owner. Bob had a lien on the property for the value of his labor. Bob later re-acquires the property. Bob has now revived his lien since he was able to re-acquire possession of the property.

False

139.A suretyship provides a lien credit a legal interest in the property of the debtor to secure repayment of the loan.

False

140.A surety and guarantor have always been treated as the exact same thing.

False

141.A general guarantor's promise is not limited to a single transaction.

True

142.When dealing with and absolute guarantor, the creditor does not have to first attempt to collect from the debtor prior to proceeding against the guarantor.

True

143.Modernly, surety and indemnification contracts are the same thing.

False

144.BOTH performance bonds and fidelity bonds are sureties.

True

145.Surety agreements may also be created by operation of law.

True

146.The surety relationship requires good faith, but not fair dealing.

False

147.A creditor can never be required to give the surety notice that the debtor is in default.

False

148.If a credit gets a judgment against the creditor, and then the surety pays the creditor, the surety gets to benefit from the judgement that was obtained by the creditor.

True

149.Subrogation means the substitution of one person in place of another.

True

150.Lack of capacity and discharge in bankruptcy are two common defenses that are available to a surety that may be asserted against a creditor

False

151.The Statute of Limitations does not apply to surety contracts.

 False

152.The release of the principal always releases the surety.

False

152.A surety will remain liable when the creditor-principal agreement is modified if the surety consents to the modification

Before the modification takes place

At the time the modification takes place

After the modification takes place

 Any of the above

Duty to Account

155.Co-sureties share joint and several liability to the creditor

True

156.Rod and Todd have joint and several liability as sureties on a loan made to Rod's business by First Bank. Under this agreement, Todd is a

Co-surety

157.A lien for the value of material and labor expended in the construction of buildings and other improvements is a ____ .

Mechanic's lien

158.The general contractor is eligible for a mechanic's lien on the real property, but the subcontractors on the project are not.

  False

159.The usual procedure for a party seeking to perfect a mechanic's lien to file or record a ____ in the office of the county in which deeds to real estate are recorded.

Notice of lien

160.State law determines whether or not a mortgage will have priority over a mechanic's lien.

True

161.The owner may be liable for more than the contract price even if they follow the statutory procedures.

 False

162.If a judgment for dollar damages is not paid, the judgment creditor may apply for a ____

Writ of Execution

163.____ is a proceeding by which a plaintiff seeks to reach the assets of the defendant that are in the hands of a third party.

Garnishment