Question 1

A legal agreement between two parties to operate for a specific purpose and for a limited period of time is known as a(n)

Accepted Answer

A)   LLC.
B)   joint venture.
C)   limited partnership.
D)   S corporation.E) C) and D)
F) A) and B)

Question 2

The discussions and votes during a corporation meeting are called the

Accepted Answer

A)   articles of incorporation.
B)   the bylaws.
C)   the minutes.
D)   agreements.E) All of the above
F) A) and D) C

Question 3

A limited partnership ends if a limited partner sells his or her ownership or dies.

Accepted Answer

A) True 
 B)False

Question 4

Ownership in a corporation is documented by

Accepted Answer

A)   stock certificates.
B)   partner agreements.
C)   bylaws.
D)   sales tax receipts.E) All of the above
F) C) and D)

Question 5

The biggest disadvantage of a sole proprietorship is

Accepted Answer

A)   the large number of legal documents necessary.
B)   the difficulty in starting one.
C)   the unlimited liability of the entrepreneur.
D)   all of the above.E) All of the above
F) C) and D)

Question 6

A ______ is a legal entity separate from its owners.

Accepted Answer

A)   proprietorship
B)   partnership
C)   corporation
D)   all of the aboveE) A) and B)
F) A) and C) C

Question 7

General partners

Accepted Answer

A)   have unlimited liability.
B)   are liable for the actions of other partners.
C)   are fully responsible for company debts.
D)   all of the above.E) B) and C)
F) A) and D)

Question 8

General partnerships are not legally required to have a written partnership agreement.

Accepted Answer

A) True 
 B)False

Question 9

Proprietorships are the most common form of organization because

Accepted Answer

A)   they provide limited liability.
B)   they are a legal entity separate from the owner.
C)   they are easy to start.
D)   it is easy to raise money from outside investors.E) B) and D)
F) C) and D)

Question 10

A proprietor cannot lose personal assets if someone sues the company.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is FALSE?

Accepted Answer

A)   Investors in a limited liability company have limited liability.
B)   The profits of an LLC are transferred to the owners' personal tax returns.
C)   LLCs are generally less flexible than corporations.
D)   All of the above.E) B) and C)
F) A) and C)

Question 12

With a limited liability company,

Accepted Answer

A)   the profits of the company are split among the investors and shown on their personal tax returns.
B)   good legal advice is necessary.
C)   members must file articles of organization and an operating agreement.
D)   all of the above.E) C) and D)
F) A) and D)

Question 13

Part or all of a corporation's profit may be given to the stockholders in the form of

Accepted Answer

A)   taxes.
B)   liabilities.
C)   dividends.
D)   debt.E) All of the above
F) C) and D)

Question 14

Because the corporation pays taxes on the company profit and the stockholders pay taxes on dividends, this is known as

Accepted Answer

A)   double taxation.
B)   self-employment tax.
C)   excise tax.
D)   use tax.E) All of the above
F) A) and B)

Question 15

Which of the following is TRUE?

Accepted Answer

A)   The officers of a corporation attend meetings and vote on issues presented.
B)   The owners of a corporation have control over most operating decisions.
C)   Corporation owners may sell their stock without affecting the legal existence of the company.
D)   All of the above.E) All of the above
F) A) and C)

Question 16

Limited liability companies are often recommended for family-owned businesses.

Accepted Answer

A) True 
 B)False

Question 17

Excise taxes must be paid by the

Accepted Answer

A)   liquor industry.
B)   firearms industry.
C)   retailers of motor fuel.
D)   all of the above.E) A) and C)
F) A) and B)

Question 18

Of the following, the least common form of organization in the United States is the

Accepted Answer

A)   proprietorship.
B)   partnership.
C)   corporation.
D)   There is an equal number of each in the United StatesE) All of the above
F) B) and C) B

Question 19

Corporations

Accepted Answer

A)   must have a board of directors and hold annual meetings.
B)   must record the minutes of the meetings.
C)   may be required to complete more paperwork than a proprietorship if the company expands into other states.
D)   all of the aboveE) C) and D)
F) B) and D)

Question 20

Before forming a partnership, the partners should consider

Accepted Answer

A)   how much time each will invest in the business.
B)   what decisions need the agreement of all partners.
C)   how much money each partner will invest.
D)   all of the above.E) A) and D)
F) A) and B)

Exam 4: The Legal Section

A legal agreement between two parties to operate for a specific purpose and for a limited period of time is known as a(n)

Correct AnswerverifiedShow Answer

The discussions and votes during a corporation meeting are called the

Correct AnswerverifiedC

A limited partnership ends if a limited partner sells his or her ownership or dies.

Correct AnswerverifiedShow Answer

Ownership in a corporation is documented by

Correct AnswerverifiedShow Answer

The biggest disadvantage of a sole proprietorship is

Correct AnswerverifiedShow Answer

A ______ is a legal entity separate from its owners.

Correct AnswerverifiedC

General partners

Correct AnswerverifiedShow Answer

General partnerships are not legally required to have a written partnership agreement.

Correct AnswerverifiedShow Answer

Proprietorships are the most common form of organization because

Correct AnswerverifiedShow Answer

A proprietor cannot lose personal assets if someone sues the company.

Correct AnswerverifiedShow Answer

Which of the following is FALSE?

Correct AnswerverifiedShow Answer

With a limited liability company,

Correct AnswerverifiedShow Answer

Part or all of a corporation's profit may be given to the stockholders in the form of

Correct AnswerverifiedShow Answer

Because the corporation pays taxes on the company profit and the stockholders pay taxes on dividends, this is known as

Correct AnswerverifiedShow Answer

Which of the following is TRUE?

Correct AnswerverifiedShow Answer

Limited liability companies are often recommended for family-owned businesses.

Correct AnswerverifiedShow Answer

Excise taxes must be paid by the

Correct AnswerverifiedShow Answer

Of the following, the least common form of organization in the United States is the

Correct AnswerverifiedB

Corporations

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Before forming a partnership, the partners should consider

Correct AnswerverifiedShow Answer

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C

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C

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B

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