1 Which of the following is the most common way of doing business in the Chapter 11 Quiz Business Law United States a Corporation b Limited Liability partnership c Sole Proprietorship d Cooperative e General Partnership 2 Which of the following is a key advantage of sole proprietorships a Autonomy comes with total ownership of the business s finances b It is sometimes possible to bring in others to the business c A range of options are available for raising working capital d Very few sole proprietors seek funding from outside sources If sole proprietors seek funding from banks down payment e requirements are typically low 3 Affluent individuals or groups of individuals who provide capital to start up and early stage businesses are known as 4 A corporation sells its shares to members of the public for the first time This a Capitalists b Angel investors c d Realtors e Stockists Institutional buyers is known as Initial public offering a b Venture capitalism c Share public offering d Buy or sell agreement e Ultra Vires a True b False 5 Private placement is a nonpublic offering in which a business sells securities to general members of the public to raise capital 6 puts all the personal assets of the sole proprietor reachable by creditors a Corporate social responsibility b Ultra vires c Limited partnership d Unlimited liability 7 With unlimited liability one successful personal injury lawsuits not covered by insurance or exceeding insurance limits can wipe out years of hard work by individual business owner e Private placement a True b False 8 Identify the form of business in which there is no difference between the owner and the business a Corporation b Limited Liability partnership c Sole proprietorship d Cooperative e Joint Venture a Dilution of stock b Double taxation c Lifelong continuity d Unlimited Liability e Lack of flexibility 9 Which of the following is an unattractive feature of sole proprietorships 10 The central feature of a general partnership is that a The articles of incorporation must be filed with the state b There is state involvement in the formation of the partnership c There is a difference or distinction between the owner and the businesses d There is an agreement with the partner to share profits and losses e It is taxed just like an S corporation 11 There is state involvement in creating a general partnership because there is separation from the business and the partners a True b False a True b False 12 There is state involvement in creating a general partnership because there is clear separation between the business and the partners There is no state involvement in creating a general partnership because there is no separation from the business and the partners they are legally the same 13 A n is an association of two or more persons in an unincorporated entity to do business and share profits and losses 1 2 3 4 5 Subsidiary Limited Partnership Limited liability company General partnership S corporation 14 Which of the following is false about general partnerships c Normally all general partners have an equal voice in management but as a creation of contract the partners can modify this is they wish d General partnerships cannot be dissolved as easily as they are formed purposes e There is no state involvement in creating a general partnership because there is no separation from the business and the partners they are legally the same f A general partnership is considered a disregarded entity for tax g A general partnership may file an information return reporting total income and losses and how those profits and losses are allocated among the general partners 15 Which of the following is true about general partners in the context of taxation a Taxing planning opportunities are limited for general partners b Businesses rather than the general partners need to pay taxes c General partners are considered as disregarded entities for the d Limited and general partners are equally liable for paying a business s purpose of taxation taxes The partnership may file an information return reporting total income and losses for the partnership and how those profits and losses are allocated among the general partners As is the case for sole proprietors tax planning opportunities are limited for general partners 16 In the event of business failure a partner loses only the amount of his investment into the business and nothing more in a a General partnership b Sole proprietorship c Private partnership d e Limited partnership Joint and several liability partnership 17 Which of the following is true about limited partnership It has both general partners and limited partners It does not come under state law e f g Limited partners are generally permitted to participate in day to day management of the business h Partners may lose more than the amount they have invested in the business It is a company wholly owned or controlled by another company i A limited partnership has both general and limited partners The most a partner can lose is the amount of his investment into the business nothing more Limited partnerships have to be formed in compliance with state law and limited partners are generally prohibited from participating in day to day management of the business 18 A corporation Is very easy to manage a b Must be formed in compliance with commercial law c Must incorporate only where the principal place of business is located d Has Continuity regardless of its owners e Cannot have just one shareholder Unlike a sole proprietorship or general partnership a corporation is a separate legal entity separate and distinct from its owners Since it is a separate legal entity a corporation has continuity regardless of its owners 19 A chancery is a court with jurisdiction to decide cases based on equity as 20 Units of account for financial instrument such as stocks are known as well as law a True b False a Ultra Vires b Actus Reus c Articles of partnership d Securities e Shares a Respondeat superior b Actus reus c Mens rea d Res ipsa loquitur e Ultra Vires 21 Under older common law shareholders could sue a company that conducted business beyond the scope of its articles These actions are called Under older common law shareholders could use a company that conducted business beyond the scope of its articles these actions are called ultra vires but most modern statues permit the articles to simply state the corporation can carry out any lawful actions effectively rendering ultra vires