Term
| What is a Sole Propritorship |
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Definition
| Individual engaged in business as the owner of the business |
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Term
| What is a General Partnership |
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Definition
| Two or more people engaged in business as co-owners for profit |
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Term
| What is Limited Partnership |
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Definition
-A partnership formed under a limted partnership statue w/atleast 1 general partner and 1 limited partner
-Must file with state
-General partner has unlimted liability limited only to the amount of thier investment |
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Term
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Definition
| Artifical intentiy created by complying with statuate providing limited liability to its owners (shareholders) and managed by an elected board of directors |
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Term
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Definition
| Artifical intentity created by complying with a statuate offering some of the characteristics of a partnership and some corporation |
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Term
6 Factors Relevant to choice of organization:
1.Liability |
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Definition
Limited or unlimited
SP- Unlimited
GP- Un
LP- Gneral=unlimited, Limted partner: L
Corp- Limited
LLC- Limited |
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Term
6 Factors Relevant to choice of organization:
2. Taxation |
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Definition
Double: Corporate earnings are taxed, distribution to shareholders are taxed
Flow Through: can off set losses
SP: Flow through
GP: FT
LP: FT
Corp: C-Corp=Double
S-Corp=FT if 75 or less SH's
LLC: you can pick |
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Term
6 Factors Relevant to choice of organization:
3. Management |
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Definition
Centralized or decentralized
SP: Doesn't matter
GP: Decentralized
LP: with General Partners=Decentralized
Corp: Centralized
LLC: you can pick |
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Term
6 Factors Relevant to choice of organization:
4. Formalities |
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Definition
Few or many
Factor only for small business, most done't want formailities
SP: Fewest
GP: not really any, partnership agreement
LP: must register with state, detailed partnership agreement
Corp: most formalities, articles of corporation, certificate fo corporation, bylaws, annual registration, annual franchise report, annual board meeting, annual SH mtg, act through the board on major decisions
LLC: One time registration |
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Term
6 Factors Relevant to choice of organization:
5. Duration |
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Definition
Perpetual or limited
SP: Limited
GP: Ltd
LP: Ltd, if general partner withdraws you have a problem, LTD you do not
Corp: You list when you file
LLC, you choose |
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Term
6 Factors Relevant to choice of organization:
6. Transferability |
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Definition
Limted: difficult to transfer full rights as an owner
Free: easy to transfer
SP: Free
GP: Limited
LP: Limited; particularly with a general partner
Corp: Free
LLC: you can pick |
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Term
Amy wants to go into the business of construction contracting. Among the reasons that would probably convince Amy to set up her business as a sole proprietorship would be
a. its ease of formation and operation.
b. its limited liability.
c. its perpetua |
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Definition
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Term
Bayside Restaurant is operated as a partnership. For tax purposes, Bayside
a. is required to file an information return but is not a tax-paying entity.
b. is a tax-paying entity.
c. pays 1/2 of the taxes if there are two partners.
d. pays 1/4 of the t |
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Definition
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Term
Al and Betty agree while talking on the telephone to form a partnership, then start operating the business. Their partnership agreement is legally binding
a. only if it is subsequently reduced to writing.
b. only if one of them gives valid consideration |
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Definition
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Term
Derrick holds himself out as the managing partner of Wembley Group, a partnership, even though Derrick has no actual connection to Wembley. Derrick obtains a personal loan based on this misrepresentation. Derrick's default on the loan will result in
a. D |
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Definition
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Term
Doug and Erin are partners in Ace Athletic Supplies, which sells sports equipment. In general, a partner who devotes his time and energy to partnership business will
a. be entitled to compensation if he or she is an equity partner.
b. be entitled to com |
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Definition
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Term
Roberta is a junior partner in an accounting firm. As a partner, she has a right of inspection that permits her to review
a. the attire worn by the staff.
b. partnership books and records.
c. the tax returns filed by other partners.
d. any client file |
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Definition
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Term
Roberta is a junior partner in an accounting firm. As a partner, she has a right of inspection that permits her to review
a. the attire worn by the staff.
b. partnership books and records.
c. the tax returns filed by other partners.
d. any client file |
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Definition
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Term
Erica is a partner is a medical firm and applies for a loan with a bank on behalf of the partnership without the authorization of the other partners. If the bank knows that Erica is not authorized to take out loans on behalf of the partnership, then
a. t |
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Definition
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Term
| Hugh and Cray are partners in Silver Development, a partnership formed to build and sell Twin Towers, an office and retail-shopping complex. Without Hugh's knowledge, Cray engages in fraud on behalf of Silver that results in Silver's default on several ba |
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Definition
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Term
Fact Pattern 33-2
Bob, Maria, Carlos, and Linda are general partners in a medical practice. When the area surrounding their clinic is redeveloped, many of their patients move away and their revenues decline.
____ 10. Refer to Fact Pattern 33-2. Carlos's |
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Definition
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Term
11. Refer to Fact Pattern 33-4. Hans, Werner, and Erwin decide to dissolve their partnership. Creditors of the partnership must
a. be notified by a newspaper announcement or similar public notice.
b. receive actual notice.
c. receive constructive notic |
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Definition
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Term
12. Refer to Fact Pattern 33-4. Werner announces to his partners and the company's creditors that he will no longer participate in the business. The subsequent signing by Hans and Erwin of a contract with a supplier is binding on
a. Hans and Erwin.
b. t |
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Definition
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Term
Federal Home Products, Inc. (FHP), is a corporation. The implied powers of FHP are powers necessary to
a. amend the corporate charter.
b. bring a derivative suit.
c. declare dividends.
d. perform all acts reasonably appropriate and necessary to accomp |
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Definition
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Term
14. Acme, Inc., is incorporated in the state of California and is doing business in the state of Nevada. In Nevada, it is properly referred to as
a. an alien corporation.
b. a foreign corporation.
c. a close corporation.
d. a national corporation. |
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Definition
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Term
15. National Sales, Inc., would like to change its corporate status to avoid income taxes at the corporate level. To qualify, National's shareholders must not be
a. corporations.
b. estates.
c. individuals.
d. partnerships. |
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Definition
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Term
16. Jay and Kyle are accountants and members of Jay & Kyle, P.C., a professional corporation. As a member, Jay
a. is personally liable for any tort committed by Kyle.
b. may be personally liable for malpractice committed by an employee under his supervi |
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Definition
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Term
17. Doug and Ellen are individual shareholders of United Digital Corporation (UDC), an S corporation. Doug and Ellen are in a lower tax bracket than UDC, which means
a. Doug and Ellen can pay the lower rate on their UDC income.
b. Doug and Ellen must pa |
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Definition
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Term
18. Tom is a registered agent for Telecorp, Inc., which incorporated in Delaware. As a registered agent, Tom
a. agreed to buy stock in Telecorp before it existed.
b. applied to Delaware on behalf of Telecorp to obtain its corporate charter.
c. receives |
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Definition
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Term
19. Pete and Rob hold the first organizational meeting of Coastal Resorts Corporation (CRC). Probably the most important function of this meeting is
a. adopting CRC's bylaws.
b. chartering CRC.
c. drafting CRC's articles of incorporation.
d. specifyin |
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Definition
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Term
20. Gamma Corporation and Omega Corporation, like other business corporations, most likely issue securities to
a. increase their market share.
b. increase their visibility.
c. obtain financing.
d. reduce their production costs. |
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Definition
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Term
21. Great Stores Corporation issues bonds. Regarding bonds, which of the following statements is false?
a. Bonds are issued by both businesses and governments.
b. Bonds are sometimes referred to as fixed-income securities.
c. Bonds rarely have fixed ma |
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Definition
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Term
22. Max purchases 1,000 shares of common stock in Stone Tour Company. As a shareholder of record, Max will own a proportionate interest with regard to corporate
a. control.
b. earnings.
c. net assets.
d. all of the above. |
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Definition
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Term
23. Carl and Donna are preferred stockholders in U.S. Goods Corporation. Carl and Donna have the same rights as most preferred stockholders, which means, as regards U.S. Goods, they
a. have the right to an annual dividend only.
b. have the right to vote |
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Definition
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Term
24. Ron and Nancy form Eagle Equipment Corporation. Eagle has a board of directors, a chief executive officer, a chief operating officer, and fifty-two shareholders. Eagle is governed by its
a. board of directors.
b. incorporators.
c. officers.
d. sha |
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Definition
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Term
25. Mike and Dorothy incorporate their business as American Products, Inc. The first board of directors may be appointed by American's
a. board of directors.
b. incorporators.
c. officers.
d. shareholders. |
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Definition
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Term
26. Bob and Jenny act as the incorporators for National Sales, Ltd. After the first board of directors is chosen, subsequent directors are elected by a majority vote of National's
a. board of directors.
b. incorporators.
c. officers.
d. shareholders. |
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Definition
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Term
27. John and Gail are directors of Adams Corporation. With respect to Adams, the most important right of John and Gail is the right of
a. compensation.
b. indemnification.
c. inspection.
d. participation. |
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Definition
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Term
28. Andy and Flora are directors of Jackson Paper Company. Dick and Jane are Jackson officers. Rachel and Henry, as well as the directors and officers, are Jackson shareholders. Jackson stock dividends are ordered by
a. the directors.
b. the shareholder |
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Definition
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Term
29. Joe and Diana form Consumer Goods, Inc. Ultimate responsibility for policymaking decisions necessary to the management of corporate affairs rests with Consumer's
a. board of directors.
b. incorporators.
c. officers.
d. shareholders. |
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Definition
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Term
29. Joe and Diana form Consumer Goods, Inc. Ultimate responsibility for policymaking decisions necessary to the management of corporate affairs rests with Consumer's
a. board of directors.
b. incorporators.
c. officers.
d. shareholders. |
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Definition
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Term
31. George is a director of Washington Corporation. Which of the following describes George's position with regard to Washington?
a. Agent
b. Principal
c. Fiduciary
d. Trustee |
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Definition
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Term
32. Frosty Drinks Corporation distributes soft drinks in the Midwest. Frosty's board of directors can delegate some of its functions to the firm's
a. incorporators.
b. officers.
c. shareholders.
d. none of the above. |
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Definition
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Term
33. Roland is a director of HMI, Inc. Which of the following actions by Roland would constitute a breach of his duty of loyalty to the corporation?
a. On the advice of the HMI's attorney and accountant, Roland votes for the purchase of a controlling inte |
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Definition
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Term
34. Great Stores, Inc., must hold a shareholders' meeting
a. once a month.
b. once a year.
c. once every two years.
d. only when it is called by the board of directors. |
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Definition
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Term
35. Betty owns 100 shares of MegaCorp, Inc. MegaCorp makes a new issue of 10,000 shares. According to her stock certificate, Betty is entitled to buy another 100 shares at the time of the new issue. This is an example of
a. the right of first refusal.
b |
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Definition
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Term
| 36. Ethan transfers shares of stock that he owns to Luigi. A shareholder's meeting takes place before Luigi's ownership is entered in the corporate stock book, and Ethan and Luigi both want to exercise voting rights at the meeting. Who is entitled to vote |
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Definition
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Term
37. Joe is a shareholder of American Computers, Inc. Joe will be deemed to have a fiduciary duty to American Computers and to the minority shareholders if Joe has
a. a right of first refusal.
b. a sufficient number of shares to exercise de facto control |
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Definition
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Term
Fact Pattern 36-1
First State Bank merges with Community Bank. Only First State Bank remains.
____ 38. Refer to Fact Pattern 36-1. The terms of the merger agreement conflict with First State Bank's articles of incorporation. These articles of incorporat |
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Definition
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Term
39. Refer to Fact Pattern 36-1. Community Bank owed money to creditors. After the merger, First State Bank is
a. obligated to pay the debts.
b. obligated to pay the debts only if creditors follow certain statutory procedures.
c. not obligated to pay th |
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Definition
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Term
Fact Pattern 36-2
First National Bank decides to consolidate its operations with Overseas Bank to create a new firm called International Bank.
____ 40. Refer to Fact Pattern 36-2. Overseas Bank owed money to creditors. International Bank is
a. obligate |
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Term
Fact Pattern 36-3
Xantha Corporation combines its assets and debts with those of Omega Corporation and a new corporation, OXCorp, is born.
____ 41. Refer to Fact Pattern 36-3. To accomplish this combination, which of the following procedures was not nec |
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Term
42. A merger between Able Corporation and Baker, Inc., can be expressed as Able + Baker =
a. Able.
b. Charlie Company.
c. Charlie Company + Delta Corporation.
d. none of the above. |
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Definition
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Term
43. Telecom, Inc., wishes to acquire a controlling interest in Digital Company by buying Digital stock. A public offer by Telecom to Digital shareholders is
a. a buyout notice.
b. an acquisition call.
c. a tender offer.
d. none of the above. |
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Definition
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Term
Fact Pattern 36-4
Ravenous Corporation wants to gain control of Meek Company. The companies negotiate for several months, without coming to terms. Ravenous decides to pursue a takeover attempt. Meek decides to resist.
____ 44. Refer to Fact Pattern 36-4 |
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Definition
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Term
45. Doug trades in securities on a regional securities exchange. These trades are subject to regulation by
a. the National Securities Markets Improvement Commission.
b. the Securities and Exchange Commission.
c. the U.S. Department of Justice.
d. none |
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Definition
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Term
| 46. Acme Enterprises, Inc., a corporation traded on a national stock exchange, wants to offer bonds for sale to the public. All-Rite Insurance Company, a state-regulated insurance company, wants to offer annuity contracts for sale to the public. Before an |
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Definition
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Term
47. Technix Corporation wants to issue stock of $10 million in a single offering. Technix does not have to provide any investors with any material information about itself, its business, or its securities if
a. all of the investors are accredited.
b. al |
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Definition
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