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Business Law
Q:
According to the Statute of Frauds, a general partnership that exists for more than ________ must have a written partnership agreement.
A) three months
B) six months
C) nine months
D) one year
Q:
Global Distribution Corporation suggests that its employees apply the "categorical imperative" to ethical issues that arise at work. This reÂquires that the employees
a. categorize the issues according to legality, morality, and profitability.
b. consider only the benefits that would accrue to them personally.
c. look only at the result, regardless of the means to attain it.
d. weigh the consequences that would follow if everyone acted the same.
Q:
Which of the following must be in writing under the Statute of Frauds?
A) a business that has more than one commercial venture
B) a partnership that is authorized to deal in real estate
C) a business that is authorized to lend money
D) an enterprise that deals in health and medicine
Q:
Which of the following is true in the creation of a general partnership?
A) The business name must include the names of all partners.
B) The business name cannot be a fictitious name.
C) The name selected by the partnership cannot indicate that it is a corporation.
D) The business cannot operate under a trade name.
Q:
Whirlwind Financial Corporation sends its executives to a resort in Mexicoat taxpayers' expenseto consider using the firm's cash to buy back its stock and thereby prop up the value. Many of its competitors are doing the same thing. One of the best ways to learn about the ethical responsibilities inherent in operating a business is to look at
a. the mistakes made by other companies.
b. the benefits of pursuing profit despite the appearance of impropriety.
c. the prevalence of a practice among other corporations.
d. who is footing the bill for a particular action.
Q:
Ergonomic Corporation convenes its employees for its managers to announce (1) a new company-wide ethical code of conduct, (2) an ad campaign to publicize the new code, and (3) the discharge of employees who do not adhere to the code. One of the most effective ways to set a tone of ethical behavior within a business organization is
a. to create an ethical code of conduct.
b. to discharge employees who do not create the appearance of impropriety.
c. to post a marketing campaign online touting the firm's ethical tone.
d. for management to direct employees to "do as we say, not as we do."
Q:
Where a partnership agreement provides for the sharing of profits but is silent as to how losses are to be shared, ________.
A) losses are shared in the same proportion as profits
B) losses are shared in greater proportion than profits
C) profits are shared in greater proportion than losses
D) losses are absorbed by the partnership entity rather than borne by the individual partners
Q:
Straitway Company encourages its managers to behave ethically, reasoning that the employees will take their cues from management. One of the most important ways to create and maintain an ethical behavior workplace is for management to
a. demonstrate a commitment to ethical decision making.
b. discreetly engage in unethical or illegal acts.
c. look the other way when an employee engages in an unethical act.
d. direct employees to "do as we say, not as we do."
Q:
Which of the following is true of a general partnership?
A) A business must generate a profit in order to qualify as a general partnership.
B) The general partners need not be the co-owners of the business.
C) A general partnership may be formed with little or no formality.
D) Charity organizations and schools are usually formed as general partnerships.
Q:
Flexo Trucking Company transports hazardÂous waste. Garn is a Flexo driver, whom the company knows drives longer hours than federal regulations permit. One night, Garn exceeds the limit and has an accident. Spilled chemicals contaminate Hill City's water source, forcing the residents to move away. Flexo acted unethically because
a. Flexo showed reckless disregard for Hill City's residents and others.
b. Garn exceeded the federal time limit.
c. harm was caused by an unfortunate accident.
d. Hill City should have better protected its water source.
Q:
An organization or venture must have a ________ motive in order to qualify as a partnership.
A) large-scale expansion
B) noncommercial
C) profit
D) target market
Q:
An association of two or more persons to carry on as co-owners of a business for profit is known as a ________.
A) limited partnership
B) sole proprietorship
C) corporation
D) general partnership
Q:
Housemate, Inc., makes and sells a variety of household products. With a fair amount of certainty, Housemate's decision makers can predict whether a given business action would be legal in
a. all situations.
b. many situations.
c. no situations.
d. practically no situations.
Q:
Peak & Vale Accountants provides other firms with accounting services. Questions of what is ethical involve the extent to which Peak & Vale has
a. a legal duty beyond those duties mandated by ethics.
b. an ethical duty beyond those duties mandated by law.
c. any duty beyond those mandated by both ethics and the law.
d. any duty when it is uncertain whether a legal duty exists.
Q:
List the advantages and disadvantages of a sole proprietorship.
Q:
Eden, the chief executive officer of Flo-Thru Piping Corporation, wants to enÂsure that Flo-Thru's activities are legal and ethical. The best course for Eden and Flo-Thru is to act in
a. good faith.
b. ignorance of the law.
c. regard for the firm's shareholders only.
d. their own self interest.
Q:
The sole proprietor has ________ liability.
Q:
Sharon, the human resources director for Tempo Corporation, atÂtempts to comply with the law in dealing with applicants and employÂees. One of the challenges Sharon faces is that the legality of an action is
a. always clear.
b. never clear.
c. sometimes clear.
d. usually clear.
Q:
A(n) ________ is a document that is filed with the state that designates a trade name of a business.
Q:
Bess runs Creditors Asset Recovery. She recruits clients by misrepresenting the facts and pretending to be licensed in various occupations in Michigan. Bess's conduct most likely warrants
a. an ethical admonishment but no other sanctions.
b. an injunction plus other sanctions.
c. no sanctions but no praise.
d. praise for her aggression in recovering the assets of "deadbeat" debtors.
Q:
The designation for a business that is operating under a trade name is ________.
Q:
A sole proprietorship does not pay taxes at the business level.
Q:
Mariah works in the public relations department of New Trends Sales Company. Her job includes portraying New Trends's activities in their best light. In this context, ethics consist of
a. a different set of principles from those that apply to other activities.
b. the same moral principles that apply to non-business activities.
c. those principles that produce the most favorable financial outcome.
d. whatever saves New Trends's "face."
Q:
A sole proprietor has limited personal liability.
Q:
Lia works for Media Marketing Company. Her job includes putting "spin" on the firm's successes and failures. In this context, ethics consist of
a. "bad" versus "good" publicity.
b. questions of rightness and wrongness.
c. the firm's quarterly revenue.
d. whatever is legal.
Q:
A sole proprietorship can operate under the name of the sole proprietor or a trade name.
Q:
Bribery of foreign government officials is both an ethical and a legal issue.
Q:
If no other form of business organization is chosen while obtaining a license, the business is by default a sole proprietorship.
Q:
One guideline to evaluating the ethics of a particular action is to "let your conscience be your guide."
Q:
No federal or state government approval is required for creating a sole proprietorship.
Q:
A business organization and its actions cannot be based on trust.
Q:
Businesspersons who would choose to act unethically may be deterred from doing so because of public opinion.
Q:
In a sole proprietorship, the business is considered a separate legal entity.
Q:
To be ethical is to "do the right thing" but it does not otherwise "pay."
Q:
A sole proprietor is legally responsible for the business's contracts.
Q:
Corporations can be good citizens by promoting goals that society deems worthwhile.
Q:
A sole proprietorship cannot be easily transferred when the owner desires to do so.
Q:
A business firm's profits may suffer if the firm is not a "good corporate citizen."
Q:
The earnings and losses from a sole proprietorship are reported on ________.
A) the federal income tax filing document for sole proprietorships
B) the sole proprietorship business license that is renewed each year
C) the sole proprietor's personal income tax filing
D) the state income tax filing document for sole proprietorships
Q:
Why does a sole proprietorship not pay taxes at the business level?
A) It does not have a separate legal existence.
B) It is a small business that is exempted from taxation.
C) It is a non-profit organization.
D) It is generally an institution with no business dealings.
Q:
It may be unethical for a company with a product that is outlawed in one country to look elsewhere for a market.
Q:
If an action is ethical from an outcome-based perspective, then it cannot be ethical from a duty-based perspective.
Q:
Orlando opened a hot dog stand in Brooklyn, doing business as Orlando's Red Hots. Unfortunately, the venture has not generated a profit. Orlando borrowed $5,000 from the bank to open his business, and the short-term loan is now due. Orlando's friend Bob has suggested partnering with him at the beginning of next year. From which of the following sources can the bank currently recover its $5,000?
A) Orlando's secondary lender
B) Orlando's savings account
C) Orlando's family
D) Bob, Orlando's prospective business partner
Q:
According to utilitarianism, it does not matter how many people suffer a negative effect from an act.
Q:
Jonathan Lopez wants to be his own boss and ventures into retailing fruit in the neighborhood after borrowing some money from his mother. While obtaining a license to carry out business in his city, Jonathan mentions the money he borrowed but forgets to specify what type of business undertaking his store will be. Under which of the following major forms of business is Jonathan's store listed by default?
A) a general partnership
B) a sole proprietorship
C) a limited partnership
D) a limited liability corporation
Q:
Which of the following is true of creating a sole proprietorship?
A) No state government approval is required.
B) A sole proprietorship is subject to double-taxation.
C) No licenses are required to do business within a city or state.
D) Special permission must be obtained to receive sole proprietorship status.
Q:
Under the principle of rights theory, one person's principles are as "right" as another's.
Q:
Ethical standards based on religious teachings tend to be absolute.
Q:
Which of the following is true of a business operating under sole proprietorship?
A) It is not considered a separate legal entity.
B) It cannot be sold when the owner decides to do so.
C) It requires governmental approval when being transferred.
D) It has access to unrestricted capital by means of investments.
Q:
According to utilitarianism, an action that affects the majority adversely is morally wrong.
Q:
Which of the following is true of a sole proprietorship?
A) A business operated under sole proprietorship cannot be transferred.
B) Large businesses cannot be operated under sole proprietorship.
C) A business operated under sole proprietorship must be owned by one or more people of the same family.
D) Creditors can recover claims against the business from the sole proprietor's personal assets.
Q:
________ are the most common form of business organization in the United States.
A) General partnerships
B) Sole proprietorships
C) Limited liability companies
D) Limited partnerships
Q:
In ethical terms, a cost-benefit analysis is an assessment of the negative and positive effects of alternative actions on individuals.
Q:
An entrepreneuris a person who forms and operates a business.
Q:
Ethical reasoning is the process through which an individual rationalizes whatever action he or she chooses to take.
Q:
Which of the following is a major form of conducting business?
A) an institution
B) a charity
C) a corporation
D) a trust
Q:
Stock buybacks are illegal and serve no legitimate purposes.
Q:
Which of the following best describes an entrepreneur?
A) a person who forms and operates a business
B) a person who invests in an existing business
C) a person who lends capital to a new business
D) a person who derives a profit from a new or an existing business
Q:
Restricting the bonuses that are paid to executives is unethical.
Q:
Explain the liabilities of general and limited partners in a limited partnership.
Q:
Some companies have set up confidential systems for employees to "raise red flags" about suspected unethical practices.
Q:
According to the RULPA, which of the following categories is entitled to priority in the order of distribution of assets of a limited partnership during the winding-up phase?
A) partners with respect to unpaid distributions
B) partners with respect to capital contributions
C) creditors of the limited partnership
D) charitable organizations registered with the secretary of state in the state where the limited partnership was formed
Q:
Corporate ethical policies must be clearly communicated to be effective.
Q:
An ethics program can clarify what a company considers to be unacceptable conduct.
Q:
On the dissolution and the commencement of the winding up of a limited partnership, a(n) ________ must be filed by the limited partnership with the secretary of state of the state in which the limited partnership is organized.
A) termination statement
B) renunciation statement
C) certificate of cancellation
D) annulment
Q:
Managers must apply different standards to themselves than they apply to their employees.
Q:
________ establishes rules for the dissolution of a limited partnership.
A) The RULPA
B) The UPA
C) The UCC
D) Federal statutory law
Q:
Which of the following is an accurate statement regarding dissolution of a partnership?
A) A general partnership may be dissolved, while a limited partnership may not.
B) Just like a general partnership, a limited partnership may be dissolved and its affairs wound up.
C) Dissolution of a general partnership is governed by federal law, while dissolution of a limited partnership is governed by state law.
D) Dissolution of a limited partnership is governed by federal law, while dissolution of a general partnership is governed by state law.
Q:
Laura is an investor and a limited partner in a limited partnership. Two years after she becomes a limited partner, Laura believes that the general partners are not doing a very good job of managing the affairs of the limited partnership, and she accordingly participates in its management. While she was managing the business, a bank loans $1 million to the limited partnership, believing that Laura is a general partner. If the limited partnership defaults on the $1 million loan, which of the following will be true?
A) Laura will not be held personally liable, as she is technically a limited partner.
B) Laura will be treated as a general partner and will be held personally liable for the loan.
C) Laura will be held liable for her proportionate share of the $1 million, depending on the total number of general and limited partners in the limited partnership.
D) Laura's liability will be restricted to the value of her capital investment in the limited partnership.
Q:
Setting realistic workplace goals can reduce the probability that employÂees will act unethically.
Q:
Ethical codes of conduct can set the ethiÂcal tone of a firm.
Q:
Under partnership law, ________ have the right to manage the affairs of the limited partnership.
A) investors
B) sole proprietors
C) limited partners
D) general partners
Q:
Corporations can be perceived as owing ethical duties to groups other than their shareholders.
Q:
According to the Revised Uniform Limited Partnership Act (RULPA), what liability does a corporation have if it is a general partner in a limited partnership?
A) unlimited personal liability
B) liability restricted to the extent of its capital contribution
C) liability of termination as partner
D) unlimited organizational capital liability
Q:
Acting in good faith gives a business firm a better chance of defending its actions in court.
Q:
Which of the following types of liability does a limited partner of a limited partnership have for the debts and obligations of the limited partnerships?
A) unlimited personal liability
B) liability restricted to the extent of his or her capital contribution
C) liability of termination as partner
D) unlimited organizational capital liability
Q:
Business ethics applies only to the owners, operators, and employees of corporations.
Q:
Which of the following types of liability does a general partner of a limited partnership have for the debts and obligations of the limited partnership?
A) unlimited personal liability
B) limited capital liability
C) liability of termination as partner
D) limited personal liability
Q:
Business ethics is consistent only with short-run profit maximization.
Q:
Explain the events that cause the dissolution of a limited partnership under the RULPA.