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Q:
Greta is a member of Hovercraft LLC. As a member, Greta is
A.a manager or officer, but not an owner.
B.an investor, but not a manager, officer, or owner.
C.an owner.
D.a participant, but not an investor, manager, officer, or owner.
Q:
Esteban and Florian want to form a limited liability company (LLC) to manage their business, Gordian Nuts. LLC statutes have been adopted in
A.every state.
B.no state.
C.less than one-fifth of the states.
D.only Wyoming.
Q:
Kelly, Lars, and Mona agree to be partners in Neighborhood Delivery Service (NDS), splitting the profits equally. Kelly contributes 67 percent of the capital. When NDS is dissolved, its liabilities are greater than its assets. The losses are paid by
A.all of the partners in proportion to their capital contributions.
B.all of the partners in proportion to their shares of the profits.
C.Kelly because she contributed most of the capital.
D.Lars and Mona because they contributed the least of the capital.
Q:
Hud and Iggy form Jerry-Bilt Construction to enter into a contract to build one bridge. Under their partnership agreement, Jerry-Bilt is to dissolve when the bridge is built. Iggy signs a contract for the firm to build a second bridge. Jerry-Bilt
A.dissolves as soon as the first bridge is built.
B.dissolves as soon as the second bridge is built.
C.dissolves immediately on Iggy's signing of the second contract.
D.does not dissolve.
Q:
Clu, Dolf, and Elton do business as Fertile Valley Farm. Clu's relationship to the firm ends, but it continues to do business. This is
A.dissociation.
B.dissolution.
C.winding up.
D.wrongful.
Q:
Fact Pattern 23-2
Luann and Mace are partners in Networx, a computer peripherals firm.
Refer to Fact Pattern 23-2. Mace dissociates from Networx. Luann signs a contract with Physik Drives, a wholesale component supplier, apparently on Networx's behalf. Physik does not know of Mace's dissociation. The contract is binding on
A.Luann, Mace, and Networx.
B.Luann only.
C.Networx only.
D.Physik only.
Q:
Fact Pattern 23-2
Luann and Mace are partners in Networx, a computer peripherals firm.
Refer to Fact Pattern 23-2. Luann signs a contract with Oleo Chips, a retail component supplier, apparently on Networx's behalf. The contract is binding on
A.Luann, Mace, and Networx.
B.Luann only.
C.Networx only.
D.Oleo only.
Q:
Corbin, a partner in Doctors Medical Clinic, applies for a loan with Evermore Bank allegedly on Doctors' behalf but without the authorization of the other partners. Evermore knows that Corbin is not authorized to take out the loan. Corbin defaults on the loan. Liability for its unpaid amount is imposed on
A.Corbin and Doctors, jointly.
B.Corbin only.
C.Doctors only.
D.Evermore only.
Q:
Megan and Nicole do business as One World Realty. In acting on the firm's behalf in a deal with Property Acquisition Company, Megan fails to account for the profit. To her firm, Megan is
A.liable for breach of the duty of common sense.
B.liable for breach of the duty of economic sense.
C.liable for breach of the duty of loyalty.
D.not liable.
Q:
Rona and Savannah do business as Treasure Island Traders. Acting in good faith on the firm's behalf in a deal with Unlimited Potential, Inc., Rona makes an honest error in overestimating the profit. To her firm, Rona is
A.liable for breach of the duty of care.
B.liable for breach of the duty of economic sense.
C.liable for breach of the duty of loyalty.
D.not liable.
Q:
Denise and Elke do business as Final Curtain Decorators. In most states, for purposes of holding title to property, this partnership would be treated as
A.an aggregate of the individual partners.
B.a natural person.
C.an entity.
D.a non-existent party.
Q:
Sable and Rex agree while talking on the phone to form a partnership to deal in transfers of real property, which fall under the Statute of Frauds. Their partnership agreement is legally binding
A.only if a copy of the agreement is filed in the appropriate state office.
B.only if the agreement is reduced to writing.
C.only if an information return is filed with the Internal Revenue Service.
D.without more.
Q:
Noah and Orin do business as Pest Control Partners. In most states, for the purposes of suing and being sued, Pest Control Partners would be treated as
A.an aggregate of the individual partners.
B.a natural person.
C.an entity.
D.a non-existent party.
Q:
Fact Pattern 23-1
Desi starts up eSites, an Internet service, and leases office space in a building owned by Fred. The lease requires Desi to pay Fred a base rental of $1,250, plus 10 percent of eSites' profits, each month. The term is two years. Desi hires Gwen to work at eSites' tech support desk at an hourly wage of $12.50, plus a commission of 10 percent of the profits. The term is also two years.
Refer to Fact Pattern 23-1. Desi and Gwen are
A.not partners, because Gwen does not have an ownership interest or management rights in eSites.
B.not partners, because the pay includes an hourly wage.
C.not partners, because the pay includes only 10 percent of the profits.
D.partners in a partnership for two years.
Q:
Fact Pattern 23-1
Desi starts up eSites, an Internet service, and leases office space in a building owned by Fred. The lease requires Desi to pay Fred a base rental of $1,250, plus 10 percent of eSites' profits, each month. The term is two years. Desi hires Gwen to work at eSites' tech support desk at an hourly wage of $12.50, plus a commission of 10 percent of the profits. The term is also two years.
Refer to Fact Pattern 23-1. Desi and Fred are
A.not partners, because Fred does not have an ownership interest or management rights in eSites.
B.not partners, because the lease includes a "base rental."
C.not partners, because the rent includes only 10 percent of the profits.
D.partners in a partnership for two years.
Q:
Ben, who runs a livestock breeding business, owes the Circle C Ranch $40,000. Ben agrees to pay the Circle C a percentage of his profits each month until the debt is paid. Because of this agreement, the Circle C is
A.Ben's creditor and partner.
B.Ben's creditor only.
C.Ben's partner only.
D.neither Ben's creditor nor his partner.
Q:
Guy and Hanna do business as G-H Associates. If G-H is a partnership, it is governed by the Uniform Partnership Act
A.in the absence of an express agreement.
B.in the absence of an implied agreement.
C.only in the presence of an express agreement.
D.under all circumstances.
Q:
Jody owns KuppaJoe Kiosks, a sole proprietorship. Jody's liability is
A.limited by state statute and varies from state to state.
B.limited to the extent of her capital expenditures.
C.limited to the extent of her original investment.
D.unlimited.
Q:
Kelly, the owner of Llama Farms, a sole proprietorship, wants to obtain additional business capital but to maintain control. This can best be accomplished by
A.borrowing funds.
B.bringing in partners.
C.issuing stock.
D.selling the business.
Q:
Bernie wants to go into the business of trucking refrigeration units. Among the reasons that would probably convince Bernie to set up his business as a sole proprietorship would be
A.its greater flexibility.
B.its limited liability.
C.its perpetual existence.
D.the ease of transferring the business to others.
Q:
Carl sells Direct Marketing Enterprises, a sole proprietorship, to Eve. This is a transfer of
A.a license.
B.a trade name.
C.the formula to make a product.
D.the ownership of the business.
Q:
Jim organized, and owns and operates, Jim's Landscaping Service in the simplest form of business organization. This is
A.none of the choices.
B.a limited liability company.
C.a partnership.
D.a sole proprietorship.
Q:
As with partnerships, a court can order a limited liability company to dissolve in certain circumstances.
Q:
Most limited liability company statutes have no provisions regarding members' meetings.
Q:
Normally, a dissociated member of a limited liability company (LLC) has the right to have his or her interest in the LLC bought by the other members.
Q:
When a member dissociates from a limited liability company, the member's duty of loyalty continues.
Q:
Some states provide that in the absence of an agreement to the contrary each member of a limited liability company has one vote.
Q:
A limited liability company must be managed by non-member managers.
Q:
In many states, an operating agreement is not required for a limited liability company to exist.
Q:
The liability of the members of a limited liability company is limited to the amount of their investments.
Q:
For federal income tax purposes, one-member limited liability companies are automatically taxed as sole proprietorships.
Q:
A limited liability company can be taxed as a partnership.
Q:
A limited liability company is not a citizen of any state.
Q:
Limited liability companies (LLCs) are governed by state LLC statutes.
Q:
In a limited partnership, a limited partner is personally liable to the partnership's creditors.
Q:
Any partnership can be dissolved by the partners' agreement.
Q:
A limited liability partnership allows its partners to avoid personal liability for the malpractice of other partners.
Q:
On a partner's dissociation, his or her duty of loyalty to the partnership ends.
Q:
A partner always has the power and the right to dissociate from the partnership.
Q:
In a general partnership, the partners are personally liable for the debts of the partnership.
Q:
A partner who pursues his or her own interests automatically violates the partner's fiduciary duties to the partnership.
Q:
A partner owes to the partnership and the other partners a duty of loyalty.
Q:
Each partner is an agent of the partnership in carrying out the usual business of the firm.
Q:
In a general partnership, all partners have equal rights in managing the partnership.
Q:
Under no circumstances can a non-partner be regarded as an agent whose acts are binding on the partnership.
Q:
Withdrawal from a partnership for a term prematurely does not constitute a breach of the partnership agreement.
Q:
A partner's profit from a partnership is taxed as income to the firm.
Q:
Federal law permits a partnership to be treated as an entity in suits in federal courts.
Q:
Joint ownership of property in and of itself creates a partnership.
Q:
An association cannot be a partnership without an express agreement.
Q:
A sharing of profits from the ownership of property creates a presumption that a partnership exists.
Q:
The Uniform Partnership Act governs the operation of partnerships.
Q:
In raising capital, a sole proprietor is limited to his or her personal funds-a personal loan is not possible.
Q:
A sole proprietor has unlimited liability for all obligations that arise in doing business.
Q:
A sole proprietorship lacks continuity on the death of the proprietor.
Q:
A sole proprietor owns the entire business but does not receive all of the profit.
Q:
The simplest form of business is a sole proprietorship.
Q:
An employer can be liable for an employee's sexual harassment of a member of the same gender.
Q:
It is not unlawful for an employer to retaliate against an employee who has opposed a discriminatory employment practice.
Q:
An employer is not liable for the sexual harassment of an employee by the employee's supervisor.
Q:
A small difference in job content can justify higher pay for one gender.
Q:
Under the Equal Pay Act of 1963, all of the women on an employer's staff must be paid the same as all of the men.
Q:
Gender can be a determining factor in an employer's decision to hire, fire, or promote an employee.
Q:
Disparate-impact discrimination occurs when an employer intentionally discriminates against an employee who is a member of a protected class.
Q:
All employers in the United States are subject to federal employment discrimination laws.
Q:
An employer with fewer than fifteen employees is automatically shielded from federal employment discrimination laws.
Q:
The Civil Rights Act of 1964 does not prohibit job discrimination at all stages of employment.
Q:
Only state law governs drug tests of private-sector employees.
Q:
Most employees can continue the group health benefits provided by their employers for a limited period of time after the loss of employment.
Q:
An employee can continue the health benefits provided by his or her employer for a period of time only on an involuntary loss of employment.
Q:
Employers who provide pension plans for retired workers must comply with certain standards in managing the plans.
Q:
Once an employee receives workers' compensation, he or she can maintain a suit against the employer for negligence.
Q:
To recover workers' compensation, an employee must prove that an injury was the fault of the employer.
Q:
Employer who willfully violates safety regulations can be prosecuted under state laws.
Q:
Certain employers must provide their employees with up to twelve weeks of family or medical leave during any twelve-month period.
Q:
All employees are entitled to overtime pay.
Q:
Whistleblower statutes protect employers who retaliate against their employees for "blowing the whistle."
Q:
Firing a worker who refuses to perform an illegal act violates public policy.
Q:
An oral promise that an employer makes to employees regarding discharge policy may be considered part of an implied contract.
Q:
There are no exceptions to the employment-at-will doctrine.