Multiple Choice Questions
1. A sole proprietorship:
(a) Must file a tax return
(b) Requires no formal steps for its creation
(c) Must register with the secretary of state
(d) May sell stock
(e) Provides limited liability to the owner
2. Assuming all other requirements are met, a corporation may elect to be treated as an S corporation under the Internal Revenue Code if it has:
(a) Both common and preferred stockholders
(b) A partnership as a stockholder
(c) 100 or fewer stockholders
(d) The consent of a majority of the stockholders
3. A limited liability company:
(a) Is regulated by a well-established body of law
(b) Pays taxes on its income
(c) Cannot have members that are corporations
(d) Must register with state authorities
(e) Protects the owners from personal liability for their own misdeeds
4. While working part time at a Supercorp restaurant, Jenna spills a bucket of hot french fries on a customer. Who is liable to the customer?
(a) Supercorp alone
(b) Jenna alone
(c) Both Jenna and Supercorp
(d) Jenna, Supercorp, and the president of Supercorp
(e) Jenna, Supercorp, and the shareholders of Supercorp
5. A limited liability partnership:
(a) Protects partners from liability for their own misdeeds
(b) Protects the partners from liability for the debts of the partnership
(c) Must pay taxes on its income
(d) Both (a) and (b)
(e) (a), (b), and (c) are all correct