Jed and Milly are shareholders of RSD Bananas, Inc. As shareholders, they:

a. owe the company a fiduciary duty

b. declare a corporate dividend.

c. hire a chief executive officer.

d. all of the above

e. none of the above

Tony is the general partner in United Amusement, a limited partnership. A united debt comes due that the partnership cannot pay. Tony is

a. not liable for the debt

b. personally liable for the debt

c. liable only up to the amount of his contribution

d. personally liable only if he breached the duty of care or loyalty.

Joe is an employee of Picadilly Pickles, LLC. Joe also an agent of Picadilly if

a. Joe acts within the scope of his employment

b. Picadilly exercises a sufficient degree of control over him

c. Joe represents to a third party that he is an agent

d. Picadilly has given authority to Joe to represent Picadilly

RSD, Inc. is incorporated in the state of California and is doing business in the state of Nevada. In Nevada, RSD is properly referred to as

a.An alien corporation

b.A foreign corporation

c.A close corporation

d.A national corporation

Bill is an employee of Ted. Ted sends Bill to pick up a shipment of goods. On the way back, Bill decides to drive somewhat out of the way to pick up some flowers for his wife. After picking up the flowers, Bill is distracted by their beautiful scent and hits and severely injures a pedestrian. Who is liable?

a.Only Bill if the flower trip was a detour

b.Only Ted if the flower trip was frolic

c.Only Bill and Ted if Bill's trip was a detour

d. Only Bill and Ted if Bill's Trip was frolic

Milly introduces Amy to her friends as "my associate." Amy purports to act as Milly's agent in several business transactions with those friends. If Milly is liable for Amy's actions, it will be under

a.The good faith rule

b.The fiduciary principle

c.Apparent authority

d.The equal dignity rule

Which is correct in relation to the RSD Banana Company, LLC?

A.There is a double tax

B.Company member are jointly and severally liable for the debts of the company

C.There is a single tax if the company qualifies under Subchapter S of the Internal Revenue Code

D.None of the above are correct

Jed and Milly want to incorporate to market banana products. The first step in the incorporation procedure is to

a.Draft and approve by-laws

b.Hold the first organizational meeting

c.Obtain a corporate charter

d.File the articles of incorporation

Which of the following is not an essential element of an agency relationship?

a.It must be created with the consent of both parties

b.The agent must be subject to the principal's control

c.The agent is a fiduciary with respect to the principal

d.All of the above are essential element of an agency relationship

Ryan and Jed decide to form an LLC to run their golf course testing business. Which of the following is not required to form an LLC?

a.Articles of organization

b.An operating agreement

c.A business name that contains "LLC" or "Limited Liability Company"

d.All of these options are correct

American Shoe Company hires Jed to be the general manager of their local store in Phoenix, Arizona. If American sues Jed for hiring local employees it did not expressly authorize, what is Jed's best defense?

a.Apparent authority

b.Agency by estoppel

c.Implied authority

d.Equal authority

RSD Trucking Company employs Jed as a delivery agent. While making a delivery within the scope of employment, Jed causes an accident in which Milly is injured. Milly can recover from

a.RSD Trucking only

b.Jed only

c.RSD Trucking or Jed

d.None of these options are correct

Donna and Ed are shareholders of Friendly Credit, Inc. As shareholders, they must approve

a.Amending the articles of incorporation

b.Voluntarily dissolving the corporation

c.Merging with another company

d.All of the above

RSD, Inc., has ten shareholders and cumulative voting. Five majority shareholders hold 40 shares of common stock each and five minority shareholders hold 20 shares of common stock each. Five directors are to be elected. Assume that the five majority shareholders unite in their voting and the five minority shareholders unite in their voting. All shareholders vote in the most efficient way possible. How many directors can each group elect?

A.Majority 3 and minority 2

B.Majority 2 and minority 3

C.Majority 1 and minority 4

The concept of "par" value relates to

a.Corporate bonds

b.The original issue of common stock

c.Common stock transactions on the open market

d.None of the above

Alpha and Beta are partners in a construction company. Alpha negligently constructs a floor in a house and Milly is injured. Milly sues Alpha and Beta and the jury finds that Alpha is negligent but Beta is not. Who is liable?

a.Alpha is liable to Milly

b.Beta is liable to Milly, even though he was not negligent

c.Both of these options are correct

Which of the following forms of business can avoid the problem of double taxation?

a.Limited partnerships (LPs)

b.Limited liability companies (LLCs)

c.S corporations

d.Two of the above

e.All of the above

Jed and Milly and RSD Corporation form a partnership to provide charitable assistance to victims of the Haiti earthquake.

a.This is not a partnership because a corporation cannot be a partner

b.This is a partnership

c.This is not a partnership because the objective of the organization is not to generate a profit

Jed is a minor. Jed can be

a.An agent only

b.A principal only

c.An agent or a principal

d.None of these options are correct

Jackson was purchasing agent for R. Smith. Jackson learns of Smith's death before entering into an agreement. However, not wanting to lose a good commission, Jackson enters into the agreement to purchase goods anyway by signing "R. Smith by Jackson, his purchasing agent." Who is liable?

a.No one is liable because R. Smith has died

b.Only Jackson is liable

c.Both R. Smith and Jackson are liable

d.R. Smith is liable

Which of the following is not considered a "security"?

a.Stock

b.Bond

c.Certificate of deposit

d.All of the above

Longfellow Deeds is a member of the Board of Directors for his uncle's corporation.

An investment opportunity is presented to the Board. Mr. Deeds reads the report of and relies on the recommendation of the executive committee of the Board and votes in favor of making the investment because he feels it is in the best interests of the corporation. Within two years, all the money invested has been lost. Mr. Deeds has

a.Breached the duty of care

b.Breached the duty of loyalty

c.Incurred personal liability for this decision

d.None of the above

Jed is acting as an agent on behalf of an undisclosed client when he enters into a contract with Milly. Jed has authority from his client to do so. Liability for nonperformance of the contract may be imposed on

a. Jed only

b. the undisclosed client only

c. Jed and the undisclosed client

d. none of these options are correct

Sam enters into an agency agreement with Jed under which Jed will do door-to-door sales. Without Sam's knowledge but while otherwise acting within the scope of agency, Jed commits a burglary. Under principles of agency law, who can be held criminally liable for Jed's actions?

a.Sam only

b.Jed only

c.Both Sam and Jed

d.None of the above

Mike and Dorothy incorporate their business as American Products, Inc. The first board of directors is usually appointed by American's

a.Board of directors a

b.Incorporators

c.Shareholders

d.Officers

Jed and Milly form RSD Bananas, Inc. Responsibility for broad policy making decisions necessary to the management of corporate affairs rests with RSD's

a.Shareholders

b.Board of directors

c.Incorporators

d.Officers

RSD Sales, LLC, is a limited liability company with Jed and Milly as company members. On a company sales trip, Milly negligently drives a company car and hits and injures Sam. Which of the following is correct?

A.Milly is liable to Sam

B.Jed is liable to Sam

C.RSD Sales, LLC, is liable to Sam

D.Two of these options are correct