Question 1(1 point)

Listen

ReadSpeaker webReader: Listen

Focus

Which statement best describes the relationship between directors and officers in a corporation?

Question 1 options:

1)

Directors and officers are elected by the shareholders.

2)

Directors are appointed by officers.

3)

Officers are appointed by directors.

4)

Directors and officers are employees.

Question 2(1 point)

Listen

ReadSpeaker webReader: Listen

You and your friend want to form a management consulting business. You all want to be involved in the business.What is the best structure for this business?

Question 2 options:

1)

sole proprietorship

2)

limited partnership

3)

limited liability partnership

4)

corporation

Question 3(1 point)

Listen

ReadSpeaker webReader: Listen

You and your friends want to start up an accounting business.You all want to be involved in the business.What is the best structure for this business?

Question 3 options:

1)

general partnership

2)

limited partnership

3)

limited liability partnership

4)

corporation

Question 4(1 point)

Listen

ReadSpeaker webReader: Listen

Aaron owns a food truck that he takes to various festivals each summer. He has not filed any documents at the registry and is the only owner of the business. In law, how is Aaron's business characterized?

Question 4 options:

1)

limited partnership

2)

sole proprietorship

3)

general partnership

4)

joint venture

Question 5(1 point)

Listen

ReadSpeaker webReader: Listen

Which statement best describes how a partnership comes into existence?

Question 5 options:

1)

The partners must sign a written partnership agreement.

2)

The partners must register the partnership.

3)

Two or more people carry on business together with a view to profit.

4)

Two or more people purchase property together.

Question 6(1 point)

Listen

ReadSpeaker webReader: Listen

Why are limited liability partnerships advantageous to professional partnerships?

Question 6 options:

1)

Partners are immune from liability arising from the professional negligence of their partners.

2)

A partner's liability is limited to his or her capital contribution.

3)

They are easier to form than general partnerships.

4)

They ensure equal sharing of profits among the partners.

Question 7(1 point)

Listen

ReadSpeaker webReader: Listen

What is the legal outcome when one partner exceeds his or her authority and borrows money on behalf of a partnership without the consent of the fellow partners?

Question 7 options:

1)

The other partners will be liable to the third party because partners are mutual agents.

2)

Non-consenting partners can avoid liability by proving the partner breached the partnership agreement.

3)

The third party can collect the debt, but only from the partner who authorized the debt.

4)

The third party can collect from the partnership assets but not from the personal assets of the non-consenting partners.

Question 8(1 point)

Listen

ReadSpeaker webReader: Listen

Nancie is a shareholder in BlueSky Investments Inc. With respect to BlueSky's obligations, which of the following most likely reflects Nancie's liability?

Question 8 options:

1)

Nancie's liability is dependent on how the obligations were incurred.

2)

Nancie is liable for these obligations unless she has given her personal guarantee.

3)

Nancie's limited liability shield may be negated by her giving a personal guarantee.

4)

As a shareholder, all of Nancie's personal assets will be at risk.

Question 9(1 point)

Listen

ReadSpeaker webReader: Listen

Which statement best describes the profit-sharing feature of corporations?

Question 9 options:

1)

Shareholders are paid a pre-determined rate of return.

2)

Shareholders are automatically entitled to a dividend if the business is profitable.

3)

The decision of whether to declare dividends is controlled by the shareholders.

4)

Shareholders are only entitled to dividends if they are declared by the directors.

Question 10(1 point)

Listen

ReadSpeaker webReader: Listen

Rose, Lily, and Fawn were shareholders in Style Co., an incorporated company with limited liability. Each bought one-third of the shares in Style Co. for an aggregate payment of $15 000 each. The corporation borrowed $90 000 from the bank to finance its operations. The bank required personal guarantees from all shareholders for the full amount of the loan. Style Co. became insolvent, and the bank ultimately sued each of the shareholders to recover the $90 000. What amount is the maximum amount that could be recovered from any one of them?

Question 10 options:

1)

$0

2)

$15 000

3)

$30 000

4)

$90 000

Question 11(1 point)

Listen

ReadSpeaker webReader: Listen

Rose, Lily, and Fawn were shareholders in Style Co., an incorporated company with limited liability. Each bought one-third of the shares in Style Co. for an aggregate payment of $15 000 each. The corporation borrowed $90 000 from the bank to finance its operations. No personal guarantees were given to the bank. Style Co. became insolvent, and the bank ultimately sued each of the shareholders to recover the $90 000. What amount is the maximum amount that could be recovered from any one of them?

Question 11 options:

1)

$0

2)

$15 000

3)

$30 000

4)

$90 000

Question 12(1 point)

Saved

Listen

ReadSpeaker webReader: Listen

What is the most compelling reason for the creation of a corporate business entity?

Question 12 options:

1)

to extend director's liability in the event of bankruptcy

2)

to limit owners' liability in the event of bankruptcy

3)

to share joint liability in the event of bankruptcy

4)

to proportion liability in the event of bankruptcy