Business created under a state statute in which some partners have limited liability
Limited Partnership
Business providing limited liability and pass-through tax status for its members
Limited Liability Company
Legal entity existing under the authority of the state legislature
Business Corporation
Corporation formed by professionals, such as doctors, lawyers, accountants, and engineers
Professional Corporation
Corporation that passes through all income to its shareholders, who pay tax on income received
S Corporation
Small corporation whose shareholders are active in managing the business and that operates informally
Close Corporation
One who acts for or represents another
Agent
The person for whom an agent acts
Principle
Duties owed by an agent
Performance, Notification, Loyalty, Accounting of Profits
Duties owed by principle
Compensation, Reimbursement and Indemnification, Cooperation
A business owned and operated by one person and is limited by the life of it's owner
Sole Proprietorship
Liability extended beyond what is invested in a business to an individual's personal assets
Personal Liability
Money used to form and operate a business or other venture
Capital
a name that must be registered with state or local officials because it does not disclose the surname of the business owner.
Fictitious name
a voluntary association of two or more persons who agree to carry on business together for profit.
General Partnership.
Model for partnership legislation in about three fourths of the states.
RUPA
Business entity created in accord with state statutes that provides limited liability to some of its members
Limited Partnerships
A member of a limited partnership who does not participate in managing the business and whose liability is limited to amount invested in the business.
Limited Partner
Member in a limited partnership who manages and controls the business and has unlimited personal liability
General Partner
Investment vehicle entered into by family members to achieve estate and tax planning benefits.
Family Limited Partnership.
Entity providing full protection for its members from all personal liability, whether arising in tort or contract; must comply with statutes.
Limited Liability Companies
A partnership formed to carry out a single enterprise rather than an ongoing business
Joint Venture
What are the advantages of a corporation
Limited liability, Corporate deductions, Continuity of existence, Transferability of share ownership.
One involved in forming a corporation and organizing its structure.
Promoter
The combination of equity and debt securities.
Capital structure
a share, participation, or other interest in property or an enterprise of the issuer or an obligation of the issuer
Security
A security representing ownership interest in an enterprise
Equity Security
Capital received by a corporation in return for issuance of stock
Equity Capital
a security representing an obligation of the corporate issuer (often called a bond or a loan) and require a regular payment (including interest with the intent to pay off the loan)
Debt Security
Money received by a corporation in return for issuing debt
securities
Debt Capital
One to whom a debt is owed by a corporation (a secured creditor)
Bondholder
An unsecured corporate obligation
Debenture
Trading on equity (when the total investment yields a higher rate of return than the cost of borrowing money)
Leverage
A distribution of corporate profits
Dividend
Ordinary stock of a corporation having no special privileges.
Common stock/shares
Stock in a corporation that carries certain rights and privileges, generally non-voting shares.
Preferred Stock
Shares of a given class that may be converted into shares of another class on some predetermined ration in the Articles of Incorporation
Convertable Shares
The dollar amount stated as the value of each share
Par Value
The number of authorized shares held by shareholders
Outstanding shares
Stock issued for less tan the full value set by the board
Watered Stock
Payments to shareholders that are not a sharing of profits
Distribution
Distribution of a corporation's profits to shareholders.
Dividend
A division of outstanding shares
Stock-Split
State Laws regulating issuance of securities within a state
Blue Sky Laws
Corporation doing business in the state in which it was formed
Domestic Corporation
Corporation doing business in a state other than the state in which it was formed
Foreign Corporation
Termination of the legal status of an entity
Dissolution
Process of collection assets, paying debts, and distributing remains to business owners
Liquidation
Corporation whose shares are held by a small group that is active in managing the corporation
Close Corporation
Corporation formed for a purpose other than to earn profit
Non-profit Corporation
A corporation that forms another
Parent
A corporation formed by another
Subsidiary
The incorporation of the practice of a professional, including a doctor or lawyer.
Professional Corporation
T/F - Agency relationships can only be created by written agreement
False
T/F - A principle may later ratify an agent's acts even if the act is unauthorized by the agency relationship.
True
T/F - If parties have not specified a termination date for an agency relationship, the agency relationship will expire after a reasonable amount of time.
True
T/F - Sole proprietorship's have many regulatory formalities for their creation
False
T/F - Shareholders of a corporation retain all business profits and suffer all business losses by themselves.
False
T/F - All sole proprietorship's must file fictitious business name statements.
False
T/F - General partnerships can be formed only by written agreement.
False
T/F - You can create partnership for a non-profit business.
False
T/F - Partners may assign their rights to profits from a general partnership and assign their management roles.
False
T/F - Partners do not ordinarily receive compensation for performing services for their general partnerships; they generally share in profits arising from the general partnership.
True
T/F - In general, a partnership agreement may provide for nearly any scheme of division of profits and losses that partners in a general partnership desire.
True
T/F - General partnerships do not file federal income tax returns because the entities do not pay federal taxes.
False
T/F - Members of a partnership may form a contract among themselves regarding the operations of the partnership
True
T/F - A general partner in a limited partnership has the same status, duties, and rights as a general partner in a general partnership.
True
T/F - Generally, limited partners can freely transfer their interests to others without causing a dissolution of the limited partnership.
True
T/F - To form a limited partnership, a limited partnership certificate must be filed with the Secretary of State for a particular jurisdiction.
True
T/F - Under the RULPA, a limited partnership agreement may be written or oral.
True
T/F - Partnerships are generally taxed the same (pass-through of taxes).
True
Limited partnership are creations of
Statute
T/F - LLPs may be formed only for the practice of professions, such as medicine or law.
False
T/F - LLPs are recognized only in 48 states
False
T/F - An LLP formed in one state can operate as an LLP in another.
True
T/F - An LLP agreement may be oral or in writing.
True
T/F - The taxation of an LLP is the same as that for a general partnership.
True
T/F - Members of an LLC enjoy pass-through taxation and limited liability.
True
T/F - Nearly all states allow one-person LLCs.
True
T/F - A non-profit organization may operate as an LLC.
False
T/F - A manager of an LLC need not be a member of the LLC.
True
The participants in an LLC are called
members
T/F - Joint stock companies are similar to LLPs and LLCs because they afford the best features of partnerships and of corporations.
False
T/F - The formation of a corporation is similar to a general partnership.
False
T/F - Shareholders, Directors, and Officers manage the corporation.
False
T/F - A corporation's promoters are not insulated from personal liability for obligations they undertake prior to formation of a corporation.
True
T/F - Corporations are subject to regulation and taxation only in the state in which they incorporate (and not in other states in which they conduct business).
False
T/F - Bylaws are filed with the secretary of state of a corporation's state of incorporation.
False
T/F - The only way for corporations to raise money from debt equity.
False
T/F - Authorized shares are shares that have been issued to investors.
False
T/F - Debt securities show ownership interest in a corporation.
True
T/F - Voting Agreements are when shareholders may enter into binding agreements with each other by which they specify in writing in advance how they will vote.
True
T/F - A written consent allows shareholders to take action without holding a formal shareholders' meeting if they unanimously consent in writing to the action to be taken.
True
T/F - Dividends are allocated to shareholders in direct proportion to their respective ownership interest in the corporation.
True
T/F - Directors may have personal liability for declaring and paying dividends when the corporation does not have sufficient funds to do so.
True
T/F - A stock split has the same effect as a share dividend.
False
T/F - All amendments to the articles of incorporation require shareholder approval.
False
T/F - The decision to amend articles of incorporation typically begins with the board of directors.
True
T/F - Amended bylaws are kept at the corporate offices and filed with the secretary of state.
False
T/F - When a corporation purchases another corporation's stock, it need not seek its shareholder approval to make the acquisition.
True
T/F - A corporation incorporated in Delaware can change its state of incorporation to New York.
True
Stock issued for less than par value is known as watered stock. T/F
False
Preemptive rights are exercised to protect a shareholder's proportionate interest in the corporation. T/F
True
Redemption of stock is
C. giving up the stock in exchange for corporate assets.
Short-term share options are called stock rights. T/F
True
Insulating owners from a defectively formed corporation is known as the doctrine to corporation by estoppel. T/F
True
Combining debt securities and equity securities of a corporation is regarded as
D. capital structures
A dissenting vote recorded in the minutes eliminates the dissenting director's potential personal liability for the action taken. T/F
True
A de jure corporation is a corporation that has met all statutory requirements for its creation. T/F
True
A(n) ________is a corporate debt evidenced by a certificate of some type.
