BUS340 Bedford Ch 19

QuizBooks LLC is a limited liability company. Like any other LLC, unless QuizBooks chooses otherwise, the firm will be taxed as

a. a corporation.

b. a joint venture.

c. a partnership.

d. a sole proprietorship.

The owners of a joint stock company are personally liable for its obligations.

True

False

General principles of agency law are the basis for a partner’s duties and liabilities.

True

False

A sole proprietor may own and manage any type of business.

True

False

Only a limited partnership’s limited partners have a fiduciary obligation to the other partners.

True

False

In some states, business trusts pay corporate taxes.

True

False

Build-Rite Construction Corporation and Deals-R-Us, Inc., combine their efforts to build an office and retail complex. Their form of business organization is

a. a business trust.

b. a joint stock company.

c. a joint venture.

d. a syndicate.

Leigh wants to go into the business of construction contracting. Among the reasons that would probably convince Leigh to set up his business as a sole proprietorship would be

a. its greater organizational flexibility.

b. its limited liability.

c. its perpetual existence.

d. the ease of transferring the business to other family members.

Omega Corporation and Precision Coding, Inc., two software firms, wish to combine their research and development capabilities to make a special, limited edition computer game. The most appropriate legal en­tity for this project might be

a. a business trust.

b. a joint stock company.

c. a joint venture.

d. a syndicate.

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.

Starting a sole proprietorship is easier and less costly than starting any other form of business.

True

False

China Bank is a foreign entity—a firm owned and operated by investors in a foreign country. With respect to an LLC in the United States, China Bank can

a. act as a creditor, but cannot otherwise invest or participate.

b. become a member.

c. not become a member, but can participate in its operations.

d. not become a member or otherwise participate in its operations.

In most states, a general partner is jointly and severally liable for all partnership obligations.

True

False

A limited liability company is required to have an operating agreement.

True

False

Dreem Land Corporation and EZ Investments Company transfer their property to Financial Managers, Inc., which manages the property and distributes the profits to Dreem and EZ. This form of a business organization is

a. a business trust.

b. a joint stock company.

c. a joint venture.

d. a syndicate.

The beneficiaries of a business trust are personally liable for its obligations.

True

False

In a limited liability company, members cannot participate in its management.

True

False

In a limited liability company, members do not have to participate in its manage­ment.

True

False

Jim organized, and owns and operates, Jim’s Landscaping Service in the simplest form of business organization. This is

a. a corporation.

b. a limited liability company.

c. a partnership.

d. a sole proprietorship.

Loni, Michel, and Nita are investors in Oceanic Exploration, a busi­ness trust. A business trust is managed by its

a. directors and officers.

b. general partners.

c. managing members.

d. trustees.

In a limited liability company, members must participate in the manage­ment of the company.

True

False

The Uniform Partnership Act governs the operation of partnerships.

True

False

A sole proprietorship is a separate legal entity for tax pur­poses.

True

False

Cal sells “DownSize,” a weight-reduction program, from a Web site, in competition with Eat-Less Inc.’s product “Fit ‘n Trim.” Eat-Less files a suit against Cal, alleging in part that he is a sole proprietor, but his enterprise should be deemed a different form of business. Cal’s enter­prise should most likely be considered

a. a corporation because DownSize is sold online.

b. a franchisee because DownSize is sold in competition to Fit ‘n Trim.

c. a sole proprietorship because Cal is a sole proprietor.

d. no form of business entity because Cal has no formal organization.

Carl sells Direct Marketing Enterprises, a sole proprietorship, to Erv. 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.

Owen, Paula, Quinn, and Rita combine to finance the building of Super Stores, a shopping mall. Their selected form of business organization is an in­vestment group, or

a. a business trust.

b. a joint stock company.

c. a joint venture.

d. a syndicate.

A limited liability company is operated in compliance with state law.

True

False

One of the disadvantages of a sole proprietorship is that the owner is liable for the losses of the business.

True

False