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.
c. a partnership.
The owners of a joint stock company are personally liable for its obligations.
True
False
True
General principles of agency law are the basis for a partner’s duties and liabilities.
True
False
True
A sole proprietor may own and manage any type of business.
True
False
True
Only a limited partnership’s limited partners have a fiduciary obligation to the other partners.
True
False
False
In some states, business trusts pay corporate taxes.
True
False
True
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.
c. a joint venture.
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.
a. its greater organizational flexibility.
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.
c. a joint venture.
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.
a. borrowing funds.
Starting a sole proprietorship is easier and less costly than starting any other form of business.
True
False
True
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.
b. become a member.
In most states, a general partner is jointly and severally liable for all partnership obligations.
True
False
True
A limited liability company is required to have an operating agreement.
True
False
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.
a. a business trust.
The beneficiaries of a business trust are personally liable for its obligations.
True
False
False
In a limited liability company, members cannot participate in its management.
True
False
False
In a limited liability company, members do not have to participate in its management.
True
False
True
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.
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.
d. trustees
In a limited liability company, members must participate in the management of the company.
True
False
False
The Uniform Partnership Act governs the operation of partnerships.
True
False
True
A sole proprietorship is a separate legal entity for tax purposes.
True
False
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.
c. a sole proprietorship because Cal is a sole proprietor
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.
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.
d. a syndicate
A limited liability company is operated in compliance with state law.
True
False
True
One of the disadvantages of a sole proprietorship is that the owner is liable for the losses of the business.
