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True / False
1. The majority of businesses are corporations.
a. True
b. False
2. State laws, not federal, concern the forms of business organization.
a. True
b. False
3. There are close to 30 million businesses in the U.S.
a. True
b. False
4. About 80 percent of business revenues go to corporations.
a. True
b. False
5. Most large businesses are organized as proprietorships.
a. True
b. False
6. The sole proprietorship is the most common business organization in the U.S.
a. True
b. False
7. Sole proprietorships must register with their state government to be able to operate a business legally.
a. True
b. False
8. Proprietorships must receive a license from the state be able to operate a business legally.
a. True
b. False
9. In a sole proprietorship, legally the owner is the business and the business is the owner.
a. True
b. False
10. Sole proprietorships must register with their state government to be able to operate a business legally.
a. True
b. False
11. The income of proprietorships must be reported on a corporate income tax form.
a. True
b. False
12. Proprietorships must file a federal tax return in the name of the business, if there is positive income.
a. True
b. False
13. The income of proprietorships is often treated as personal income of the owner.
a. True
b. False
14. Proprietorships are generally expected to follow the accounting guidelines set out in the Uniform Proprietorship
Act.
a. True
b. False
15. A general partnership is a business organization made up of four or more persons called limited partners.
a. True
b. False
16. Many states allow partnerships to be treated as legal entities for certain purposes.
a. True
b. False
17. Partnerships must begin with a written agreement, but not necessarily a contract, between two or more people to
do business.
a. True
b. False
18. About half the states have adopted the Uniform Partnership Act.
a. True
b. False
19. If partners in a partnership are in a dispute not covered in the partnership agreement, a court uses the Uniform
Partnership Act, if the state has adopted it, to settle the matter.
a. True
b. False
20. Many partnership agreements are subject to the Federal Partnership Act.
a. True
b. False
21. Partnership agreements typically state what the voting rights of partners will be and how the profits will be shared.
a. True
b. False
22. By law, partnership agreements must specify compensation arrangements for any partners paid by the partnership
itself.
a. True
b. False
23. In Zhou v. Bickley, Zhou helped Bickley start a motorcycle repair shop. When they got into a dispute later, the
courts held that they were not partners who had invested different sums of money in the business.
a. True
b. False
24. In Zhou v. Bickley, Zhou helped Bickley start a motorcycle repair shop. When they got into a dispute later, the
courts held that Bickley was a sole proprietor who had borrowed money from Zhou for which he was liable
a. True
b. False
25. In Zhou v. Bickley, Zhou helped Bickley start a motorcycle repair shop. When they got into a dispute later, the
courts held that Bickley never acted as if Zhou was his partner, hence he was a proprietor who owed Zhou for
the money he lent him.
a. True
b. False
26. The law specifies that partners owe a fiduciary duty to one another of the highest loyalty.
a. True
b. False
27. In a partnership, partners are presumed to place their individual interests above those of the partnership.
a. True
b. False
28. In general, the law in Japan is more favorable to small businesses than it is in the U.S.
a. True
b. False
29. Unless specified otherwise by contract, each partner's number of votes depends on his percent of total investment
in the partnership.
a. True
b. False
30. By law, all partners in a general partnership must have equal votes.
a. True
b. False
31. Unless otherwise provided by contract, a partnership dissolves if a change in the composition of the partners takes
place.
a. True
b. False
32. A partnership may be designed to continue even if a partner dies or quits.
a. True
b. False
33. To terminate a partnership, the partners must go through a deconstruction process.
a. True
b. False
34. To terminate a partnership, the partners must go through "dissolution."
a. True
b. False
35. The winding up of partnership affairs completes any unfinished business and distributing the partnership's assets.
a. True
b. False
36. A limited partnership is a special form of a general partnership.
a. True
b. False
37. The formation of limited partnerships is governed by state law, not common law.
a. True
b. False
38. The formation of interstate limited partnerships is governed by the Federal Uniform Partnership Act.
a. True
b. False
39. Most states have passed a Uniform Limited Partnership Act.
a. True
b. False
40. In most states, limited partnerships must file certificates of limited partnership with the state.
a. True
b. False
41. Certificates of limited partnership must include information about the proportion of the profits or compensation that
partners are entitled to receive.
a. True
b. False
42. Certificates of limited partnership must include information bout the contributions of each partner.
a. True
b. False
43. Certificates of limited partnership that are filed with the state must state what the plan is in case the partnership
must be terminated.
a. True
b. False
44. Like a general partnership, all partners in a limited partnership have unlimited personal liability for the debts of the
business venture.
a. True
b. False
45. In a limited partnership, the general partner has sole responsibility for managing the business and may be personally
liable to the partnership's creditors.
a. True
b. False
46. If a limited partner contributes services to the business, she may create an inference of managerial control and may
be declared a general partner.
a. True
b. False
47. Limited partners may not participate in the management of the limited partnership or they lose certain legal
protections.
a. True
b. False
48. The bankruptcy of a limited partner in a partnership dissolves a limited partnership.
a. True
b. False
49. When a limited partnership dissolves, the general partner receives his share of the profits and capital contributions
before the limited partners are paid.
a. True
b. False
50. Corporate charters used by state governments many years ago often granted some special privilege.
a. True
b. False
51. Monopoly power was often granted by early corporate charters.
a. True
b. False
52. The modern "liberal" general incorporation statutes that we have today were adopted in the late 1800s.
a. True
b. False
53. The modern "liberal" general incorporation statutes that we have today were adopted in the 1930s.
a. True
b. False
54. After reviewing a corporation's articles of incorporation for compliance with state standards, and its application, the
state issues corporate bylaws.
a. True
b. False
55. The secretary of state in most state is the official who decides if corporations will be issued charters and rejects
those believed to be unsound businesses.
a. True
b. False
56. The states issue certificates of incorporation.
a. True
b. False
57. The federal government issues certificates of incorporation for corporations with over one billion dollars in assets, if
the firm wishes to have federal registration.
a. True
b. False
58. The articles of incorporation include the classes of stock to be issued and the purpose of the business.
a. True
b. False
59. The articles of incorporation filed with the state must include the bylaws that will govern the operation of the
corporation.
a. True
b. False
60. The articles of incorporation filed with the state can provide minimal information about the structure of a
corporation.
a. True
b. False
61. The corporate bylaws are the rules that regulate the internal structure of a corporation.
a. True
b. False
62. The articles of incorporation set the rules that regulate the internal structure of a corporation.
a. True
b. False
63. Corporations are "persons" that enjoy many of the same rights and privileges accorded real persons.
a. True
b. False
64. Corporations are not provided Fifth Amendment protection against self incrimination.
a. True
b. False
65. The officers and directors of corporations are not provided Fifth Amendment protection against self incrimination
for business-related matters.
a. True
b. False
