227. Which form of business incurs double taxation:
a. limited partnerships
b. LLCs
c. corporations
d. proprietorships
e. general partnerships
228. Which form of business incurs double taxation:
a. limited partnerships
b. LLCs
c. proprietorships
d. none of the other choices
e. all of the other specific choices
229. The profits of partnerships are taxed:
a. the same as corporations
b. to each partner personally as agreed upon or shared equally
c. both at the partnership level and to each partner individually
d. not at all, since they are exempt
e. none of the other choices
230. Which of the following have unlimited liability for debts of their business?
a. limited partners
b. general partners
c. sole proprietors
d. general partners and sole proprietors
e. general partners, limited partners, and sole proprietors
231. When a court “pierces the corporate veil” it:
a. holds shareholders personally liable for corporate debts
b. holds the board of directors jointly and severally liable
c. provides the chief financial officer of the corporation with limited liability
d. sanctions the under capitalization of the corporation
e. provides partial protection from corporation debts
232. When a court “pierces the corporate veil” it:
a. provides partial protection from corporation debts
b. holds the board of directors jointly and severally liable
c. provides the chief financial officer of the corporation with limited liability
d. sanctions the under capitalization of the corporation
e. none of the other choices
233. When a court holds shareholders personally liable for corporate debts it is said to be:
a. “piercing the corporate veil”
b. “opening the corporate veil”
c. “closing the corporate veil”
d. “tearing the corporate veil”
e. “cutting the corporate veil”
234. When a court holds shareholders personally liable for corporate debts it is said to be:
a. “cutting the corporate veil”
b. “opening the corporate veil”
c. “closing the corporate veil”
d. “tearing the corporate veil”
e. none of the other choices are correct
235. In K.C. Roofing Center v. On Top Roofing, Inc., where K.C. Roofing asked the courts to hold Nugent, the
owner of On Top Roofing, a corporation which no longer existed, personally liable for the cost of roofing supplies
sold to On Top Roofing while it existed, the appeals court held that:
a. Nugent was personally liable for the debts owed the plaintiffs because he was using corporate status to avoid
debts to the plaintiff
b. Nugent was not personally liable for the debts owed the plaintiffs because On Top Roofing was a limited
liability company
c. Nugent was not personally liable for the debts owed the plaintiffs because On Top Roofing no longer existed
d. Nugent was personally liable for the debts owed the plaintiffs because K.C. Roofing Center was also a
limited liability company
e. Nugent was not personally liable for the debts owed the plaintiffs because the evidence did not support the
three-part test for piercing the corporate veil
236. In K.C. Roofing Center v. On Top Roofing, Inc., where K.C. Roofing asked the courts to hold Nugent, the
owner of On Top Roofing, a corporation which no longer existed, personally liable for the cost of roofing supplies
sold to On Top Roofing while it existed, the appeals court held that:
a. Nugent was not personally liable for the debts owed the plaintiffs because the evidence did not support the
three-part test for piercing the corporate veil
b. Nugent was not personally liable for the debts owed the plaintiffs because On Top Roofing was a limited
liability company
c. Nugent was not personally liable for the debts owed the plaintiffs because On Top Roofing no longer existed
d. Nugent was personally liable for the debts owed the plaintiffs because K.C. Roofing Center was also a
limited liability company
e. none of the other choices are correct
237. The refers to the ability of an owner in a business venture to sell or pass that interest to others.
a. immovability of ownership interests
b. transferability of ownership interests
c. removability of ownership interests
d. redistributionability of ownership interests
e. mobility of ownership interests
238. The refers to the ability of an owner in a business venture to sell or pass that interest to others.
a. immovability of ownership interests
b. mobility of ownership interests
c. removability of ownership interests
d. redistributionability of ownership interests
e. none of the other choices are correct
239. With respect to transferability of ownership interests, a sole proprietor may:
a. not transfer her interests
b. may only transfer her interest with approval of the state
c. freely transfer her interests
d. transfer her interests to family members only
e. transfer her interests after paying a capital gains tax
240. With respect to transferability of ownership interests, a sole proprietor may:
a. not transfer her interests
b. may only transfer her interest with approval of the state
c. transfer her interests after paying a capital gains tax
d. transfer her interests to family members only
e. none of the other choices
241. If a partner assigns his interests in a partnership:
a. the partnership is terminated
b. the new person does not automatically become a partner
c. the partnership continues
d. the partnership is terminated and the new person does not automatically become a partner
e. the new person does not automatically become a partner and the partnership continues
242. The sale of shares in a closed corporation is similar to the sale of a sole proprietorship because:
a. the shares are traded on the open market
b. numerous shareholders make transfers difficult
c. determining a market value of the asset may be difficult
d. government approval is necessary for a transfer
e. duration is an important issue
243. The sale of shares in a closed corporation is similar to the sale of a sole proprietorship because:
a. the shares are traded on the open market
b. numerous shareholders make transfers difficult
c. there is limited life in such corporations
d. government approval is necessary for a transfer
e. none of the other choices
244. Sales of and can be difficult because determining the market value of the asset may be difficult.
a. close corporation; sole proprietorship
b. close corporation; double proprietorship
c. close corporation; publicly traded corporation
d. sole proprietorship; publicly traded corporation
e. sole proprietorship; double corporation
245. Sales of and can be difficult because determining the market value of the asset may be difficult.
a. sole proprietorship; double corporation
b. close corporation; double proprietorship
c. close corporation; publicly traded corporation
d. sole proprietorship; publicly traded corporation
e. none of the other choices are correct
246. The New York Stock Exchange is an example of a stock exchange where:
a. the stock of sole proprietorships can be traded
b. the stock of public corporations can be traded
c. the stock of private corporations can be traded
d. the stock of public corporations cannot be traded
e. the stock of public corporations can be sold but not bought
247. The New York Stock Exchange is an example of a stock exchange where:
a. the stock of sole proprietorships can be traded
b. the stock of public corporations can be sold but not bought
c. the stock of private corporations can be traded
d. the stock of public corporations cannot be traded
e. none of the other choices are correct
248. A business’s refers to its ability to continue to operate in the event of the death, retirement, or other
incapacity of an owner of the business.
a. perpetuity
b. lifetime
c. duration
d. experience
e. continuation
249. A business’s refers to its ability to continue to operate in the event of the death, retirement, or other
incapacity of an owner of the business.
a. perpetuity
b. lifetime
c. continuation
d. experience
e. none of the other choices are correct
250. A terminates with the death or incapacity of the proprietor.
a. sole proprietorship
b. double corporation
c. limited liability corporation
d. corporate corporation
e. partnership
251. Unless its articles of incorporation provide otherwise, a corporation:
a. lasts for twenty years
b. lasts for fifty years
c. lasts perpetually
d. lasts as long as state law allows; the life varies among the states
e. lasts as long as the IRS permits
252. Unless its articles of incorporation provide otherwise, a corporation:
a. lasts for twenty years
b. lasts for fifty years
c. lasts as long as the IRS permits
d. lasts as long as state law allows; life varies among the states
e. none of the other choices
253. Unless its articles of incorporation provide for a specified period of duration, a corporation has:
a. total existence
b. permanent existence
c. perpetual existence
d. final existence
e. existence of perpetual duration
254. Unless its articles of incorporation provide for a specified period of duration, a corporation has:
a. total existence
b. permanent existence
c. existence of perpetual duration
d. final existence
e. none of the other choices are correct
255. With perpetual existence, the death or retirement of a shareholder:
a. does not bring about the termination of the corporation
b. brings about the termination of the corporation
c. brings about the termination of the corporation in a five year period
d. brings about the termination of the corporation if the shareholder had more than a 10% share
e. brings about the termination of the corporation if the shareholder had more than a 30% share
256. With perpetual existence, the death or retirement of a shareholder:
a. brings about the termination of the corporation if the shareholder had more than a 30% share
b. brings about the termination of the corporation
c. brings about the termination of the corporation in a five year period
d. brings about the termination of the corporation if the shareholder had more than a 10% share
e. none of the other choices are correct
257. About of retail sales in the U.S. takes place in franchise operations.
a. one fourth
b. two thirds
c. one half
d. one third
e. 90%
258. About of retail sales in the U.S. takes place in franchise operations.
a. one fifth
b. two thirds
c. one half
d. 90%
e. none of the other choices are correct
259. A franchise is sold by:
a. a franchisor
b. a franchisee
c. a franchise director
d. the Franchise Trade Association
e. none of the other choices
260. To get the right to sell goods or services associated with a franchisor’s trademark, trade name or trade dress, the
franchisee must pay a(n):
a. legal fee
b. employment fee
c. corporation fee
d. franchise fee
e. franchise allotment
261. Which of the following is characteristic of a successful franchise:
a. a trademark
b. a uniform product or service
c. both a and b are correct
d. neither a nor b is correct
e. an international market
262. Which of the following is a category of franchise:
a. product distributorship
b. trademark or trade-name licensing
c. business format franchising
d. all of the other specific choices are correct
e. both a and b, but not c, are correct
263. The franchisee has the right to sell the product of the parent company in which category of franchise:
a. product distributorship
b. trademark or trade-name licensing
c. business format franchising
d. sale format franchising
e. all of the other specific choices are correct
264. The franchisee has a license to market the company’s brands, such as Coca-Cola in which category of franchise:
a. product distributorship
b. trademark or trade-name licensing
c. business format franchising
d. sale format franchising
e. all of the other specific choices are correct
265. The franchisee follows the business model set out by the parent company, such as McDonald‘s in which category
of franchise:
a. product distributorship
b. trademark or trade-name licensing
c. business format franchising
d. sale format franchising
e. all of the other specific choices are correct
266. Which of the following is included in the business format category of franchises:
a. restaurants
b. nonfood retailers
c. business services
d. rental companies
e. all of the other specific choices are correct