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75. Enron’s off-the-book financings consisted mostly of LLCs and LLPs.
a. True
b. False
76. Close corporations are generally publicly traded.
a. True
b. False
77. Piercing the corporate veil has been used for purposes of imposing CERCLA liability.
a. True
b. False
78. AIG was not involved in the subprime mortgage debacle.
a. True
b. False
79. If members of a limited liability company exercise management authority, they lose their limited liability.
a. True
b. False
80. Under Sarbanes-Oxley, current employees are not considered independent for purposes of board structure.
a. True
b. False
81. Which of the following is true of a sole proprietorship?
a. A separate tax return must be filed.
b. It is not a business entity.
c. There is no personal liability for the owner.
d. none of the above
82. Which of the following is not a method for forming a partnership?
a. by agreement
b. by estoppel
c. by implication
d. by transfer
83. Evidence of sharing profits is prima facie evidence of partnership existence unless the profits are:
a. wages or rent.
b. not shared equally.
c. income.
d. all of the above
84. A partnership by estoppel:
a. is the same as a partnership by implication.
b. results when third parties are led to believe a partnership exists.
c. is the same as a joint venture.
d. none of the above
85. Partners' personal assets:
a. cannot be reached by partnership creditors.
b. cannot be reached by partnership creditors unless partnership assets are exhausted.
c. can only be reached by personal creditors.
d. none of the above
86. In 2012, the CEO with the highest compensation was:
a. Lawrence Ellison
b. Mark Hurd
c. John Donahoe
d. none of the above
87. Unanimous consent of the partners is required for:
a. confession of a judgment.
b. borrowing money in a trading partnership.
c. signing checks.
d. none of the above
88. Partnership property:
a. is always personal property.
b. is owned by the partners as tenants in partnership.
c. can be pledged to a partner's personal creditor.
d. all of the above
89. A, B, and C are partners in a real estate firm. B has just died. B's widow:
a. owns one-third of all the partnership land.
b. is a tenant in partnership with A and C.
c. can force the sale of the partnership property.
d. none of the above
90. A partner's interest:
a. is the same as the partnership property.
b. cannot be attached by creditors.
c. cannot be transferred.
d. none of the above.
91. Transfer of a partner's interest:
a. is void.
b. results in dissolution of the partnership.
c. relieves the partner of liability.
d. makes the transferee a partner.
e. none of the above
92. For income tax purposes, a partnership:
a. files a return and pays taxes.
b. is an entity.
c. has no taxes.
d. none of the above
93. Dissolution:
a. is the same as termination.
b. can result from a limited partner leaving the partnership.
c. can result from the death of a partner.
d. all of the above
94. A limited partnership:
a. requires at least one general partner.
b. can be created by implication.
c. must be run by the limited partners.
d. all of the above
95. Which of the following is not required for the certificate of limited partnership (under RULPA)?
a. names of the limited partners
b. capital contributions of the partners
c. the profit-sharing arrangement
d. None of the above are required.
96. Limited partners have liability:
a. for the full amount of partnership debts.
b. only for the amount of their contribution.
c. for the negligent acts of the general partner.
d. none of the above
97. Limited partners:
a. can use their name in the partnership name.
b. can contribute management services to the partnership.
c. cannot advise the general partner.
d. none of the above
98. The assignment of limited partnership interests:
a. is prohibited by the ULPA.
b. may be a sale of securities subject to federal regulation.
c. is liberally permitted under the Internal Revenue Code.
d. none of the above
99. Which is the proper order for distribution of assets upon dissolution of a limited partnership?
a. outside creditors; distributions owed to partners; capital contributions; remainder split according to distribution
agreement
b. outside creditors; limited partners' profits; limited partners' capital; general partners' advances; general
partners' profit; general partners' capital
c. limited partners' capital; outside creditors; limited partners' advances; general partners' capital and profits
d. none of the above
100. Which of the following is not required for the articles of incorporation?
a. names of incorporators
b. capital stock structure
c. names of board members
d. All of the above are required.
101. In a novation by the board of a pre-incorporation contract involving the corporation, the promoter, and a third party:
a. the corporation is released from liability.
b. the promoter is released from liability.
c. the promoter is made secondarily liable.
d. none of the above
102. In a ratification by the board of a pre-incorporation contract involving the corporation, the promoter, and a third
party:
a. the corporation is released from liability.
b. the promoter is released from liability.
c. the promoter is made secondarily liable.
d. none of the above
103. The corporate veil can be pierced when:
a. there is only one shareholder in the corporation.
b. the corporation was formed to avoid personal liability.
c. the corporation has only preferred stock.
d. none of the above
104. Watered shares result:
a. when a purchaser does not pay full market value for the shares.
b. when a purchaser does pay more than par value for the shares.
c. in personal liability for the shareholders.
d. none of the above
105. The business judgment rule holds directors liable for:
a. errors in business judgment.
b. their mistakes.
c. failure to obtain necessary information for making decisions.
d. none of the above
106. A director who usurps a corporate opportunity:
a. will owe his/her corporation the profits from the opportunity.
b. will not owe the profits to the corporation so long as the venture was disclosed in advance.
c. has violated the business judgment rule.
d. none of the above
107. Which of the following shareholders would qualify for access to the corporate books and records?
a. a shareholder who owns 5 percent of any class of stock
b. a shareholder who owns 5 percent of all the outstanding stock of a corporation
c. a shareholder who has owned stock for six months
d. All of the above shareholders qualify.
108. A shareholder proxy is:
a. good until revoked.
b. not subject to any securities laws.
c. a transfer of a right to vote.
d. none of the above
109. Transfer restrictions:
a. must be noted on the stock to be valid.
b. are generally valid only in family-owned corporations.
c. cannot be used to satisfy SEC restrictions.
d. none of the above
110. A corporate dissolution:
a. cannot result from an agreement.
b. results when a corporation does not hold an annual meeting.
c. can begin with a board resolution.
d. none of the above
111. A Subchapter S or S Corporation is:
a. a special class of close corporation under the MBCA.
b. an IRS tax treatment option for corporations owned by a limited number of shareholders.
c. a not-for-profit corporation.
d. none of the above
112. Hank Greenberg was the head of:
a. the SEC.
b. Citigroup.
c. AIG.
d. BP.
113. Which of the following cannot be used to pierce the corporate veil?
a. inadequate capitalization
b. alter ego theory
c. formation of the corporation to avoid personal liability
d. All of the above theories can be used.
114. Which of the following activities will cause a limited partner to lose his limited liability status?
a. being employed by the general partner as an employee
b. managing the firm with the general partner
c. consulting with or advising the general partner
d. All of the above will result in the loss of limited liability status.
