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a. True
b. False
1. There are no formal requirements for forming a sole proprietorship.
a. True
b. False
2. The sole proprietor's personal assets are subject to business creditor attachment.
a. True
b. False
3. The income of the sole proprietor's business is reported as a separate entity's income.
a. True
b. False
4. Partners by implication cannot share profits.
a. True
b. False
5. A partnership can only be formed voluntarily.
a. True
b. False
6. Sharing of profits is prima facie evidence that a partnership exists.
a. True
b. False
7. A partnership by estoppel arises when actions lead a third party to believe a partnership exists.
a. True
b. False
8. The sale of the goodwill of a partnership requires unanimous consent.
a. True
b. False
9. Partners' personal assets can be reached by partnership creditors.
a. True
b. False
10. Partners are mutual principals and agents.
a. True
b. False
11. Partners are not liable for each others' torts committed in the scope of business.
a. True
b. False
12. A tenancy in partnership does not carry rights of survivorship.
a. True
b. False
13. A partner's interest in a partnership is not transferable.
a. True
b. False
14. A partnership must file a separate tax return and pay taxes on its income.
a. True
b. False
15. Dissolution of a partnership is termination of a partnership.
a. True
b. False
16. In a limited partnership, there must be a least one general partner.
a. True
b. False
17. Limited partners have liability limited to the amount of their contribution to the partnership.
a. True
b. False
18. Only the general partner in a limited partnership has personal liability.
a. True
b. False
19. Limited partners can take a management role and remain limited partners.
a. True
b. False
20. A limited partnership can exist by implication.
a. True
b. False
21. Limited partnerships are taxed the same way as general partnerships.
a. True
b. False
22. A corporation is only a domestic corporation in its state of incorporation.
a. True
b. False
23. Oil company executives are the highest paid CEOs annually.
a. True
b. False
24. The articles of incorporation must include the capital stock structure of the corporation.
a. True
b. False
25. The statutory agent is the party who will be served with lawsuits against the corporation.
a. True
b. False
26. An S corporation is created as an LLC.
a. True
b. False
27. Incorporators are not liable for contracts entered into before incorporation.
a. True
b. False
28. Novation and ratification have the same effect on promoters' pre-incorporation contracts.
a. True
b. False
29. Bylaws provide the requirements for meetings and voting.
a. True
b. False
30. The corporate veil can be pierced for inadequate capitalization.
a. True
b. False
31. Watered shares are shares for which the purchaser did pay more than par but less than full market value.
a. True
b. False
32. Directors are personally liable for errors in business judgment.
33. The corporate opportunity doctrine requires directors to first present related business opportunities to the
corporation.
a. True
b. False
34. Boards cannot rely on outside experts in decision making.
a. True
b. False
35. In 2012, the highest paid CEO was paid slightly more than $96 million in compensation.
a. True
b. False
a. True
b. False
36. Any shareholder can demand access to the corporate books and records.
a. True
b. False
37. A proxy is valid only for 11 months.
a. True
b. False
38. A copy of the voting trust must be on file in the corporate records.
a. True
b. False
39. Stock transfer restrictions are void.
a. True
b. False
40. Partners are only jointly liable for torts of other partners committed in the scope of the partnership business.
a. True
b. False
41. Limited partners who act as guarantors for partnership notes lose their limited partner status.
a. True
b. False
42. A merger requires a board resolution and shareholder approval.
a. True
b. False
43. Appraisal rights are given only to dissenting shareholders.
44. Limited partners can consult and advise with the general partner and still retain limited liability.
a. True
b. False
45. Limited partners' profits and losses are allocated equally.
a. True
b. False
46. An assignment of a limited partner's interest terminated the limited partnership.
a. True
b. False
47. Upon termination of both limited and general partnerships, outside creditors have first priority in terms of asset
distribution.
a. True
b. False
48. Close corporations have less formality in their operational requirements.
a. True
b. False
49. Subchapter S or S Corporation shareholders have personal liability for corporate debts.
a. True
b. False
50. An inadequately capitalized corporation can have its corporate veil pierced.
a. True
b. False
51. It is fraud to form a corporation to avoid personal liability.
a. True
b. False
52. Members of limited liability companies have no right to vote on who should manage their companies.
a. True
b. False
53. Owners of limited liability companies enjoy pass-through treatment of income and losses.
a. True
b. False
54. Limited liability companies are peculiar to the United States.
a. True
b. False
55. New members are admitted to an LLC only with approval by a majority of existing members.
a. True
b. False
56. A limited liability company can be created informally.
a. True
b. False
57. “Saytopay” gets its name from stakeholders getting to vote on executive compensation.
a. True
b. False
58. A LLP can be created by implication.
a. True
b. False
59. All owners in an LLP have limited liability.
a. True
b. False
60. A limited liability company can be created informally.
a. True
b. False
61. Limited liability companies, limited liability partnerships, limited partnerships, general partnerships, sole
proprietorships and S corporations all have flow-through income and loss provisions for tax purposes.
a. True
b. False
62. Limited liability partnerships are favored by accounting firms because they limit the liability of partners for the acts
of the other partners.
a. True
b. False
63. Limited partnership interests are generally not transferable.
a. True
b. False
64. The corporate veil liability theory has been applied in situations that involve environmental clean-up issues.
a. True
b. False
65. Parent corporations can never be held liable for the environmental clean-up costs of subsidiaries.
a. True
b. False
66. Corporations pay double taxes, on income and shareholders on dividends.
a. True
b. False
67. Shareholders generally elect the officers of the corporation.
a. True
b. False
68. Pooling agreements are the same as voting trusts.
a. True
b. False
69. LLCs have existed in Europe and South America prior to their existence in the U.S.
a. True
b. False
70. Under Sarbanes-Oxley, loans to corporate officers are prohibited.
a. True
b. False
71. Under Sarbanes-Oxley, codes of ethics must cover financial reporting standards.
a. True
b. False
72. Lawyers for corporations are not required to reveal investigations of misconduct in the corporation to the CEO.
a. True
b. False
73. Lawyers for corporations are required to report misconduct by the corporation to the SEC after they have
exhausted all means for an internal correction.
a. True
b. False
74. Under Sarbanes-Oxley, the majority of members of the audit committee must be independent directors.
a. True
b. False
