Business Law Ch. 16-18 Test
True/False
Indicate whether the
statement is true or false.
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1.
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Business profits or losses are
combined with the sole proprietor's other income for income tax purposes.
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2.
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In a general partnership, each
partner is liable for the other partners' actions within the scope of the
partnership.
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3.
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The biggest advantage to a sole
proprietorship is the limited liability regarding losses and lawsuits.
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4.
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A partner cannot personally
transfer ownership of property.
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5.
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Unless otherwise stated in the
partnership agreement, partners share equally in the profits.
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6.
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The articles of incorporation
is a legal document filed with the state in order to establish a corporation.
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7.
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The dissolution of an LLC is
similar to a partnership and can occur for any of the same reasons.
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8.
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A corporation's directors
meet and vote to set broad polices.
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9.
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A person who owns stock in a
corporation has the right to receive a stock certificate.
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10.
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Under the fairness rule,
directors and corporate officers may not exploit their positions for personal gain at the expense of
the corporation.
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11.
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Unlike partners in a
partnerships, directors of a corporation are not subject to the duty of care or the duty of
loyalty.
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12.
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The government can terminate a
corporation for failure to pay taxes or file annual reports.
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13.
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The federal government's
power to regulate business is gradually diminishing.
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14.
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California has passed vehicle
emissions standards that are stricter than the federal standards.
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15.
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The SEC was created in the
early 1990s to prevent insider trading and other fraudulent activities.
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16.
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The Clean Water Act set
guidelines for dealing with businesses that dump pollutants into the nation’s
waterways.
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17.
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The rapid rise of industrialism
in the 19th century led to an increase in air and water pollution.
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18.
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The roots of Department of
Energy can be traced back to World War II and the Manhattan Project, which developed the first
nuclear weapons.
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Multiple Choice
Identify the choice that
best completes the statement or answers the question.
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19.
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Co-ownership of all real and
personal property included in the partnership is referred to as
a. | joint
tenancy. | c. | tenancy by
estoppel. | b. | uniform tenancy. | d. | tenancy in partnership. |
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20.
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When a partnership ends, the
firm's assets are first paid to
a. | partners who lent money to the
firm. | b. | partners who put money into the firm. | c. | surplus due partners. | d. | creditors other than
partners. |
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21.
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A corporation that formed in
Texas but operates in Florida is called a(n)
a. | domestic
corporation. | c. | alien
corporation. | b. | foreign corporation. | d. | S corporation. |
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22.
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An example of a public
corporation is
a. | the local school
district. | c. | Habitat for
Humanity. | b. | Microsoft. | d. | McDonald’s. |
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23.
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In a corporation, the
shareholder’s liability is
a. | limited to the amount of money paid
for the shares in the corporation. | b. | unlimited based on the articles of
incorporation. | c. | limited to $100,000. | d. | unlimited based on the most recent vote by the board of
directors. |
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24.
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The right to vote on behalf of
other shareholders is called a
a. | permission
vote. | c. | parliamentary
vote. | b. | proxy vote. | d. | preliminary vote. |
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25.
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The dissolution of a
corporation can come about
a. | by a unanimous vote of the
shareholders. | b. | by stock acquisition. | c. | when a corporate officer
dies. | d. | when the profits exceed a certain
threshold. |
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26.
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Profits distributed to the
shareholders are called
a. | interest. | c. | proxies. | b. | benefits. | d. | dividends. |
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27.
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Insider trading is legally
considered a(n)
a. | felony
crime. | c. | misdemeanor. | b. | tort. | d. | intentional
tort. |
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28.
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Corporations raise money
a. | by selling
stock. | c. | through asset
acquisition. | b. | by buying bonds. | d. | through stock acquisition. |
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29.
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Which of the following
organizations does NOT regulate business between countries?
a. | The International Law
Commission | b. | The U.N. Commission on International Trade
Law | c. | The World Trade Organization | d. | The Federal Trade
Commission |
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30.
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The law making monopolies
illegal is called the
a. | Sherman Antitrust
Act. | c. | Sarbanes-Oxley
Act. | b. | Clayton Antitrust Act. | d. | Robinson-Patman Act. |
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31.
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The federal agency responsible
for protecting the environment is the
a. | Clean Air
Agency. | c. | Environmental and
Pollution Agency. | b. | Environmental Protection Agency. | d. | Federal Trade Commission. |
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32.
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The Kyoto Protocol for reducing
greenhouse gases
a. | originated in Japan in the early
1900s. | b. | also focus on nuclear energy waste. | c. | have not been passed into law by the United
States | d. | were created at a meeting of the
FERC. |
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Matching
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Match each term with its
definition. a. | sole
proprietorship | f. | S
corporation | b. | dissociation | g. | limited liability company (LLC) | c. | limited partnership | h. | corporation | d. | limited liability partnership (LLP) | i. | joint liability | e. | shareholder | j. | C corporation |
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33.
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A business entity that
combines the best features of a partnership and a corporation
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34.
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An entity with the legal
authority to act as a single person, distinct from its owners
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35.
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Form of business that is owned
and operated by one person
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36.
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An individual who has one vote
for every share of stock held
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37.
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In a partnership, all the
partners must be sued together in a lawsuit
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Match each term with its
definition. a. | insider
trading | f. | asset
acquisition | b. | corporate directors | g. | direct suit | c. | corporate officers | h. | derivative suit | d. | merger | i. | stock
acquisition | e. | franchise | j. | consolidation |
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38.
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When two or more companies
join together and form a new company
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39.
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When an individual or
corporation buys enough stock in another corporation to take over control of it
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40.
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When a corporate officer or
director buys or sells shares in a corporation based on firsthand knowledge about the corporation
that the general public does not know
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41.
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Group of people that set the
broad policies for the corporation and are responsible for seeing that the corporation acts within
its power
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42.
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When two companies join
together and one keeps its identity while the other loses it
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