BUS 250 CHAPTER 31 UPDATED ACTUAL QUESTIONS
AND CORRECT ANSWERS
Question:
1. joint venture
Answer:
A partnership for a limited purpose.
Question:
2. close corporation
Answer:
A company whose stock is not publicly traded. Also known as a closely held
corporation.
Question:
3. s corporations
Answer:
Congress created S corporations (aka "S corps") to encourage entrepreneurship
by offering tax breaks. The name "S corporation" comes from the provision of the
Internal Revenue Code that created this form of organization.Footnote
Shareholders of S corps have both the limitedliability of a corporation and the tax
status of a partnership
Question:
4. sole proprietorship
Answer:
An unincorporated business owned by one person.
Question:
5. Kristine bought a Rocky Mountain Chocolate Factory
franchise. Her franchise agreement required her to
purchase a cash register that cost $3,000, with an annual
maintenance fee of $773. The agreement also provided
that Rocky Mountain could change to a more expensive
system. Within a few months after signing the agreement,
Kristine learned that she would have to buy a new cash
register that cost $20,000, with annual maintenance fees
of $2,000. Did Rocky Mountain act in bad faith?
Answer:
Yes if the franchisor can prove damage to the overall business was sever.
, Question:
6. George forms a general partnership with Susan. If Susan
gave a client bad legal advice and is sued, where does
liability lie
Answer:
With both Susan and George.
Question:
7. Wanda is a member of a limited liability partnership. Her
other partners made a bad investment and owe Big Bank
$50,000. Is Wanda liable for the debt?
Answer:
No, unless she agreed to be liable.
Question:
8. George is a member of a limited liability partnership. His
other partners made a bad investment and owe El Globo
Bank $100,000. Is George personally liable for the debt?
Answer:
Yes, if the LLP was not properly registered.
Question:
9. What is true about type S Corporations?
Answer:
Shareholders are not liable for corporate torts, but must pay taxes on dividends
Question:
10. Susan wishes to buy a national franchise. Which of the
following does the FTC require the seller to provide to
Susan before she buys the franchise?
Answer:
To provide Susan with an offering circular at least 14 business days before any
contract is signed or money is paid.
b. Disclose in the offering circular any litigation against the company for the prior
ten years and any claims the company made against franchisees during the prior
year
c. Disclose in the offering circular how many franchisees have gone out of
business within the last three years;
d. All of the above are required by the FTC.
AND CORRECT ANSWERS
Question:
1. joint venture
Answer:
A partnership for a limited purpose.
Question:
2. close corporation
Answer:
A company whose stock is not publicly traded. Also known as a closely held
corporation.
Question:
3. s corporations
Answer:
Congress created S corporations (aka "S corps") to encourage entrepreneurship
by offering tax breaks. The name "S corporation" comes from the provision of the
Internal Revenue Code that created this form of organization.Footnote
Shareholders of S corps have both the limitedliability of a corporation and the tax
status of a partnership
Question:
4. sole proprietorship
Answer:
An unincorporated business owned by one person.
Question:
5. Kristine bought a Rocky Mountain Chocolate Factory
franchise. Her franchise agreement required her to
purchase a cash register that cost $3,000, with an annual
maintenance fee of $773. The agreement also provided
that Rocky Mountain could change to a more expensive
system. Within a few months after signing the agreement,
Kristine learned that she would have to buy a new cash
register that cost $20,000, with annual maintenance fees
of $2,000. Did Rocky Mountain act in bad faith?
Answer:
Yes if the franchisor can prove damage to the overall business was sever.
, Question:
6. George forms a general partnership with Susan. If Susan
gave a client bad legal advice and is sued, where does
liability lie
Answer:
With both Susan and George.
Question:
7. Wanda is a member of a limited liability partnership. Her
other partners made a bad investment and owe Big Bank
$50,000. Is Wanda liable for the debt?
Answer:
No, unless she agreed to be liable.
Question:
8. George is a member of a limited liability partnership. His
other partners made a bad investment and owe El Globo
Bank $100,000. Is George personally liable for the debt?
Answer:
Yes, if the LLP was not properly registered.
Question:
9. What is true about type S Corporations?
Answer:
Shareholders are not liable for corporate torts, but must pay taxes on dividends
Question:
10. Susan wishes to buy a national franchise. Which of the
following does the FTC require the seller to provide to
Susan before she buys the franchise?
Answer:
To provide Susan with an offering circular at least 14 business days before any
contract is signed or money is paid.
b. Disclose in the offering circular any litigation against the company for the prior
ten years and any claims the company made against franchisees during the prior
year
c. Disclose in the offering circular how many franchisees have gone out of
business within the last three years;
d. All of the above are required by the FTC.
