Business Law Exam 3:
Business Entities
Practice Questions and
Answers Updated 2026
TrueB-BAnswerBCorporationsBhaveBperpetualBexistence.
FalseB-BAnswerBTheBmostBcommonBformBofBbusinessBownershipBisBtheBcorporation
FalseB-
BAnswerBToBbeBaBcloseBcorporation,BtheBbusinessBmustBbeBsmall,BwithBunderB20Bow
nersBandBunderB$500,000BinBgrossBannualBincome
FalseB-BAnswerBABpartnershipBisBaBseparateBtaxableBentity
FalseB-
BAnswerBLimitedBliabilityBisBaBmajorBadvantageBofBaBpartnershipBasBcomparedBtoBaB
corporation.
FalseB-
BAnswerBDr.BWong,BaBdentist,BandBhisBwife,BanBattorney,BcanBprotectBtheirBpersonal
BassetsBwithBlimitedBliabilityBfromBtheirBbusinessBdealingsBbyBcreatingBandBoperatingB
aBprofessionalBcorporationBtogether
FalseB-
BAnswerBCorporationsBhaveBaBdistinctBadvantageBoverBotherBformsBofBbusinessBorgan
izationBinBtheBareaBofBtaxation
,TrueB-
BAnswerBABlimitedBliabilityBcompany,BunlikeBaBSubchapterBSBcorporation,BcanBhaveBm
embersBthatBareBcorporations,Bpartnerships,BorBnonresidentBaliens
TrueB-
BAnswerBGenerally,BaBjointBventureBisBaBpartnershipBcreatedBforBoneBlimitedBpurpose
TrueB-
BAnswerBCooperativesBmayBbeBeitherBincorporatedBorBunincorporatedBbusinesses.
FalseB-
BAnswerBToBformBanBLLC,BaBcharterBandBanBoperatingBagreementBmustBbeBfiledBwit
hBtheBSecretaryBofBStateBinBtheBjurisdictionBwhereBtheBbusinessBwillBoperate
FalseB-
BAnswerBFranchiseBfeesBcanBbeBcostly,BbutBtheyBareBusuallyBpayableBoverBaBnumber
BofByears,BafterBprofitsBareBgeneratedBfromBtheBbusiness
FalseB-
BAnswerBTheBFederalBTradeBCommissionBwillBnotBallowBtheBsaleBofBfranchisesBthatBa
reBunfairBtoBtheBfranchisee
TrueB-
BAnswerBFilingsBareBrequiredBtoBformBandBoperateBaBlimitedBliabilityBpartnership
BB-BAnswerBAllBtheBbusinessBformsBlistedBbelowBhaveBlimitedBliabilityBexceptBthe:
a.BlimitedBliabilityBcompany.
b.BgeneralBpartnership.
, c.BSubchapterB"S"Bcorporation.
d.Bcorporation.
DB-
BAnswerBRachelBandBCyndiBstartedBaBretailBbusinessBcalledBZebraBToyBCompany.BThe
BbusinessBisBoperatedBasBaBpartnership.BUnderBpartnershipBlaw:
a.BRachelBisBpersonallyBliableBforBanyBbusinessBcontractsBenteredBintoBbyBCyndi.
b.BRachelBisBpersonallyBliableBforBanyBbusinessBdebts,BregardlessBofBwhetherBsheBorB
CyndiBcreatedBtheBobligation.
c.BRachelBisBpersonallyBliableBforBanyBnegligentBactBcommittedBbyBCyndiBinBtheBscop
eBofBtheBbusinessBactivity.
d.BallBofBtheBabove
50,000B-
BAnswerBLanceBandBDarrellBhaveBanBequalBpartnership.BThisByear,BafterBexpenses,Bth
eBpartnershipBhadBaBprofitBofB$100,000.BLanceBandBDarrellBwillBeachBpayBtaxesBon:
cooperativeB-
BAnswerBSeventyBfarmersBinBMorganBCountyBjoinedBtogetherBtoBgainBtheBadvantages
BofBpurchasingBseedBandBfertilizerBinBbulkBandBofBobtainingBbetterBpricesBwhenBdistri
butingBandBsellingBtheirBcrops.BTheseBfarmersBhaveBformedBa:
AB-BAnswerBTheBFederalBTradeBCommissionBrequiresBfranchisorsBto:
a.BgiveBprospectiveBfranchiseesBanBofferingBcircularBatBleastB14BbusinessBdaysBpriorBt
oBtheBsigningBofBaBcontractBorBpaymentBofBanyBmoney.
Business Entities
Practice Questions and
Answers Updated 2026
TrueB-BAnswerBCorporationsBhaveBperpetualBexistence.
FalseB-BAnswerBTheBmostBcommonBformBofBbusinessBownershipBisBtheBcorporation
FalseB-
BAnswerBToBbeBaBcloseBcorporation,BtheBbusinessBmustBbeBsmall,BwithBunderB20Bow
nersBandBunderB$500,000BinBgrossBannualBincome
FalseB-BAnswerBABpartnershipBisBaBseparateBtaxableBentity
FalseB-
BAnswerBLimitedBliabilityBisBaBmajorBadvantageBofBaBpartnershipBasBcomparedBtoBaB
corporation.
FalseB-
BAnswerBDr.BWong,BaBdentist,BandBhisBwife,BanBattorney,BcanBprotectBtheirBpersonal
BassetsBwithBlimitedBliabilityBfromBtheirBbusinessBdealingsBbyBcreatingBandBoperatingB
aBprofessionalBcorporationBtogether
FalseB-
BAnswerBCorporationsBhaveBaBdistinctBadvantageBoverBotherBformsBofBbusinessBorgan
izationBinBtheBareaBofBtaxation
,TrueB-
BAnswerBABlimitedBliabilityBcompany,BunlikeBaBSubchapterBSBcorporation,BcanBhaveBm
embersBthatBareBcorporations,Bpartnerships,BorBnonresidentBaliens
TrueB-
BAnswerBGenerally,BaBjointBventureBisBaBpartnershipBcreatedBforBoneBlimitedBpurpose
TrueB-
BAnswerBCooperativesBmayBbeBeitherBincorporatedBorBunincorporatedBbusinesses.
FalseB-
BAnswerBToBformBanBLLC,BaBcharterBandBanBoperatingBagreementBmustBbeBfiledBwit
hBtheBSecretaryBofBStateBinBtheBjurisdictionBwhereBtheBbusinessBwillBoperate
FalseB-
BAnswerBFranchiseBfeesBcanBbeBcostly,BbutBtheyBareBusuallyBpayableBoverBaBnumber
BofByears,BafterBprofitsBareBgeneratedBfromBtheBbusiness
FalseB-
BAnswerBTheBFederalBTradeBCommissionBwillBnotBallowBtheBsaleBofBfranchisesBthatBa
reBunfairBtoBtheBfranchisee
TrueB-
BAnswerBFilingsBareBrequiredBtoBformBandBoperateBaBlimitedBliabilityBpartnership
BB-BAnswerBAllBtheBbusinessBformsBlistedBbelowBhaveBlimitedBliabilityBexceptBthe:
a.BlimitedBliabilityBcompany.
b.BgeneralBpartnership.
, c.BSubchapterB"S"Bcorporation.
d.Bcorporation.
DB-
BAnswerBRachelBandBCyndiBstartedBaBretailBbusinessBcalledBZebraBToyBCompany.BThe
BbusinessBisBoperatedBasBaBpartnership.BUnderBpartnershipBlaw:
a.BRachelBisBpersonallyBliableBforBanyBbusinessBcontractsBenteredBintoBbyBCyndi.
b.BRachelBisBpersonallyBliableBforBanyBbusinessBdebts,BregardlessBofBwhetherBsheBorB
CyndiBcreatedBtheBobligation.
c.BRachelBisBpersonallyBliableBforBanyBnegligentBactBcommittedBbyBCyndiBinBtheBscop
eBofBtheBbusinessBactivity.
d.BallBofBtheBabove
50,000B-
BAnswerBLanceBandBDarrellBhaveBanBequalBpartnership.BThisByear,BafterBexpenses,Bth
eBpartnershipBhadBaBprofitBofB$100,000.BLanceBandBDarrellBwillBeachBpayBtaxesBon:
cooperativeB-
BAnswerBSeventyBfarmersBinBMorganBCountyBjoinedBtogetherBtoBgainBtheBadvantages
BofBpurchasingBseedBandBfertilizerBinBbulkBandBofBobtainingBbetterBpricesBwhenBdistri
butingBandBsellingBtheirBcrops.BTheseBfarmersBhaveBformedBa:
AB-BAnswerBTheBFederalBTradeBCommissionBrequiresBfranchisorsBto:
a.BgiveBprospectiveBfranchiseesBanBofferingBcircularBatBleastB14BbusinessBdaysBpriorBt
oBtheBsigningBofBaBcontractBorBpaymentBofBanyBmoney.
