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Exam 17: Business Organizations

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Question 31

Multiple Choice

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Bayside Restaurant LLC is a limited liability company.Its sole member is Conrad.For federal income tax purposes,unless the firm indicates otherwise,it will automatically be taxed as

A) a person.
B) a corporation.
C) a sole proprietorship.
D) a partnership.

E) None of the above
F) All of the above

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Question 32

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The Franchise Rule requires a franchisor to provide potential earnings figures to its prospective franchisees.

A) True
B) False

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Question 33

Multiple Choice

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Donuts Whole Inc.offers an entrepreneur the opportunity to operate a franchise bakery under the Donuts Whole trade name.Before a franchise contract is signed,Donuts Whole must explain

Gift Shop is operated as a partnership,with five partners.Han has a one-third interest in the firm.Each of the other partners has a one-sixth interest.Ingre is the senior partner.With respect to ordinary management decisions

Liu,the owner of Mortgage Source,a sole proprietorship,wants to obtain additional business capital.For this enterprise,the opportunity is most likely limited to

Dain is a limited partner in Eco Baits,a pest control service organized as a limited partnership,which cannot pay its debts.Dain is liable for the debts

To eliminate costly negotiations or litigation,partners may agree on how the firm's assets will be valued or divided if the partnership dissolves.

Jana and Kwan are partners in Lawyers LLP,a limited liability partnership.Jana supervises the firm's associate Milo,who negligently fails to appear in court on behalf of Norm,a client.Liability to Norm rests only with

Mai-Lin's Martial Arts,Inc. ,grants a franchise to Naomi to operate a Mai-Lin's school.Mai-Lin's may require Naomi to pay the franchisor a percentage of her

Nora and Owen do business as Property & Profit,a real estate investment partnership.In acting on the firm's behalf,Nora takes advantage of an opportunity to make a secret profit.To her firm,Nora is liable for a breach of

As in a partnership,a limited liability company may pay no taxes-profits can be passed through to the members,who pay personal taxes on the profits.

The member of a limited liability company has the power to dissociate from the firm at any time,but may not have the right.

Case law governing franchising emphasizes the importance of good faith and fair dealing.

A partner who withdraws from a partnership for a term before its expiration date can be held liable for any resulting losses.

Only a managing partner has the right to full and complete information concerning the conduct of all aspects of partnership business.

Fizz and Guy are partners in Home Decor,a furniture store.Fizz dissociates from the business.This ends Fizz's

Carl starts up,and assumes the financial risk of,DataWorks,a new marketing enterprise.As a sole proprietorship,Carl's enterprise must meet legal requirements relating to

Rena establishes and operates Sweet Homes,a construction-contracting outfit,as a sole proprietorship.In the course of doing business,the outfit fails to pay some of its debts.To satisfy the obligations,the firm's creditors can go after

In a sole proprietorship,the proprietor bears the burden of any liabilities incurred by the business enterprise.

Maeve sells New Energy,a sole proprietorship that makes and sells solar panels,to Omar.This is