Which of the following is an incorrect statement regarding delaware corporation law?

• LGS 200 Module 4 Private Law and Business Environment

• limited sole proprietorship 10 Which of the following is NOT a major form for conducti- Sole partnership ng businesses and professions?

which of the following is not an advantage of a sole proprietorship?

• The sole proprietorship "veil" shields the sole proprietor from personal liability for business debts which of the following is incorrect regarding the cre- creation of a sole proprietorship utilizes the same pration of a sole proprietorship? ocedure for the creation of a corporation

A sole proprietor has ____________ personal liability.

• unlimited The income or loss from the sole proprietorship is repotaxpayer's Form 1040 U. Individual Tax Return. rted on ____________, which must be attached to the
• Schedule C Which of the following is NOT a basic form of breach ofthe partnership? a general partner's duty of loyalty to other partners and
• Keeping partnership information confidential Which of the following is NOT a duty of general partne- duty of divergent purpose rs?

________________ are personally liable for the debts and obligations of the partnership.

• General Partners which of the following is an INCORRECT statement reg- The UPA has been adopted in whole or in part by a minority of statesarding the Uniform Partnership Act (UPA)

Which of the following NOT a criterion to qualify as a general partnership under the UPA?

• the issuance of publicly-traded stock which of the following is an INCORRECT statement reg- Stock of the partnership, representing ownership, mustarding formation of general partnership? be publicly traded on a well-known stock exchange (for example, NASDAQ). Which of the following is an INCORRECT statement regar- The organization or venture must actually make a profit in order to qualify as a partnershipding formation of a general partnership?

Which of the following is an INCORRECT statement regarding the name of a general partnership?

• The name selected by the partnership can indicate that it is a corporation According to the UPA, a general partner is entitled tordinary and proper conduct of the business. o ____________ for expenses reasonably incurred in the

• indemnification 11 Under the Uniform Partnership Act, general partners hatrust committed by a partner or an employee of the general partnership while acting on partnership business ve ________________ liability for torts and breaches of

• Joint and Several According to the UPA, the ___________ of a partnershipany partner ceasing to be associated in the carrying on of the business." is "the change in the relation of the partners caused by

• dissolution The process of ____________ consists of the liquidation (proceeds to satisfy claims against the partnership. sale) of partnership assets and the distribution of the

• winding up A limited partnership is also known as _______________ - special partnership

A limited partnership has two types of partners: _______________________

• general and limited In a limited partnership, limited partners are not pe_______________. rsonally liable for partnership debts beyond their
• Capital Contributions which of the following is an INCORRECT statement reg- A limited partnership cannot have more than one genearding limited partnerships? ral partner

A limited partnership agreement is also called the _______________________.

• articles of limited partnership A limited partnership is required by law to keep all EX- copies of financial statements older than three yearsCEPT which of the following records at its principal office?

A limited partnership is required by law to keep the following records at its principal office?

• 1. Copies of federal, state, and income tax returns2. a list of the full name and business address of each partner

1. copies of effective written limited partnership ag4. a copy of the certificate of limited partnership reements

Which of the following is an INCORRECT statement regarding the liability of general partners in a limited partnership? - The general partners of a limited partnership have limited liability for the debts and obligations of the limited partnership The RULPA identifies the types of activities that a liliability. These activities include all EXCEPT which ofmited partner may engage in without losing his or her the following? limited

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Which of the following is an INCORRECT statement regarding the duration of corporation's existence?

• Corporations automatically expire twenty (20) years aftincorporation unless the owners of the corporation expressly petition the secretary of state for renewal of the er the secretary of state's issuance of a certificate of corporate charter. Which of the following is an INCORRECT statement regar- A corporation usually has a decentralized management ding corporate management?

Which of the following is an INCORRECT statement regarding corporate shareholders?

• Generally, shareholders have unlimited liability for corporate debts. The Ford Motor Company, a major manufacturer of autoDelaware. It is a(n) ______________ corporation in Delaware. mobiles and other vehicles, is incorporated in
• domestic Can a corporation be incorporated in more than one sta- No te?

The articles of incorporation are also referred to as the corporate ____________.

• charter According to the RMBCA, the articles of incorporation mu- the period of duration of the corporation st include all EXCEPT which of the following?

According to the RMBCA, the article of incorporation must include which of the following?

• the name and the address of each incorporator Does the registered office/agent of a corporation have tbusiness? o be at the same location as the corporation's place of
• No Which of the following is an INCORRECT statement regar- Incorporators, not the initial directors, can adopt the bylaws of the corporation corporate bylaws?

An act by a corporation that is beyond express or implied powers is called a(n) ________________ act.

• ultra vires Common stock is a type of equity security that represents t- residual he ________ value of a corporation.

Does common stock have a fixed maturity date.

• No ____________ stock is a type of equity security that is gi- Preferred ven certain preferences and rights over common stock.

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Which of the following is an INCORRECT statement regarding preferred stock?

• Preferred stockholders have unlimited liability for corporate debts and other obligations. A dividend preference is the right to receive a(n) ____- fixed ________ dividend at set periods during the year.

Which of the following is NOT a criterion a corporation must meet in order to be taxed as an S corporation?

• The corporation must have no more tan 1,000 shareholders. Which of the following is an INCORRECT statement regar- A corporation must do business in Delaware in order to obtain the benefits of Delaware corporation law Delaware corporation law?

Which of the following is an INCORRECT statement regarding a corporation's shareholders?

• Shareholders have comprehensive management dutites If a shareholders' meeting is not held within either __________ months after the end of the corporation's f__________ months of the last annual meeting or iscal year, whichever is earlier, a shareholder may petition the court to order the meeting held. - 15; 6

Which of the following is an INCORRECT statement regarding shareholders' meetings?

• Annual shareholders' meetings must b held at the times fixed in the articles of organization. A(n) __________ is a shareholders' authorizing of anothshareholders' meetings in the event of the shareholder's er person to vote the shareholders' shares at the absence.
• proxy Which of the following is an incorrect statement regardi- The record date is set forth in the corporation's articles of organization corporate voting requirements?

Which of the following is an INCORRECT statement regarding corporate voting requirements?

• The affirmaive vote of the majority of the non-votingan act of the shareholders for actions other than for th shares represented at a shareholders' meeting constitutese election of directors.

Unless otherwise required by a corporation's articles of incorporation or by corporate law, voting for the election of directors is by the _________ voting method. - straight

The straight voting is also referred to as __________ voting.

• noncumulative _____________ voting is a system in which a shareholder all for one candidate or split them among several candidates. can accumulate all of his or her votes and vote them
• cumulative

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According to the __________ doctrine, if a shareholder dominates a corporation and uses it for improper purposes, a court of equity can disregard the corporate encorporation's debts and obligations. tity and hold the shareholder personally liable for the

• piercing the corporate veil The goals of the Sarbanes-Oxley Act (SOX) of 2002 includ- replace independent corporate adults with internal auditse all EXCEPT which of the following?

Which of the following is an INCORRECT statement regarding limit liability corporations?

• LLCs are creatures of federal statue The owners of LLCs are usually called - members

A(n) __________ is an unincorporated business entity that combines the most favorable attributes of general partnerships, limited partnerships, and corporations. - LLCs

The ___________ is a model that provides comprehensive and uniform laws for the formation, operation, and dissolution of LLCs. - ULLCA

Which of the following is an incorrect statement regarding the taxation of LLCs?

• Under the Internal Revenue Code, for federal incomeelects to be taxed as a partnership. tax purposes, an LLC is taxed as a corporation unless it

Which of the following is an INCORRECT statement regarding capital contributions to an LLC?

• A member's capital contribution to an LLC may not be in the form of services. A(n) ____________ is an agreement entered into amonLLC and the relations among members, managers, and thg members that governs the affairs and business of the e LLC.
• operating agreement A ___________ interest is a members' ownership interesdistributions of money and property from the LLC. t in an LLC that entitles the member to receive
• distributional Which of the following is an INCORRECT statement regar- A member's distributional interest in an LLC must be transferred in wholeding a distributional interest in an LLC?

As a general rule, members of an LLC are not personally liable to third persons for the debts, obligations, and liabilities of an LLC beyond their ____________ - capital contribution

Are managers personally liable in an LLC?

• no 17 An LLC can be either a(n) ________-managed LLC or a(- member; manager n) ___________-managed LLC.

Which of the following is an incorrect statement regarding the management of an LLC?

• An LLC must be managed by designated management, not by its members Can all actions concerning the LLC by delegated to mana- no gers?

Which of the following is an INCORRECT statement regarding agency authority to bind an LLC to contracts?

• In a manager-managed LLC, non-manager members can bind the LLC to contracts Which of the following is an INCORRECT statement regarLLC? ding members' and managers' duty of loyalty to an
• A manager of a manager-managed LLC does not owe a not a member. fiduciary duty of loyalty to the LLC, since her or she is

Today, more than ________ franchise outlets in the United States account for more than _________ percent of retail sales and about ________ percent of the gross dom- 700,000; 25; 15 estic product.

Which of the following is NOT an advantage to franchising?

• For the franchise, there are no start-up expenses Which of the following is NOT a basic form of franchises- temporal?

What are the forms of franchises?

• 1. processing plant2. distributorship

1. area4. chain

In a(n) __________ franchise, the franchisor manufactures a product and licenses a retail dealer to distribute a product to the public? - distributorship

In a ___________ franchise, the franchisor provides a secret formula, or the like, to the franchisee. the franchisee then manufactures the product at its own loca- processing plant tion and distributes it to retail dealers.

in a ___________ franchise, the franchisor licenses the franchisee to make and sell its products or services to the public from a retail outlet serving an exclusive geog- chain-style raphical territory.

_____ are personally liable for the debts and obligations of the general partnership. 19 -general partners. The formation of a general partnership creates certain rights and duties among partners and between the partners and third parties. For example, gobligations of the partnership. eneral partners are personally liable for the debts and

Which of the following is an INCORRECT statement regarding formation of a general partnership? -Stock of the partnership, representing ownership, must bexample, NASDAQ). The partners of a general partnershie publicly traded on a well-known stock exchange (for p are the co-owners of the business. General partnerships do not issue and trade stock ownership in the partnership. Which of the following is an INCORRECT statement regar-the name selected by the partnership can indicate that it is a corporation name selected by the partnershipding the name of a general partnership? cannot indicate that it is a corporation (for example, it cannot contain the term Inc.) Which of the following is NOT a major legal form in w - Limited sole proprietorship hich to conduct a business?

Which of the following is NOT an advantage of a sole proprietorship?

• The sole proprietorship "veil" shields the sole proprietor liability for bussiness debts Which of the following is an INCORRECT statement regar - Creation of a sole proprietorship utilizes the same procedure for the creation of a corporationding the creation of a sole proprietorship?

A sole proprietor has _____ personal liability.

• Unlimited Nathan opens a clothing store called "The Clothing Storthe proper statement and publishes the necessary notice ofe" and operates it as a sole proprietorship. Nathan fi the use of the trade name. Nathan contributes les $25,000 of his personal funds to the business and borrowAfter several months, Nathan closes the business because it is $100,000 from a bank in the name of the business. s unsuccessful. At the time it is closed, the business has no assets, owes the bank$100,000, and owes ocorrect statement regarding Nathan's personal risk exposure for his unsuccessful business?ther debts of $25,000. Which of the following is a
• Nathan loses his $25,000 capital contribution, and hand the $25,000 debt owed to others. e is responsible for the $100,000 debt owed to the bank

_____ are personally liable for the debts and obligations of the general partnership.

• General partners Which of the following is an INCORRECT statement regar - The UPA has been adopted in whole or in part by a minority of statesding the Uniform Partnership Act (UPA)?

Which of the following is NOT a criterion to qualify as a general partnership under the UPA?

• The issuance of publicly-traded stock Which of the following is an INCORRECT statement regar - Stock of the partnership, representing ownership, must be publicly traded on a well-known stock excgange ding formation of a general partnership?

(ex: NASDAQ) 20 Which of the following is an INCORRECT statement regar - The name selected by the partnership can indicate that it is a corporationding the name of a general partnership?

General partners do not pay federal income taxes. Instead, the income and losses of partnership have to be reported on the individual partners' personal income ta - Flow-through taxation x returns. This is called _____.

Under the Uniform Partnership Act, general partners have _____ liability for torts and breaches of trust committed by a partner or an employee of the general - Joint and several partnership while acting on partnership business.

According to the UPA, the _____ of a general partnership is when the "general partnership receives notice from a general partner of their express will to withdraw as - Dissolution a partner."

The process of _____ consists of the liquidation (sale) of general partnership assets and the distribution of the proceeds to satisfy claims against the partnership. - Winding up

A limited partnership has two types of partners: _____.

• General and limited Before transacting business in a foreign state, a foreigregistration with that state's _____. n limited partnership must file an application for
• Secretary of state _____ formation occurs when: 1) a certificate of limitecertificate that is filed; or 3) some other statutory requirement for the creation of a limited partnership d partnership is not properly filed; 2) there are defis not met in a
• Defective A limited partnership agreement is also called the ____ - Articles of limited partnership _.

In a limited partnership, limited partners are not personally liable for partnership debts beyond their _____.

• Capital contributions Under the Uniform Partnership Act, general partners areven if the partner did not join in the commission of the act _____ liable for the business of the limited partnership
• Jointly and severally _____ are not personally liable for the debts and obli - Limited partners gations of the limited partnership.

The process of _____ consists of the liquidation (sale) of limited partnership assets and the distribution of the

Which of the following is an incorrect statement regarding the duty of care of directors and officers of a corporation?

Which of the following is not a characteristic of a corporation?

Which of the following is an incorrect statement regarding limited liability companies LLCS )?

Which of the following is not a legal form of a business organization?