Question 1

Who serve as agents of the corporation and run the "day-to-day" operations of the business?

Accepted Answer

A)   officers
B)   directors
C)   shareholders
D)   employeesE) A) and B)
F) A) and C)

Question 2

Franchising is basically contractual in nature.

Accepted Answer

A) True 
 B)False

Question 3

Theoretically, the relationship between a franchisor and a franchisee is one of:

Accepted Answer

A)   parent and subsidiary.
B)   an "arm's-length" relationship between two (2)  independent contractors.
C)   an "arm's-length" relationship between two (2)  partners.
D)   an "arm's-length" relationship between two (2)  joint tenants.E) All of the above
F) A) and B)

Question 4

Under which organizational structure would the death of the owner have no legal effect?

Accepted Answer

A)   a partnership
B)   a corporation
C)   a sole proprietorship
D)   all of the aboveE) A) and B)
F) None of the above

Question 5

In the absence of a fixed duration provision, a joint venture will ordinarily terminate:

Accepted Answer

A)   upon completion of the project.
B)   at the will of any participant.
C)   as specified in the joint venture agreement.
D)   all of the above.E) All of the above
F) A) and D)

Question 6

A partnership is dissolved by the death of a partner.

Accepted Answer

A) True 
 B)False

Question 7

To protect themselves against liability, franchisors often require individual franchisees to:

Accepted Answer

A)   take out fraud insurance.
B)   register with the attorney general.
C)   publicly disclose their own separate business identities.
D)   disavow any connection with the franchisor.E) None of the above
F) A) and B)

Question 8

A sole proprietorship is taxed:

Accepted Answer

A)   on a personal and corporate level.
B)   only on the corporate level.
C)   only on the personal level.
D)   none of the above.E) C) and D)
F) A) and D)

Question 9

The Petroleum Marketing Practices Act gives gas station __________ the opportunity to continue in business by purchasing the entire premises used in selling motor fuel when the franchisor decides to sell the property and not renew a lease.

Accepted Answer

A)   franchisees
B)   licensors
C)   joint venturers
D)   partnersE) None of the above
F) B) and C)

Question 10

A corporation is a separate legal entity capable of owning property, contracting, and being sued in its own name.

Accepted Answer

A) True 
 B)False

Question 11

Partnership agreements allow individuals to conduct their business without the requirement of a formal organizational structure.

Accepted Answer

A) True 
 B)False

Question 12

A sole proprietor must file a certificate indicating that he or she is commencing operations and pay a single organizational fee.

Accepted Answer

A) True 
 B)False

Question 13

Most courts hold that joint ventures are not subject to the same principles of law as partnerships.

Accepted Answer

A) True 
 B)False

Question 14

The people in a corporation responsible for the management of the business are the:

Accepted Answer

A)   partners.
B)   shareholders.
C)   directors.
D)   licensees.E) All of the above
F) C) and D)

Question 15

A corporation must have at least two shareholders.

Accepted Answer

A) True 
 B)False

Question 16

The process of incorporation involves the expenditure of funds for organizational expenses.

Accepted Answer

A) True 
 B)False

Question 17

Under the FTC disclosure rule, a franchisor must pay a __________ penalty of as much as __________ for each violation when it is shown that a sale of a franchise subject to the FTC rule was made, the franchisor knew or should have known of the disclosure rule, and no disclosure statement was given to the buyer.

Accepted Answer

A)   civil; $10,000
B)   criminal; $10,000
C)   civil; $25,000
D)   criminal; $25,000E) All of the above
F) A) and C)

Question 18

An unincorporated association cannot sue or be sued in its own name.

Accepted Answer

A) True 
 B)False

Question 19

In a corporation, a large number of investors may pool their assets to finance a large business enterprise.

Accepted Answer

A) True 
 B)False

Question 20

The death of a majority shareholder terminates a corporate enterprise.

Accepted Answer

A) True 
 B)False

Exam 41: Types of Business Organizations

Under which organizational structure would the death of the owner have no legal effect?

Correct AnswerverifiedShow Answer

Most courts hold that joint ventures are not subject to the same principles of law as partnerships.

Correct AnswerverifiedShow Answer

A corporation must have at least two shareholders.

Correct AnswerverifiedShow Answer

An unincorporated association cannot sue or be sued in its own name.

Correct AnswerverifiedShow Answer

The people in a corporation responsible for the management of the business are the:

Correct AnswerverifiedShow Answer

The Petroleum Marketing Practices Act gives gas station __________ the opportunity to continue in business by purchasing the entire premises used in selling motor fuel when the franchisor decides to sell the property and not renew a lease.

Correct AnswerverifiedShow Answer

Who serve as agents of the corporation and run the "day-to-day" operations of the business?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The death of a majority shareholder terminates a corporate enterprise.

Correct AnswerverifiedShow Answer

A sole proprietorship is taxed:

Correct AnswerverifiedShow Answer

In the absence of a fixed duration provision, a joint venture will ordinarily terminate:

Correct AnswerverifiedShow Answer

A partnership is dissolved by the death of a partner.

Correct AnswerverifiedShow Answer

Partnership agreements allow individuals to conduct their business without the requirement of a formal organizational structure.

Correct AnswerverifiedShow Answer

Franchising is basically contractual in nature.

Correct AnswerverifiedShow Answer

The process of incorporation involves the expenditure of funds for organizational expenses.

Correct AnswerverifiedShow Answer

In a corporation, a large number of investors may pool their assets to finance a large business enterprise.

Correct AnswerverifiedShow Answer

To protect themselves against liability, franchisors often require individual franchisees to:

Correct AnswerverifiedShow Answer

Theoretically, the relationship between a franchisor and a franchisee is one of:

Correct AnswerverifiedShow Answer

A corporation is a separate legal entity capable of owning property, contracting, and being sued in its own name.

Correct AnswerverifiedShow Answer

A sole proprietor must file a certificate indicating that he or she is commencing operations and pay a single organizational fee.

Correct AnswerverifiedShow Answer

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