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Exam 35: Forms of Business Organization

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Question 1

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Syndicates are usually considered a type of ______, thus they are almost always governed by ______ law.

A) Limited liability company; corporate
B) Joint venture; partnership
C) Cooperative; corporate
D) Business trust; corporate
E) Joint stock company; partnership

F) D) and E)
G) C) and E)

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Question 2

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Brice just finished a residence in internal medicine and wants to go into practice with Horace and Joyce. Brice tells you that while he needs to practice with other physicians for call coverage and for other reasons, he does not want to be liable should the other physicians be found guilty of malpractice. You discuss various incorporation options with him, but he tells you that he would like to form a partnership. What business form would you recommend to him and why?

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A limited liability partnershi...

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Question 3

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Which of the following was the result in Meyer v. Christie, the case in the text involving whether an agreement to enter into a joint venture existed?

A limited partnership and a limited liability partnership refer to the same type of business organization.

In which of the following, if any, may investors share in profits but not in management responsibilities while avoiding personal liability?

Which of the following is responsible for running the day-to-day business of a corporation?

Which of the following is false regarding a sole proprietorship?

Which of the following is a business that exists because of an arrangement between the owner of a trade name or trademark and a person who sells goods or services under the trade name or trademark?

Which of the following was the result in Cousins Subs Systems Inc., v. Michael R. McKinney, the case in the text involving whether the defendant wrongfully terminated a franchise agreement with the plaintiff?

"Peanut Allergy." Kitty, who had a love of baking, decided to open her own bakery. She decided that she did not need and did not want to pay for a lawyer to advise her on different forms of ownership. Unfortunately, Kitty had not paid attention in business law class. She proceeded, with little thought, to simply open her business called Kitty's Baking. Bobby came in to order some cookies for his girlfriend, Bitsy. Unfortunately, Bitsy was allergic to peanuts. Bobby told Kitty that he needed some cookies for Bitsy but that Bitsy had allergies to peanuts. Kitty told him not to worry because she would make up a special batch just for him. Kitty had hired some assistants because she was so busy. She told an assistant, Cathy, to make up several batches of cookies for different customers including Bobby and told her to leave out the peanuts in Bobby's batch because of the allergy. Cathy, however, forgot about the peanut allergy and proceeded to make Bobby's cookies with peanuts. Bobby picked up the cookies and gave one to Bitsy in the car while they were on the way to the movie in Bobby's new car. Bitsy became violently ill, vomited in Bobby's car, and had to have her stomach pumped. Bobby and Bitsy sought recovery from Kitty who told them that Bitsy's doctor bill and Bobby's car cleaning bill were business debts, that the business was new and not making any money at the moment, and that she had no personal liability. Following the incident involving Bobby and Bitsy, Kitty discusses her problems with the bakery with her parents. Kitty's parents would like to invest in her business and share in any profits, but they do not want to share in the management responsibilities. -What type of business had Kitty initially set up?

Which of the following is false regarding a general partnership?

Investor-owners of a corporation are called which of the following?

"Tutoring Concerns." Wally and Sally want to go into business together and plan on offering a tutoring service to high school and college students. Wally proposes that they share control of the business and split profits equally and not bother with a written agreement. Sally, however, is concerned about being able to pay their debts since they will have to rent tutoring space, and purchase computers and supplies. She is also concerned about parents and students who may sue if their test scores do not improve. She tells Wally that she just bought a new boat and car, and that she does not want her assets to be in jeopardy. She tells Wally that they should form a corporation to shield their personal assets. Wally, however, tells their personal assets are not in danger with his proposal because they are a business and that, furthermore, forming a corporation would even result in tax being imposed twice. -What type of arrangement did Wally propose with his suggestion that they share control of the business and split profits equally, not bothering with a written agreement?

"Tutoring Concerns." Wally and Sally want to go into business together and plan on offering a tutoring service to high school and college students. Wally proposes that they share control of the business and split profits equally and not bother with a written agreement. Sally, however, is concerned about being able to pay their debts since they will have to rent tutoring space, and purchase computers and supplies. She is also concerned about parents and students who may sue if their test scores do not improve. She tells Wally that she just bought a new boat and car, and that she does not want her assets to be in jeopardy. She tells Wally that they should form a corporation to shield their personal assets. Wally, however, tells their personal assets are not in danger with his proposal because they are a business and that, furthermore, forming a corporation would even result in tax being imposed twice. -In regard to the quest of Wally and Sally to find the best form of business organization, which of the following is true?

Which of the following is true regarding joint ventures?

Which of the following establishes how a franchise agreement will be terminated?

"Tutoring Concerns." Wally and Sally want to go into business together and plan on offering a tutoring service to high school and college students. Wally proposes that they share control of the business and split profits equally and not bother with a written agreement. Sally, however, is concerned about being able to pay their debts since they will have to rent tutoring space, and purchase computers and supplies. She is also concerned about parents and students who may sue if their test scores do not improve. She tells Wally that she just bought a new boat and car, and that she does not want her assets to be in jeopardy. She tells Wally that they should form a corporation to shield their personal assets. Wally, however, tells their personal assets are not in danger with his proposal because they are a business and that, furthermore, forming a corporation would even result in tax being imposed twice. -Which of the following is true regarding Wally's assertion regarding tax?

Which of the following is the most popular form of business ownership in the U.S.?

Which of the following is false regarding a limited partnership?

An S corporation cannot have more than 75 shareholders.