Question

Please answers the below True/False and Multiple choice questions from Business Law. (Please provide a brief explanation to answers if possible)

Chapter: Business Organizations

1.   The business judgment rule does not immunize members of boards of directors from liability to stockholders that come about from the bad business decisions of those directors. True/False

2. Corporations are not required to incorporate under the law of the state where their corporate headquarters is located. True/False

3. The portion of a corporation’s profits that has not been paid out as dividends to shareholders is known as retained earnings. True/False

4. An S Corporation can have no more than five hundred shareholders. True/False

5. The president and other top officers of a corporation are elected by its shareholders. True/False

6.   A corporation is not effectively organized until its Bylaws have been filed with the Secretary of State. True/False

7. A corporation must be incorporated in the state where it is headquartered. True/False

8.   The term “ultra vires” means

                a.             highly toxic

                b.             extremely profitable

                c.             beyond the powers

                d.            none of the above

9.   The federal disclosure rules that regulate franchising are created by the Food and Drug Administration (the FDA). True/False

10. Limited liability companies essentially have the same tax treatment as partnerships. True/False

11. Limited partners are investors who do not generally participate in managing the business. True/False

12. All partners in a limited partnership have limited liability. True/False

13. The severance of the relationship between a partner and a partnership is called dissociation. True/False

14. Limited liability companies are created by agreement of the parties, no filing of documents with the state is required. True/False

15. In their relations with one another partners are fiduciaries. True/False

16. The simplest form of business organization is the

                    a.             sole proprietorship

                    b.             general partnership

                    c.             limited partnership

                    d.            limited liability company

17. Franchises fall into the following categories:

                a.             distributorships

                b.             chain-style business operations

                c.             manufacturing or processing plant arrangements

                d.            all of the above

18. Shareholders vote on matters that change the corporation's structure or existence, such as a merger with another firm. True/False

19. A written authorization to cast another shareholder's vote is called a quorum. True/False

20. Directors, but not managers, are subject to a duty of loyalty to the corporation. True/False

21. To help ensure federal taxation as a partnership, state LLC statutes:

                    a.             place restrictions on transferability of member interests

                    b.             provide for continuity of life

                    c.             provide for unlimited liability

                    d.            all of the above

22. Limited partners are investors who may not participate in managing the business. True/False

23. The withdrawal or death of a partner causes the partnership to be dissolved, but many partnership agreements have provisions to allow the partnership to continue despite such events. True/False

24. Partners in a general partnership owe a fiduciary duty to one another. True/False

25.   The corporation is the oldest and simplest form of business organization. True/False

26. A general partnership is a separate legal entity distinct from the owners for all purposes. True/False

Answer 1

1) False as for bad business decision directors is not liable but for any fiduciary misdeeds, the director can be liable.

2) False - as corporate has to be incorporated in the state where its H.Q is located

3) True - as retained earning is the earning which is retained back to business to help it grow and is not distributed to the shareholder.

4) False -  S-corporation should have 100 or fewer shareholders.

5) False - They are elected by the person who has established the firm i.e board of directors of the company.

6)  True - As before forming a corporation its organization rules and regulation i.e bylaws has to be registered before the secretary of state.

7) True - As corporate has to be registered in where it's the main officer i.e headquarter is located.

8) c Beyond the powers - an eg company going out of their legal preview becoming ultra vires

9) False - Federal disclosure rules that regulate franchising prepared by the federal trade commission.

10) True - LLC and LLP have the same tax structure.

11) True - As limited partners cannot take part in voting and managing the business.

12) True - In limited partners are restricted by their percentage of investment and debt obligation are restricted by the amount of investment made.

13) True - As disassociation will end partner and partnership agreement.

14) true - As LLC can be formed by the partners by an agreement of the organization to the state.

15) True - Partners have to be most ethical in carrying out business being in a fiduciary relationship.

16) True - as a sole proprietorship is formed only by one member.

17) b, as a chain-type business franchise is needed to any other person, wants to use its name.

18) c - The shareholder does not have any such rights but the board of directors has.

19 ) False -As a quorum is a minimum of members required to vote at a shareholder meeting.

20) false - Duty of loyalty is one of the fiduciary duty that applies to both director and managers

21) d - All of the above as all principle applies to LLC tax place restrictions on transferability of member interests it is to maintain economically rights, provide for continuity of life it is meant to continue business after death of partners, provide for unlimited liability as the LLC has to be liable for its business debts

22) True - As limited partners are cannot take part in management and voting of a business entity

23) True - As partners' health can dissolve a partnership but there are methods to keep it running like purchasing life insurance in the name,e of a partner.

24) True - partners must be ethical/honest in carrying out his duties which carries a fiduciary principle.

25) False - As a corporation is a new concept sole Proprietorship is the oldest form.

26) False - As in general partnership all the partners share responsibility, a separate legal entity separate actions of the entity with individuals.