Liberty University BUSI 301 quiz solutions

Liberty University BUSI 301 quiz 3 complete solutions correct answers A+ work
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Courts apply a subjective standard when examining the existence of offer and acceptance by the
parties when they created an agency relationship.
The centerpiece of a fiduciary relationship is the agent's duty to act with due care when performing
the responsibilities of the agency.
If an agent acts in a disloyal manner and realizes a personal profit from his or her acts, the court
may order a return of the funds, which is called:
The Social Security Act is funded through mandatory employment taxes paid by both the employer
and the employee.
Leah is a first-year elementary school teacher at a private religious school. The parents and kids
love her, and she gets along with everyone. One month after starting, she's called into the
headmaster'soffice and handed an envelope containing spring-breakcollege photosofher topless,
guzzling beer and alcohol, while sitting in variousmen's laps. The headmaster informs her thatshe
is terminated immediately and that she must clean out her desk and remove all personal
belongings by the end of the day. She demands to know where the headmaster got these photos,
and he tells her that the school monitors social networking sites. These pictures had been posted
to a site she no longer uses and had forgotten about.She will be successfulif she sues for wrongful
termination based on invasion of privacy.
The Fair Labor StandardsAct imposes restrictions on hiring workers under:
Which of the following is also called the Taft-Hartley Act?
Under the Age Discrimination in Employment Act, substantially younger is not defined, but many
courts follow the general rule that the age difference must be 10 years in order to qualify as
substantially younger.
An employee must file charges of illegal discrimination with the EEOC generally within ________
days of the adverse job action.
Under the Age Discrimination in Employment Act, to maintain a valid claim, the replacement
employee must be substantially younger than the terminated employee and must be a member of
a recognized protected class.
In cases where a partner has engaged in some misconduct or tortious conduct, a limited liability
partnership (LLP) acts to shield:
A limited liability company (LLC) is formed by filing _____ with the state public filing official in the
secretary of state's corporation bureau.
Limited liability companies (LLCs) are frequently governed by agreement of the parties in the form
of a statement of qualification.

Which of the following statements accurately differentiates between the management of a limited
liability company (LLC) and a limited
liability partnership (LLP)?
The Revised Uniform Limited Partnership Act (RULPA) formally requires a partnership agreement
to govern a limited partnership.
Which of the following statements accurately differentiates between a general partnership and a
limited partnership?
In choosing a business entity, principals of the business should consider the extent to which they
are personally liable for debt and other contract or tort liabilities of the business entity itself.
Which of the following is true of taxation in a C corporation?
The Revised Model Business Corporation Act (RMBCA) provides that anyone purporting to act on
behalf of a corporation, knowing incorporation has not yet occurred, is jointly and severally liable
for all liabilities created by the acts.
Matthew Granger is a member of the board of directors at Produxicore Inc. Over a period of one
year, Matthew failed to attend most of the board meetings claiming that he was unaware of their
occurrence. During the meetings that he did attend, he was not up-to-date with the company's
developments. He did not read the reports he was presented and was unfamiliar with the
company's financial records. In this scenario, Matthew Granger breached his duty of care primarily
through _____.
One who has experience, business savvy, and knowledge of a market to the extent that the law
imputes a certain cognizance of investment risk and the ability to protect his or her own interests
is referred to as a(n):
A primary market is one in which investors buy and sell issued securities among themselves.
The Private Securities Litigation Reform Act (PSLRA) of 1995 provides safe harbors from lawsuits
that shield a company and its officers and directors so long as the principals acted in good faith
and disclosed all relevant facts.
Disparagement has to do with industries, companies, and corporations but not individuals.
Jessica was caught shoplifting at a department store both by employees who witnessed the act
and by cameras in the store. The store's management may hold her as long as it takes to get her
to confess.
A commercial airliner crashed in the middle of the Atlantic. The cause of the crash has been proved
to be a wrongly installed part in one of the engines during routine maintenance. If a negligence
lawsuit is brought against the airline, it will be based on:
Courts enforce fraudulent misrepresentation for intentional lies but will not enforce fraudulent
misrepresentation for negligent ones.

A person cannot be guilty of negligence if he or she has no duty owed to the plaintiff.
The nonagent employee relationship is sometimes referred to as the:
Which of the following is an example of terminating the agency relationship by express act?
With regard to negligent hiring, the courts would require the least amount of scrutiny regarding:
The doctrine of negligent hiring applies to independent contractors only when the contractor is
hired to do a hazardous or inherently dangerous job.
If a principal wants to keep her identity secret, she would use:
The Worker Adjustment and Retraining Notification Act applies to situations in which entire plants
are to be shut down or a layoff is to occur. WARN applies to:
The Health Care and Education Reconciliation Act requires that employers provide health care
coverage to employees by 2014.
Disability benefits are provided to eligible workers pursuant to the:
Morris is a nonexempt employee with a salary of $400 a week based on a 40-hour week. If he
works 50 hours in a particular week, his paycheck should be for:
If a union chooses not to bring a grievance to arbitration, the individual union member always has
the right to pursue the matter through a lawsuit to enforce union provisions.
The Uniform Guidelines on Employee Selection Criteria says that discrimination is likely if the pass
rate of any protected class is less than ________ ofthe pass rate of the most successful race, sex,
or other protected class tested.
Title VII applies to private sector employers with:
The Equal Pay Act was written to prohibit racial discrimination in pay.
The Americans with Disabilities Act applies to employers with ________ employees.
The Equal Employment Opportunity Commission was created by:
Mike is a limited partner in Big Blue, LP. The partnership agreement permits him to have a say in
the removal of general partners and the blocking of new partners. This agreement will jeopardize
his limited partner status.
A limited partnership requires:
One disadvantage of a sole proprietorship business entity is that it is restricted to a single location
and cannot expand.
A general partnership may be formed by:
To date,every state in the union has adopted the Revised Uniform Partnership Act except the state
of Louisiana.
With regard to taxation, LLPs are treated as:
Voting rights of LLC principals are governed by:

Some states recognize LLCs but do not permit partnership taxation at the state level.
The IRS has classified the LLC as a type of corporation for tax purposes.
All states require that LLPs have a written partnership agreement.
Each of the following is a factor used by courts to determine whether to pierce the corporate veil
except:
A new start-up corporation has gone to a bank for a commercial loan. Recognizing the start-up
status of the business and the limited assets the corporation currently possesses, the bank, to
protectits interests, may require that either collateralbe pledged or a personalguarantee be signed
by shareholders but may not require both.
The corporation with the most shareholders is the:
A start-up business planning to incorporate must file for incorporation in the state in which it
originally plans to do business.
The Revised Model Business Corporation Act mandates that all corporations other than single-
member corporations maintain a board of directors with at least three members who are
independent of the officers and shareholders.
The "safe-harbor" exemption from SEC regulations involves:
The most commonly used debt instrument is:
Blue-sky laws are federal security laws that preempt state security laws.
Rule 10(b)(5) of the 34 Act is aggressivelyused by the SEC in terms of insider-trading enforcement.
Fred is a corporate insider and has made some very large profits through the buying and selling of
his corporation's stock during the previous six months. These profits would be called:
The Restatement (Third) of Agency has been adopted in about half of the states.
Courts apply a subjective standard when examining the existence of offer and
acceptance by the parties when they created an agency relationship.
A principal has a duty to reimburse or indemnify the agent for payments made or
expenses incurred event if incurred outside the agent's actual authority.
In all agency relationships, the principal authorizes the agent to provide services or
accomplish some task on behalf of the principal and
under the principal's charge.
In an agency relationship, the status of an agent is based on what the parties agreed to
rather than the actual working relationship between
principal and agent.
In creating an agency relationship, consent occurs when the principal manifests some
offer to form an agency.
In an undisclosed agency, the agent is not contractually liable to the third party.
In the case of the death of a principal, some state statutes permit the agent to continue to
have actual authority in the agency relationship,
until the agent learns of the death.

_____ arises either when the parties in an agency relationship expressly agree to create
the relationship or when the authority is implied
based on custom or course of past dealings.
Ratification
Actual authority
Retroactive power
Apparent authority
The increased political power of immigrant groups is one of the factors that forced the
federal government to legislate federal protections for
employees in the early 1900s.
The employment-at-will doctrine reflects an employer's wide latitude in decision making
when exercising the power and right to terminate an
employee.
The Fair Labor Standards Act (FLSA) is administered and enforced by the Equal
Employment Opportunity Commission (EEOC).
Generally, if a labor union chooses not to bring a grievance to arbitration, the individual
union member has the authority to pursue a lawsuit
against the employer to enforce contract provisions.
Even if a strike is commenced due to an unfair labor practice, the striking employees are
not entitled to immediate restatement with back pay
once they unconditionally return to work.
Wilma has been working full time for a large corporation for three years. Her mother has
fallen ill and is in need of continuous care for the next
few months. Wilma asks her employer for two months' medical leave and is granted
approval. Which of the following will be applicable to
Wilma according to the Family and Medical Leave Act (FMLA)?
She must be immediately credited with seniority when she returns.
She is not entitled to any health care benefits during the leave period.
She is entitled to a regular salary while on leave.
She must be immediately reinstated at the same rate of pay when she returns.
Ted works at Silvia's Inn from Monday to Friday. He works for 37 hours a week at a rate
of $10 per hour. On a particular Friday, Silvia asks
Ted to stay back and work two extra hours. According to the Fair Labor Standards Act
(FLSA), which of the following statements is most
likely to be true in this scenario?
Ted is not entitled to overtime pay.
Ted will receive overtime pay at the rate of $15 an hour.
Ted will receive overtime pay at the rate of $20 an hour.
Ted is entitled to overtime pay only if he works three extra hours.
Which of the following is true of the policies laid down by the Electronic Communications
Privacy Act (ECPA)?
Employers are allowed to access an employees' office voice mail without their consent.
Employers do not have the right to track websites visited by employees in office systems.
Employers do not have the right to monitor personal calls of employees in the workplace.
Employers require employees' consent to count their keystrokes and mouse clicks in
office systems.
The Federal Unemployment Tax Act covers the costs of administering state
unemployment insurance and state job service programs.
Social Security provides benefits for workers who become disabled on the job.
Leon works in an office environment and, during lunch, closes his office door and uses
his personal laptop computer to search the Internet for porn, accessing the company's

server via an ethernet cable connection. The company may monitor his computer usage
even though he is using a personally owned computer.
The term employment discrimination encompasses workplace-related discrimination that
may include the hiring process and disciplinary
action but does not include the treatment of employees in terms of promotions and
demotions, work schedules, and assignments.
The Americans with Disabilities Act (ADA) of 1990 requires the person in the protected
class to receive equal treatment to that of nonclass
members.
As in all civil cases involving employment discrimination, the initial burden of proof rests
upon the plaintiff to prove her case.
A state and local government affirmative action program aimed at addressing inequalities
in the workplace and in education is constitutional
so long as it attempts to remedy an actual past practice of discrimination, and it does not
employ a system of quotas.
While state antidiscrimination statutes are relatively conservative in exactly what
constitutes a protected class, federal statutes have
expanded protected-class membership.
The Equal Employment Opportunity Commission (EEOC) is a five-member commission
whose members are:
appointed by the president with approval of the Senate.
appointed by the Supreme Court judge.
elected by labor unions to form a separate body.
appointed by the Senate to be a part of Congress.
Wang is an Asian candidate applying for the position of a waiter at an Asian restaurant in
Boston. Raj, the restaurant owner, rejects Wang's
application because he believes that Asians do not make good waiters. Which of the
following statements is most likely to be true in the
context of Title VII of the Civil Rights Act of 1964?
Under Title VII, Wang is being discriminated against on the basis of his membership to a
protected class.
Under Title VII, Wang is being discriminated against on the basis of his membership to a
specific gender.
Under Title VII, Wang is not being discriminated against because Raj, being an Asian
himself, cannot discriminate against his
own group.
Under Title VII, Wang is not being discriminated against because he belongs to a
majority ethnic group and members of majority
groups cannot be discriminated against.
The theory of disparate treatment is based on the _____.
Duke Power standard
Hopkins standard
Griggs standard
McDonnell Douglas standard
A successful Age Discrimination in Employment Act suit requires that the plaintiff
affirmatively prove that age was the direct reason for the adverse employment action
suffered.
Under the Age Discrimination in Employment Act, substantially younger is not defined,
but many courts follow the general rule that the age difference must be 10 years in order
to qualify as substantially younger.

Which of the following is not a protected class under the original Civil Rights Act of 1964?
gender
age
race
national origin
T/F: Implied contracts may be found through language contained in an employee
handbook or manual
T/F: Each state follows its own individual whistle-blower statute
T/F: The centerpiece of a fiduciary relationship is the agent's duty to act with due care
when performing the responsibilities of the agency
T/F: A revocation of the agency relationship requires the principal and the agent to agree
to terminate the agency
T/F: In a disclosed agency situation, the agent is not contractually liable to the third party
T/F: Your professor is a partially disclosed agent representing your school
T/F: Rob agrees to act as an agent for Diane in selling her car. Diane has a duty of
loyalty to Rob
T/F: Courts will apply a subjective standard when examining the existence of offer and
acceptance by the parties when creating an agency relationship
T/F: One significant benefit of an employer completing an IRS Form SS-8 is that even if
the employer does in fact misclassify a worker, the proper completion of the form may
evidence a good faith effort by the employer reducing or even eliminating IRS penalties
for misclassification
T/F: Whether someone is an agent or not depends on what is said in the agreement
between the principal and the agent
T/F: A principal has the power to terminate an agency relationship whether or not they
have the legal right to terminate that relationship
T/F: In an agency relationship the principal's control must be total and continuous over
the agent
T/F: Whether an agency is classified as disclosed, undisclosed or partially disclosed, the
principal has the duty to fully perform the contract obligations
Sanchez borrowed money from Fifth National Bank to buy a car. She defaulted on the
loan. Fifth National hired Rex's Recovery Service to repossess the car for a set fee. They
were simply told to locate and seize the car. Rex's would be classified as a/an:
Mike worked for Frank's Pizza as a driver and is an agent. His duties consisted of making
deliveries along a designated route. One day Mike decided to see his girlfriend, Jackie,
who lived 50 miles out of his pizza route. While driving to his girlfriend's, Mike injured a
pedestrian, Chuck. The accident was caused because of Mike's negligent driving. Chuck
is now suing both Mike and Frank's for personal injuries. Under the circumstances is
Frank liable and why?
Joyce contracted with Mega Drug Corporation to buy vitamins on behalf of Howard, a
personal trainer. Howard told Joyce to use her own name and not to disclose to Mega
that she was working for Howard. If Joyce signs the contract in her own name only and
Howard won't honor it who is liable?
The Happy Days Day Care is hiring a child care worker. On their application they
specifically ask if you've ever been arrested. Tina has applied for a job at Happy Days
and answered no to the question. She has also answered no to the question asking if
there is any reason that she would not be qualified to work with children. Soon after Tina
is hired she severely shakes a baby to stop it from crying causing the baby injuries. It is
discovered at trial that Tina has been fired from numerous day cares for baby shaking

and other various offenses. If the baby's parents sue Happy Days who is liable and for
what?
What is another form of vicarious liability?
Respondeat Superior makes a principle liable for what?
If a principal would like to keep her identity secret, she would use a/an:
Courts will apply the ________ analysis to determine the classification of an agent
Generally, the agent's duty to keep an accounting means that the agent must:
The IRS has developed a three prong status to determine an agent's status, what are the
three prongs?
T/F: Employers are not required to offer their employees health care benefits
T/F: Employees classified as key employees who take leave, are not automatically
entitled to Family Medical Leave Act reinstatement protections and guarantees
T/F: The Social Security Act is funded through mandatory employment taxes paid by
both the employer and employee
T/F: Jan has been fired by her employer for poor job performance. Jan is still entitled to
apply for and receive employer provided health care under provisions of the
Consolidated Omnibus Budget Reconciliation Act
T/F: The Fair Labor Standards Act does not cover all employees
T/F: Ben has applied for a job at a restaurant. As a condition of employment, he may be
required to take a polygraph test
T/F: Federal Unemployment Tax Act covers the costs of administering state
unemployment insurance and state job service programs
Employee protection from use of regular or random drug or alcohol tests in the workplace
is governed by?
Protection of employee medical information is addressed by the:
Which of the following literary works, although fictional, has been extremely influential in
affecting American statutory law and is often cited in legislative histories regarding
employment law?
Under the Health Care and Education Reconciliation Act, employers offering high end
health care policies in 2018 will be required to pay additional taxes to help fund the Act's
plan. A high end health care policy is defined as costing more than?
Once the union organizers obtain authorization cards from at least ________ of the
members of a bargaining unit an election will be scheduled by the NLRB
Unsafe workplace conditions are monitored and regulated under:
The Labor Management Relations Act gives the President of the United States the right
to suspend a strike for up to ________ in times of national emergency
If an employee is killed on the job, OSHA requires that the employer notify them as soon
as possible but no later than ________ after the accident
With regard to polygraph tests, who is allowed to give them?
The Family Medical Leave Act provides that eligible employees be permitted how much
time off?
Management is permitted to voice objections to the formation of a union under what act?
The Fair Labor Standards Act imposes restrictions on hiring workers under what age?
In Falcon et al. v. Starbucks Corporation, after Starbucks reclassified the assistant store
managers (ASMs ) from exempt to nonexempt for FLSA purposes, changing their job
duties but not their labor budgets and discouraging overtime, the court found:
T/F: An employee has filed a claim of discrimination with the EEOC. If the EEOC
investigates and determines that they will not follow through with a law suit representing
the employee, the employee has no recourse and cannot file a private law suit
T/F: The most common form of sexual harassment is quid pro quo harassment

T/F: Under the Age Discrimination in Employment Act, substantially younger is not
defined, but many courts follow the general rule that the age difference must be 10 years
in order to qualify as substantially younger
T/F: The Equal Pay Act was written to prohibit racial discrimination in pay
T/F: A successful Age Discrimination in Employment Act suit required that the plaintiff
suffered
T/F: Affirmative action programs are designed to remedy an actual past practice of
discrimination
T/F: A person must exhibit some sort of distinctive physical characteristic, obvious to a
neutral observer in order to be considered as disabled
T/F: Under the Age Discrimination in Employment Act to maintain a valid claim the
replacement employee must be substantially younger than the terminated employee and
must be a member of a recognized protected class
Name a class that is not protected under the original Civil Rights Act of 1964?
April has refereed high school and women's college soccer for ten years. She is fit,
knows the rules without question and has always received excellent evaluations. When
she applies to referee men's college games, the men's college referee administrator tells
her that he can't use her because women won't get the player's respect and that the
game looks more serious and acceptable with men refereeing. April is the victim of what
kind of discrimination?
Tom is a city policeman and is Mr. August in the police charity calendar wearing only a
pair of Speedos and a smile. Chuck is a fellow cop and a homosexual. Every opportunity
that he has, Chuck brushes up against Tom and asks if Tom has ever been with a man.
Chuck buys Tom gifts and leaves them by Tom's locker. Tom throws the gifts away
immediately. Tom has asked Chuck to stop but Chuck just laughs and says that "I'll get
you someday". Tom is and has always been a heterosexual. Tom has complained to his
superiors pursuant to department policy but they claim it's just horseplay and not serious.
If Tom files a complaint with the EEOC does he have a valid case and why?
Which of the following would likely not be considered a major life activity supporting a
disability claim?
In EEOC v. Asplundh Tree Expert Co., the court dismissed the lawsuit against the
defendant because?
The Equal Employment Opportunity Commission was created by what act?
An employee must file charges of illegal discrimination with the EEOC within ________
days of the adverse job action
The business necessity defense is a defense to what kind of cases?
Kim, a CPA, works for a small accounting firm consisting of two managing partners, six
accountants and four secretaries. During a skiing vacation, Kim has a serious fall and is
paralyzed from the waist down. While she cannot walk, her mind is not affected and she
is 100% capable of performing her accounting duties. She has asked the firm to widen
the aisles between cubicles so she can maneuver her wheel chair and to provide a
special desk that is wheel chair friendly. These accommodations would cost less than
$1,000, what is the company required to do?
The Equal Pay Act is an amendment to what act?
Amanda works in an office environment with 50 employees. Once or twice a week, her
boss Alan, tells her she has great legs and that she should wear shorter skirts. He also
tells her to let loose and open another button on her blouse once in a while. She asks
him to stop and continues to wear knee length skirts and keeps her blouse buttoned to
the neck. He never touches her and he never makes these comments when someone
else can hear. When she gets her performance appraisal from Alan, he gives her an

excellent evaluation and a raise. After listening to Alan for six months she files a
complaint with the EEOC, does she have a valid claim and if so what kind of claim?
T/F: Most employers are not subject to affirmative action requirements
T/F: Disciplinary actions rarely give rise to employment discrimination claims
T/F: An employee has filed a claim of discrimination with the EEOC. If the EEOC
investigates and determines that they will not follow through with a law suit representing
the employee, the employee has no recourse and cannot file a private law suit
T/F: It may not be discriminatory to require that persons in a protected class, in certain
instances, be afforded special rights
T/F: The Equal Employment Opportunity Commission enjoys rule making as well as
enforcement powers
T/F: Intent to discriminate must be proven for a disparate treatment case to be
successful
T/F: The Americans with Disabilities Act defines a disability as being a physical
impairment and does not include or protect employees regarding mental impairments
T/F: Affirmative action programs are designed to remedy an actual practice of
discrimination
T/F: A plaintiff need not be in a minority of a protected class to be covered under Title VII
T/F: Which of the following is a neutral requirement that is likely to result in disparate
impact?
Martha and Bill have applied for teaching positions in your school's accounting
department. Martha is a recent graduate with her PhD in accounting and one published
paper. She has no teaching experience except for classes taught as a teaching assistant
during her PhD program. Bill also has a PhD in accounting and has been teaching for
five years at a major university. He has eight published papers. Both are hired as tenure
track assistant professors and assigned two 101 courses and one 102 course. When
Martha later discovers that Bill's salary is $10,000 higher than hers she is furious and
files suit under the Equal Pay Act. Will she be successful? Does she have a valid cause
of action?
Mike and Kathy are both tenured associate professors in a school's English Department.
Kathy is constantly asking Mike out on dates, which he always refuses. He has asked
her to stop asking. Furthermore, Kathy is always making provocative comments to him,
telling dirty jokes and asking him about his preferences in women which embarrasses
him and has caused him to lose sleep. If Mike sues the school for permitting her
behavior, who will win the case and under what circumstances?
Once the plaintiff has established a prima facie case under the McDonnell Douglas
standard and the defendant has presented justification for the actions taken, the plaintiff
must now prove any of the following except:
The Uniform Guidelines on Employee Selection Criteria says that discrimination is likely
if the pass rate of any protected class is less than ________ of the pass rate of the most
successful race, sex or other protected class tested
Courts apply the ________ analysis to determine the classification of an agent.
Karl is a driver for Arnold's Appliance Store and delivers appliances to customers. One
day, Karl negligently secures a washer and dryer in the back of his truck, and while he is
driving, the washer falls out of the truck. Jan, driving behind the truck, sees the appliance
flying at her and swerves into a telephone pole. Which of the following is correct?
If an agent acts in a disloyal manner and realizes a personal profit from his or her acts,
the court may order a return of the funds, which is called:
Agency law generally exists on the state statutory level and is based on:

In Hannington v. University of Pennsylvania, the court had to determine whether an
attorney acted under apparent authority regarding the negotiation and signing of a
settlement agreement. The court determined that:
The shift from an agricultural society toward industrial production began almost
immediately after the end of the U.S. Revolution. T/F
The Health Care and Education Reconciliation Act requires that employers provide
health care coverage to employees by 2014. t/f
In Falcon et al. v. Starbucks Corporation, after Starbucks reclassified the assistant store
managers (ASMs) from exempt to nonexempt for FLSA purposes, changing their job
duties but not their labor budgets and discouraging overtime, the court found that:
Leon works in an office environment and, during lunch, closes his office door and uses
his personal laptop computer to search the Internet for porn, accessing the company's
server via an ethernet cable connection. The company may monitor his computer usage
even though he is using a personally owned computer. t/f
t/f. Leah is a first-year elementary school teacher at a private religious school. The
parents and kids love her, and she gets along with everyone. One month after starting,
she's called into the headmaster's office and handed an envelope containing spring-
break college photos of her topless, guzzling beer and alcohol, while sitting in various
men's laps. The headmaster informs her that she is terminated immediately and that she
must clean out her desk and remove all personal belongings by the end of the day. She
demands to know where the headmaster got these photos, and he tells her that the
school monitors social networking sites. These pictures had been posted to a site she no
longer uses and had forgotten about. She will be successful if she sues for wrongful
termination based on invasion of privacy.
In a disparate impact case, if an employer can show that a challenged employment
practice is job-related and consistent with business necessity, the plaintiff can still win by
showing that:
An employee must file charges of illegal discrimination with the EEOC generally within
________ days of the adverse job action.
t/f The most common form of sexual harassment is quid pro quo harassment.
The business necessity defense is a defense to:
Mike and Kathy are both tenured associate professors in a school's English Department.
Kathy is constantly asking Mike out on dates, which he always refuses. He has asked
her to stop asking. Furthermore, Kathy is always making provocative comments to him,
telling dirty jokes, and asking him about his preferences in women, which embarrasses
him and has caused him to lose sleep. If Mike sues the school for permitting her
behavior:
The principal and agent are both liable in which of the following relationships
An agent, unless otherwise authorized, may substitute his or her own judgment for the
principal's judgement under the duty of
the duty of _ is the centerpiece of the fiduciary obligation
the agent must act as a reasonable person when conducting business on behalf of the
principal under the duty of
which law overlaps with agency law
peculiar risk doctrine
after a certain period of time, employees are entitled to the benefits of employer pensions
even if they no longer work for that organization under a principle called
a standard that is applied to all employees or candidates for employment equally but
nevertheless is shown to be discriminatory is called a _______ standard

following an investigation by the EEOC, should discrimination be found, the next step for
the agency is to begin______
The Americans with disabilities Act does not require an employer to provide
accommodations that constitute an _________ on the employer
disparate treatment is analyzed using the _______ standard
race, religion, color, gender, and national origin are examples of ________
after the plaintiff has proved his or her prima facie case of disparate treatment, if the
employer provides a false reason for its discriminatory actions, this is called ______
Mike is Kathy's employer. Mike tells her that she will not get a raise or promotion unless
she has sex with him. Mike has committed ________ sexual harassment
Mixed motives discrimination is anaylzed using the ________ standard
A disability, as defined in the Americans with Disabilities Act, is an impairment that
significantly limits a persons ability to participate in a _____ activity
disparate impact is analyzed using the _____ standard
the mandate given to the Equal employment opportunity commission is that the
commission is required to pursue any discrimination based claims made by aggrieved
employees
Stephen is 40 yrs old and has applied for a job at a large computer game development
company. He is told that he is "over the hill" and not eligible for employment at that
company. Stephen does not have a valid age discrimination suit under the Age
discrimination in employment act b/c the act applies to those already employed, not in
the hiring process.
Betty Sue suspects that she was turned down for a job as a server at Hooters because
she is 40 pounds overweight. She may conduct the EEOC which all investigate her case
based on a Title VII violation
once a employee has established that she or he has a covered disability, the Americans
with disabilities act requires that the employer make reasonable accommodations
allowing the employee to perform essential functions of the job
In Aquino v Honda Inc, even though the charges against Aquino for alleged vandalism
were dropped, Hondas reasonable belief, after its own investigation, met the burden of
proving that Honda had a legitimate, non discriminatory reason for his firing
most employers are not subject to affirmative action requirements
disciplinary actions rarely give rise to employment discrimination claims
in Oncale v Sundowner Offshore Services , the court determined that same sex
harassment is a legitimate issue covered and actionable under Title VII.
an employee has filed a claim of discrimination with the EEOC. If the EEOC investigates
and determines that it will not follow through with a lawsuit representing the employee,
the employee has no recourse and cannot file a private lawsuit
race discrimination directed at white employees violates Title VII if the employer's acts
were motivated by race
Every time Mike passes Kathy in the office, he rubs against her. Sometimes he walks up
behind her and massages her shoulders even though she has told him not to. lately he's
been pinching her butt when no one is watching. mike is committing quid pro pro sexual
harassment
Federal laws concerning discrimination expressly preempt state laws and prohibit states
from imposing additional obligations and legal responsibilities on employers not covered
under the federal statutes.
it may not be discriminatory to require that persons in a protected class, in certain
instances, be afforded special rights
The EEOC enjoys rule making as well as enforcement powers

Disparte impact claims under the Age discrimination in Employment act do nowt require
that the employer prove a business necessity in order to defend its actions
after conducting an investigation of a discrimination claim, if discrimination is found, the
EEOC may immediately file suit on behalf of the aggrieved employee
state and local affirmative action plans in regard to race or gender based preferences in
the hiring of government contractors are subject to strict scrutiny
intent to discrimination must be proved for a disparate case to be successful
the most common form of sexual harassment is quid pro pro harassment
under the Age discrimination in Employment Act, substantially younger is not defined, but
many courts follow the rule that the age difference must be 10 yrs in order to qualify as
substantially younger
the equal pay act was written to prohibit racial discrimination in pay
a successful age discrimination in employment act suit requires that the plaintiff
suffered
the americans with disabilities act defines disability as being physical impairment and
does not include or protect employees regarding mental impairments
Affirmative action programs are designed to remedy an actual past practice of
discrimination
a person must exhibit some sort of distinctive physical characteristic, obvious to a neutral
observer in order to be considered disabled
if the plaintiff proves her or his prima facie case under the Mcdonnell Douglas standard
the burden of proof shifts to the defendant to evidence a legitimate and non
discriminatory reason for the discriminatory action
affirmative action sets and requires quotas in order to meet racial and sexual equality
under the age discrimination act, to maintain a valid claim, the replacement employee
must be substantially younger that the terminated employee and must be a member of a
protected class
Emmanuelle has been the subject of intense and continuous hostile work environment
sexual harassment over a period of months . if she quits before filing a complaint with the
EEOC, she forfeits the right to file the complaint and seek damages
a plaintiff need not be in a minority within a protected class to be covered under Title VII
Genericization occurs when a trademark has lost its distinctiveness and becomes a
general term describing a type of product rather than a specific company's
The doctrine of equivalence will negate the effect of the doctrine of omission if the new
item performs substantially the same function as the already patented item.
Satires and parodies have generally been deemed not to be copyright infringement due
to the fair use doctrine.
If an item has been patented but has not been marked as patented and infringement
occurs, the patent holder is generally barred from collecting damages.
Once a patent has been issued by the U.S. Patent and Trademark Office, the patent
cannot be challenged or revoked due to the comprehensive investigation performed by
the USPTO prior to issuance.
Suggestive trademarks gain trademark protection only if they have acquired a secondary
meaning.
A telephone book listing citizens' names, addresses, and phone numbers may not be
copyrighted.
Jessica was caught shoplifting at a department store both by employees who witnessed
the act and by cameras in the store. The store's management may hold her as long as it
takes to get her to confess.

Disparagement has to do with industries, companies, and corporations but not
individuals.
Courts are bound by the Restatement of Torts, once it is published.
Brad is drunk and driving his car 20 miles over the speed limit. He hits Angelina, who is
crossing the street against a red light. Angelina has over $95,000 in medical bills and has
significant pain and suffering. If Angelina sues in a state that still follows the theory of
contributory negligence, she will get nothing.
Assume that Iowa has passed a law requiring that anyone riding or operating a
motorcycle wear a helmet. Mary enters Iowa Harley-Davidson and wants to take a test
ride. She doesn't have a helmet with her and the dealership doesn't have one available
in her size, so the proprietor lets her go without one. If she crashes and is injured, the
proprietor has committed negligence per se.
Your cousin, who is a CPA, calls you and says that a client paid him in diamonds and
he's selling them. If you purchase one of those diamonds, at the time of the sale your
cousin would be considered a merchant of those diamonds.
Johnson Builders is selling a newly built home to Sheila. JRK Realtors is handling the
transaction. This sale is covered under Article 2 of the UCC.
UCC gap fillers will not be used and are not applicable to contracts when the contract
clearly specifies a contract term or condition.
UCC risk of loss provisions will govern the terms of a contract even if the parties have
specified risk allocation in the contract.
The 2003 revisions to the UCC have been adopted by only about half of the states.
In an assignment or delegation, any third-party rights or duties occur after the contract is
formed.
Substantial performance will be enforced only if the deviation from complete performance
is not material to the contract.
Craig is a licensed plumber and has a contract to install a replacement toilet for Mary.
When Craig realizes that he has booked two appointments simultaneously, he calls
Brian, another licensed plumber, and asks him to install Mary's toilet. Craig has assigned
his duties to Brian.
A unilateral contract is formed when a promise requires acceptance by performance.
A valid contract is one that has all the necessary elements and, thus, can be enforced.
A handyman goes to the wrong house by mistake and cleans the gutters while the
homeowners are at work. The homeowners will have to pay for the service under the
quasi-contract theory of unjust enrichment.
Under most circumstances, acceptance cannot be imposed or inferred from an offeree's
silence after receiving an offer.
Reasonableness of an offer requires that the offeror have an objective intent to contract
when making the offer.
The mailbox rule determines when a contract is considered to be deemed accepted by
the offeree, thus depriving the offeror of the right to revoke the offer.
Helen's cat Fluffy has run away, and she places reward posters throughout her
neighborhood. Mark sees one of the reward posters and spends the next six hours
searching for Fluffy. While Mark is searching the neighborhood, Fluffy gets hungry and
comes home.
A contract in which each component of the contract is dependent on every other
component is called:
A valid contract is one that has all the necessary elements and, thus, can be enforced.
When an offer and agreement exist between parties, this is called:

Aimee goes online and orders a pair of jeans, three T-shirts, and a pair of boots. This is
an example of:
In general, contracts for services are governed by:
An agreement between two adults to pay $300 cash for a bicycle is an example of a
contract that is:
An agreement to buy cocaine from a dealer is:
Aimee goes online and orders a suit for work that consists of a jacket and skirt. This is an
example of:
All contracts can be described in seven ways.
Boris skydives from a plane and gets tangled in a tree, hopelessly suspended and
swinging precariously in his parachute from the branches of the tree. Natasha sees that
he is in trouble and comes to his rescue. Once Boris is safely on the ground, he
gratefully promises to give Natasha half of his life savings account. When he changes his
mind, Natasha will probably be unsuccessful in enforcing his promise.
Aiden says to Bob, "I'll sell you this rare book for $1,000." Aiden is the:
Josh is negotiating the sale of his car with Jonathan. Jonathan asks if the car has ever
been in an accident, and Josh replies, "No, it has never been in an accident." In fact, the
car was nearly totaled the year before when Sheila, Josh's girlfriend, was driving Josh's
car, hit a wet spot, and skidded into a pole. She had the car repaired without telling him
about the accident. Josh has committed:
Amanda, a recent university graduate, needed a car to get to her new job. To help
Amanda secure a loan for the car, Ted, a friend, agreed to pay the loan should Amanda
default. Ted's promise is enforceable as long as he goes to the bank, declares his
promise to guarantee Amanda's loan in front of witnesses, and shakes hands on the
deal, giving his word.
Jeff goes to a car dealership and the salesperson tells him that the car he's looking at is
a great car and an excellent value. The statements made by the salesperson, if untrue,
will not be adequate to create either an innocent misrepresentation or a fraudulent
misrepresentation.
Larry has had a few beers and is starting to get a bit drunk. He isn't acting strange, and
in conducting conversations with others he's slurring only an occasional word or two.
Larry, should he enter into a contract in this condition, would be considered mentally
incompetent and his contract would be void.
Contractual consideration is defined as the thought process a party uses to decide
whether or not to accept the offer and enter into a contract.
Generally, mutual mistakes will often lead to the court allowing an avoidance of a
contract; however, a unilateral mistake is not usually grounds to cancel a contract.
Which of the following promises ordinarily need not be in writing to be enforceable?
Offers that the offeree partly performed or detrimentally relied on are:
Kathy and Tom have entered into a contract in which Mike has been named and included
as an intended beneficiary by Kathy. Should Tom or Kathy breach the contract, Mike
may sue both Tom and Kathy for breach of contract.
A party to a contract may be discharged from performance due to operation of law if the
other party unilaterally alters the contract.
Which of the following is not classified as an equitable remedy?
Oscar is speeding and driving inattentively when he runs into Felix, who is driving very
cautiously. As a result of the accident, Felix's car needs $2,500 worth of repairs and Felix
loses a week's salary because he has to take off from work to recover from injuries
sustained during the crash.
Which of the following involves a third-party substitution?

When an accord and satisfaction is agreed to, the original obligation subject to the
accord is immediately discharged.
Patios R Us contracts with Karl's Concrete to have 35 yards of concrete delivered to a
job site it is working on. Payment is to be made 30 days after delivery. Five days after the
concrete is delivered, Patios R Us files for bankruptcy and the filing is accepted by the
court. Karl's cannot sue to enforce the contract and receive payment.
Moe has entered into a contract with Larry. Subsequently, Moe assigns his rights in that
contract to Curley. Which of the following would not prevent that assignment?
Mel is under contract with a textbook publisher to write an instructor's manual to
accompany a new textbook. The contract states that the instructor's manual is to be
completed by August 1. On July 1, the publisher calls Mel and asks for an update. Mel
states that he's working hard and making progress. He then states that the August 1
deadline is "doable but it's going to be tough." Based on Mel's statement, the textbook
publisher may claim an anticipatory repudiation and find another author to complete the
project.
The Chicago Cubs major-league baseball team is in the playoffs and doing well. Behind
the left-field wall there is an apartment building, and the owner advertises, "Space
available on the apartment building roof with a clear view of the field for the World Series.
Bring a lawn chair, your radio, and a cooler and enjoy the game. Just $50 per game."
Bart, a lifelong fan, answers the ad and pays the building owner $100 to reserve space
for the first two games. Unfortunately, the Cubs start playing poorly and don't make it to
the World Series.
Cathy's Coaster Company uses cork in all of the protective drink coasters that it
manufactures. If Cathy's enters into an agreement with a cork exporter from Portugal to
purchase all of the cork it needs to produce its products, this would be:
Acme Rocket Company is shipping 500 toy rockets by boat to Rockets R Us. Acme is
located in Miami, and Rockets R Us is located in Boston. If goods are shipped FOB
Miami:
Shovels R Us sends a purchase order to Acme Snow Shovel Inc., for 500 shovels to be
delivered by September 30, 2014, in time for the winter season. Acme returns an
acknowledgment form indicating that the shovels will be delivered on March 1, 2015. The
acknowledgment letter forms a valid contract.
Wrongfully revoking an acceptance will constitute a breach of contract by the buyer.
If two companies enter into a sales contract and the shipping terms are omitted from the
agreement, the contract will automatically become a shipping contract.
The International Chamber of Commerce abbreviation indicating that goods are to be
picked up by the buyer and not delivered is:
The mirror image rule is not enforced under UCC standards.
UCC gap fillers will not be used and are not applicable to contracts when the contract
clearly specifies a contract term or condition.
Your cousin, who is a CPA, calls you and says that a client paid him in diamonds and
he's selling them. If you purchase one of those diamonds, at the time of the sale your
cousin would be considered a merchant of those diamonds.
On February 1, Frank's Fedora Manufacturers sends an offer to Metropolitan Outfitters
by letter with all price, quality, quantity, and delivery terms clearly stated, indicating that
the offer will remain open until October 1. On September 1 Metropolitan sends an
acceptance of the offer to Frank's with no material alterations to any of the stated terms
in the offer. The acceptance makes the contract valid and enforceable.
Mike is having coffee in a coffee house when he sees Jordan, who is the dean of a
Midwest business school. Mike used to teach at Jordan's prior school and was
considered a very valuable faculty member. They haven't seen each other for years, and

Jordan has no idea what Mike has been doing or where he's currently working. She tells
him that she has a position for him if he's interested. The next day Mike quits the
university he's under contract with and signs a contract with Jordan's school. Jordan's
school can be sued for tortious interference with existing contractual relationship.
The Restatement (Third) of Torts is currently the most recent edition.
A commercial airliner crashed in the middle of the Atlantic. The cause of the crash has
been proved to be a wrongly installed part in one of the engines during routine
maintenance. If a negligence lawsuit is brought against the airline, it will be based on:
Employers, in some states, enjoy an absolute privilege when giving employment
references as long as the reference is factual and without malice.
Which of the following is not a defense to defamation?
The civil counterpart to theft is:
A person cannot be guilty of negligence if he or she has no duty owed to the plaintiff.
When Ford runs a commercial stating that Fords are better than Chevrolets and that
"you'll be happier if you buy a Ford," Ford is committing trade libel.
Professor Smith announces to his dean that the students in his noon class are the worst
students that he has ever had and that they should never have been admitted to the
school. The students are actually as qualified as any other students admitted to the
school. The students may sue Professor Smith for slander.
A party who is injured by another's negligence but is found to have committed
comparative negligence will recover nothing.
Which of the following would generally not be patentable?
The standard that must be met for a plaintiff to win a trademark infringement claim is
likelihood of confusion.
A patent holder should mark its product as patented in order to achieve the fullest
protections. Each of the following is an acceptable means of marking the product except:
A patent equates to a governmentally sanctioned monopoly right.
All trade secrets are protectable by either patent or copyright laws.
If a student goes to the library and plagiarizes text from a book or other publication, he or
she is guilty of indirect infringement.
Which of the following is not an example of a trademark lost, or in danger of losing
protection, due to its becoming a generic term?
Mike has been hired by a publishing company to write a companion book for a particular
text sold to college students. In 2010 Mike completes the companion book, and he signs
over his copyright to the publisher. The publisher actually publishes the book in 2013.
When will the publisher's copyright run out and expire?
Satires and parodies have generally been deemed not to be copyright infringement due
to the fair use doctrine.
The Computer Software Copyright Act defined computer software programs as:
Each contract should cover a singular promise, and if multiple promises are involved,
multiple contracts should be created.
Express contracts arise from the parties' conduct.
Divisible contracts are often referred to as severable contracts in many states.
Jason writes a check to the university bookstore to pay for textbooks and supplies. This
is an example of an informal contract.
Under a bilateral contract, there is no contract until the offeree performs the requested
act.
A contract for installing a new furnace is an example of a hybrid contract.
An enforceable contract has four necessary elements: mutual assent, capacity to
contract, consideration, and legal purpose

In general, contracts for services are governed by
ABC Land Co. is negotiating the sale of an office building to Mega Co. Which laws will
govern the contract for the sale of the building?
When an offer and agreement exist between parties, this is called:
When the reason and outcome of a contract are legal, the contract has:
Which of the following is formed to remedy unjust enrichment?
An offer of a reward, if it is fulfilled, forms:
Mike is walking through a parking lot and finds Kathy lying unconscious. He puts her in
his car and takes her to the hospital. The hospital saves her life, and when she becomes
conscious, it presents her with a bill.
A contract in which one party may disaffirm or enforce the contract is:
Ally, a minor, purchases a car from a used-car dealer. The law allows minors the right to
cancel a contract until the time the minor turns 18. The contract between Ally and the
dealer is
Real estate deeds and mortgages that require a seal to be enforceable are considered:
The mailbox rule determines when a contract is considered to be deemed accepted by
the offeree, thus depriving the offeror of the right to revoke the offer.
If an offer does not specify a required type or form of acceptance, the offeree is required
to provide a written acceptance for valid mutual assent to be proved.
Uncle Buck has lent you $10,000 for tuition and living expenses. The agreement was
oral. This contract violates the statute of frauds, so it is unenforceable and you need not
repay the loan.
Larry has had a few beers and is starting to get a bit drunk. He isn't acting strange, and
in conducting conversations with others he's slurring only an occasional word or two.
Larry, should he enter into a contract in this condition, would be considered mentally
incompetent and his contract would be void.
Generally, mutual mistakes will often lead to the court allowing an avoidance of a
contract; however, a unilateral mistake is not usually grounds to cancel a contract.
An agreement to purchase $499 worth of land does not have to be in writing to be
enforceable.
In Harley-Davidson Motor Co. v. PowerSports Inc., the court permitted PowerSports to
retain its Harley-Davidson franchise because PowerSports' decision to become a publicly
owned corporation had nothing to do with its commitment to sales and service and thus
was deemed not material to the negotiations, so no fraud occurred
Jon works for a major bank. The revised employee handbook that he received 5 years
ago says that all employees with 25 years of service will receive a retirement party. He is
about to hit 25 years of service and has announced his retirement. His manager tells him
that the company, on the basis of his years of service, will throw him a party and present
him with a gold watch. Jon retires on his 25th anniversary, and his manager announces
that the company will not throw the party or give him the watch.
Robert is about to graduate college, and his parents tell him that because he is the first
member of the family to graduate college, they want to buy him a new, but inexpensive,
car. They have the money to buy the car, and Robert is excited about getting his gift.
Robert owns a used car but has never owned a new car, so this will be his first. He
decides to keep his used car because he had been promised a new car by his parents
for his high school graduation and never got it. On graduation day, his parents tell him
that they have decided to use the car money for a vacation and there will be no new car.
When a party breaches a contract, the nonbreaching party always has the option of
seeking legal or equitable remedies.
Kent Corp. (KC), a general contractor building a new dorm at a university, contracted
with Fine Rugs Inc. (FRI) to have a certain grade of industrial rugs installed in the dorm.

The contract price was $180,000. After the rugs were installed, KC was dissatisfied with
the rug quality. FRI insisted that the rugs installed were appropriate to the contract
specifications and demanded full payment. KC sends FRI a check for $120,000, which
KC believes is the proper value for the rugs installed, and marks the check "Paid in Full."
FRI writes "Under Protest" on the check and deposits it. FRI may now, in most states,
successfully sue KC for the balance of $60,000.
Anticipatory repudiation may be used when a party has knowledge that either a complete
or a partial breach will occur by the other party.
Each of the following is a discharge by mutual consent except:
accord and satisfaction
novation
rescission
frustration of purpose
In DiFolco v. MSNBC, a TV commentator e-mailed her supervisors indicating that she
wished to have a meeting to discuss her exit from the shows and to give MSNBC ample
time to replace her, but she also wrote that she wanted to be part of the MSNBC team
"for a long time to come." MSNBC claimed anticipatory repudiation. The court:
Which of the following is rarely awarded in contract cases?
Fred's Flooring (FF) contracted with Harry homeowner to install wood flooring throughout
Harry's home. Harry was to purchase the flooring, and the contract was solely for
installation. Payment was to be 20 percent at the time that the work commenced and 80
percent once the flooring was installed. Harry purchased the flooring materials and paid
the 20 percent, so FF began work. When FF's work was halfway completed, Harry
realized that he didn't have the money to pay FF on completion, so he bolted the doors
and refused access. If FF wants to rescind the contract and be paid for work completed,
FF would sue for:
The Communications Decency Act of 1996:
Products liability law arises from:
Bill is a technician at a university chemistry lab and is in charge of safety inspections and
prevention of injury due to faulty equipment. One morning, as a result of his inspection,
Bill discovers a gas burner with a broken valve. Bill gets distracted and fails to put an
"OUT OF ORDER/DO NOT USE" sign on the faulty burner. When the morning class
arrives, Halle uses the faulty burner and is burned when it catches fire. Bill's negligence
is based on:
The fact that the actual negligent act must directly cause the injury is called the:
Bill is a technician at a university chemistry lab and is in charge of safety inspections and
prevention of injury due to faulty equipment, and Bill's job includes the repair of faulty
equipment. One morning, as a result of his inspection, Bill discovers a gas burner with a
broken valve and does a very poor job of repairing it, using techniques not considered
proper or acceptable. When the morning class arrives, Halle uses the faulty burner and is
burned when it catches fire. Bill's negligence is based on:
Finley is a U.S. senator. While at a friend's wedding, he comments that another senator,
Glen, is corrupt and is an alcoholic and drug addict. A reporter overhears this statement
and includes the conversation in a written report that is published in the state's largest
newspaper. Glen is called before a Senate investigatory committee, and his reputation is
permanently scarred. Is Finley guilty of defamation?
In Belanger v. Swift Transportation Inc., after Belanger had an accident driving a
company vehicle, the accident was reported to a government website. Belanger claimed
that Swift acted with malice and lost any reference-related privilege by reporting
information to a third-party website.

Mike has admired Monica for a long time and has wanted to date her but is too shy
around girls to ask. He is a football player with a reputation of being the toughest player
on the team. Monica is scared of Mike because of his size and reputation. One day Mike
summons the courage and approaches Monica, who has her back to him and doesn't
know he's there. He puts his arms around her and gives her a gentle kiss before letting
go. He can't believe what he did, apologizes, and runs away. Monica is slightly shaken
but physically unharmed. Mike has committed:
A commercial airliner crashed in the middle of the Atlantic. The cause of the crash has
been proved to be a wrongly installed part in one of the engines during routine
maintenance. If a negligence lawsuit is brought against the airline, it will be based on:
T/F: General partnerships are not created by filing a form with a government agency
T/F: One disadvantage of a sole proprietorship business entity is that it is restricted to the
principal and the principal's immediate family in terms of number of employees that may
work for the business
T/F: Wayne Lewis wants to start a sole proprietorship named Lewis Plumbing Services.
Because it will be a sole proprietorship, Wayne has no filing requirements other than
obtaining the appropriate business license from the local and state government where
the business will be located in
T/F: With regard to dissociation and dissolution, the Revised Uniform Partnership Act
adopted and reserved the same general rules and procedures as its predecessor, the
Uniform Partnership Act
T/F: A sole proprietorship automatically is dissolved when the owner dies
T/F: A limited partnership is formed by the limited partner filing a certificate of limited
partnership with the appropriate state governmental authority
T/F: If someone successfully sues a sole proprietorship, they must exhaust the
businesses assets before they may go after the principal's personal assets
T/F: An advantage of operating as a sole proprietorship is that personal liability for any
business losses is limited to the owner's investment in the business
T/F: If a sole proprietorship loses money, the principal may deduct the losses from her
own personal tax liability if any
T/F: A limited partnership is required to have two or more limited partners
T/F: To date, every state in the union has adopted the Revised Uniform Partnership Act
except the state of Louisiana
Frank and Jesse are operating as a general partnership. A question has arisen not
covered under their partnership agreement and also not addressed by the Revised
Uniform Partnership Act. What will the courts do to resolve the situation? What law will
they look to to resolve the situation?
With regard to taxation of partnerships: what kind of tax information must a partnership
file?
A limited partnership requires what kind and how many partners?
Mike lends money to Kathy as a business loan to Kathy who is capitalizing her start up
sole proprietorship named Kathy's Things. If Mike must sue for repayment, he would
sue?
A business which exists in fact although not formally recognized is referred to as being?
Lisa and Tara are operating a business as a general partnership without an express
partnership agreement. Should a dispute arise, the courts will look to ________ to
resolve the issue regarding operation of the partnership.
What kind of partnership requires a formal filing to be recognized as a valid business
entity?

Bill is a general partner in a four member limited partnership with two general and two
limited partners. The partnership is silent with regard to the duration of the partnership
and Bill wishes to retire, can he retire? Does he have to fill out any specific paperwork or
wait a certain amount of time? Will the partnership continue to exist?
Roger is a limited partner in a business. To retain his limited liability protection he must
not do what within the business?
T/F: General partnerships are not created by filing a form with a government agency
T/F: In all forms of business entities, the entity itself pays taxes on money earned by or
through the entity
T/F: General partnerships are pass-through entities regarding taxation, however; limited
partnerships are not pass-through entities for taxes
T/F: Wayne Lewis wants to start a sole proprietorship named Lewis Plumbing Services.
Because it will be a sole proprietorship, Wayne has no filing requirements other than
obtaining the appropriate business license from the local and state government where
the business will be located in
T/F: Under the Revised Uniform Limited Partnership Act, limited partners may act as
consultants and may contribute their expertise to the limited partnership
T/F: Mike is a limited partner in Big Blue, LP. The partnership agreement permits him to
have a say in the removal of general partners and the blocking of new partners. This
agreement will jeopardize his limited partner status
T/F: In the absence of an agreement to the contrary, the Revised Uniform Partnership
Act mandates that general partnership profits be split equally amongst the partners
T/F: The Revised Uniform Limited Partnership Act requires that there be a written
partnership agreement regarding limited partnerships
T/F: One disadvantage of a sole proprietorship business entity is that it is restricted to a
single location and cannot expand
T/F: Joint ventures are governed by the same legal principles as a general partnership
Frank and Jesse are operating as a general partnership. A question has arisen not
covered under their partnership agreement and also not addressed by the Revised
Uniform Partnership Act. What will the courts do to resolve the situation? What law will
they look to?
In a general partnership an unequal split of profits may be agreed to based on the
partnership agreement, but losses are split up how?
With regard to taxation of partnerships what kind of tax information must they file?
T/F: Regarding limited partners, they may not withdraw before the time that the partners
have agree that the partnership will terminate
Redrock GP has decided to go out of business. The sale of the partnership assets and
the making of payments to creditors will occur during the ________ phase of the closing
of a partnership.
Principals generally have no personal liability for the business entity's debts regarding
which kind of business entity?
A general partnership may be formed by what kind of agreement?
What kind of business entity does not require two or more principals?
T/F: Some states do not require a written management agreement regarding LLCs
T/F: LLPs may choose to be taxed like a corporation or choose pass-through taxation
treatment
T/F: When a member of an LLC dies, the business entity automatically ceases to exist
T/F: The management structure of a member-managed LLC is similar to that of a general
partnership
T/F: All states require LLPs to have a written partnership agreement

T/F: Requiring a franchisee to purchase all franchise related materials and supplies,
trademarked and otherwise, from the franchisor violates the Small Business Franchise
Act
T/F: Jones LLC and Smith LLC both have ten members and five managing members.
Both entities go into dissolution. The procedures for dissolution including preferences of
members in terms of who is paid first and so on will be identical for both companies
T/F: The operating agreement of the LLC often controls the amount and methods of
capitalizing the business
T/F: Financial information provided to a prospective franchisee must be audited
T/F: Trish is a partner in an LLP and the partnership is having a cash flow problem. To
alleviate the problem the partnership has initiated a capital call for each partner to
contribute an additional $25,000 to the business. If Trish cannot come up with the
necessary funds, she may be forced to sell her interest in the partnership
T/F: LLCs are pass-through entities for tax purposes, however; LLPs are taxed at the
entity level without tax liability passing to partners other than their personal salary income
if any
T/F: States may require that LLPs carry liability insurance to protect clients and
customers as a condition of LLP formation
T/F: When completing the certificate of organization, the organizers of an LLC are not
required to disclose how the business is to be managed
T/F: Many states have eased filing requirements to create an LLC from requiring
extensive amounts of information to now requiring minimal information similar to that
required in a corporate filing
T/F: Some states recognize LLCs but do not permit partnership taxation at the state level
T/F: LLCs are required to name a member as its registered agent and may not use a
commercial registered office provider
LLCs were originally created by the which legislature?
Which type of business entity requires the most disclosures and is the most lengthy and
complex to create?
Federal regulations regarding franchises are primarily designed to ensure ______
_______ of all information relating to a franchise company prior to a franchise investment
An LLC offers principals the same liability coverage as principals in ______ with pass
through taxation
LLPs are often currently used to protect family businesses as a way to resolve issues
regarding what?
Personal financial contributions may be required by previous agreement with regard to
what kind of business entity?
What Act provides the following protections to franchisees: a required 30 day period for
the franchisee to cure contract defaults; freedom to work outside of the franchise as long
as the franchisee does not work in competition with the franchise; the right to purchase
materials from vendors cheaper than the franchisor as long as the quality is comparable?
T/F: Business trust beneficiaries are issued stock as evidence of their ownership rights in
trust assets
In Lieberman v. Wyoming.com, LLC, Lieberman dissociated from the LLC and
demanded cash for his share of the company. The remaining members voted to continue
the company and the operating agreement discussed distribution in the cases of
dissolution but not simple dissociation. The court decided that:
T/F: Debentures are unsecured promises to pay back money with interest at a certain
date backed by the strength of the general credit of the corporation
T/F: A corporation exists as an independent person separate from its principals

T/F: To qualify for Subchapter S status, a supermajority of the shareholders must
consent to the Subchapter S designation
T/F: A corporation is considered formed the moment the articles of incorporation are filed
by the principals
T/F: One benefit of the Subchapter S corporation is that there is no double taxation
T/F: Unless limited by the articles of incorporation, shareholders may vote to remove a
director with or without cause, however; the courts may only remove a board member for
cause
T/F: A new startup corporation has gone to a bank for a commercial loan. Recognizing
the startup status of the business and the limited assets the corporation currently
possesses, the bank, to protect its interests, may require that either collateral be pledged
or a personal guarantee be signed by shareholders but may not require both
T/F: Courts are generally inclined to be predisposed to piercing the corporate veil
whenever a corporation causes economic harm to others
T/F: Joe and Josephine have started a plumbing business and have incorporated. They
invest nothing into the corporation and the corporation has minimal assets. One day
Josephine negligently damages a main pipe in a customer's home causing the basement
to flood and resulting in $20,000 in damages. The homeowner's only remedy is to sue
the corporation and because the corporation has no funding and minimal assets, the
homeowner must bear the loss because Joe and Josephine are shielded from liability
due to the corporate protections the business entity affords them
T/F: Kate owns 1000 shares of stock in a corporation. As an owner of the corporation by
virtue of her stock ownership, if she enters into a contract on behalf of the corporation the
company will be bound by her actions
T/F: Eight businesswomen have formed a privately held corporation. Their stock
certificates and the stock register of the corporation are public documents
Le Magasin de Vêtements, Inc. is a clothing retailer incorporated in France. If they
transact business in New York, Le Magasin de Vêtements would be characterized as
what type of corporation?
An enterprise may not be a Subchapter S corporation if it owns more than ________ of
the stock of a subsidiary corporation
T/F: Poor Management and decision making performed by inadequately trained or
educated managers is a factor used by courts to determine whether to pierce the
corporate veil
These factors: inadequate capitalization; evidence of fraud or willful misconduct; failure
to follow necessary corporate formalities - are factors used by the courts to determine
whether or not to do what?
The main disadvantage of choosing a publicly held corporate form to operate a business
is?
Thirteen sorority sisters decide to start a dog walking business. They incorporate under
the name Pro Canine Walkers, Inc. and advertise their services throughout the city in
newspapers and with flyers they post. All stock is owned by the thirteen principals and
none is offered to anyone outside of the thirteen. This corporation would be classified as
what kind of corporation?
In H. Carl McCall, Trustee of the New York Common Retirement Fund, et al., Derivatively
on Behalf of Columbia/HCA Healthcare Corporation v. Scott, suit was brought claiming a
breach of their fiduciary duties by the board with regard to alleged fraudulent billing
practices. The board defended by citing the corporate charter which limits the liability of
directors for breach of duty claims as long as they did not act in bad faith. The court
determined that:
The owners of a corporation are the?

T/F: Venture capital firms are generally long term investors
The following factors: they generally concentrate on one particular industry; they usually
insist on substantial control of the corporation being funded through membership on its
board or through appointments to certain officer positions; and they are generally a
source of expertise in operations and expansion of the corporation being funded - are
factors of what type of business entity?
Saul was elected to the board of trustees of Round Way Corp. four years ago. He makes
sure everyone knows he's a board member and always brings it up at parties.
Unfortunately he cares more about the prestige than doing a good job so he hasn't
attended board meetings nor is he attending committee meetings to which he's been
assigned. If the insiders at Round Way enter into a series of bad business deals causing
financial loss to the corporation can or will Saul be held liable and why or why not?
The corporation is considered to come into existence when?
Fred and Barney have incorporated and obtained a $100,000 loan payable with interest
over five years in the corporate name. After paying on the loan regularly for two years,
the business falters due to the economy and they default on their loan. Their business
has no assets, do Fred and Barney have any personal liability for the debt?
Happy Hops Brewery, Inc. has found that there business is expanding very quickly. The
decision to fire three new delivery drivers would be made by whom?
These factors: they may issue only one class of stock; taxation is pass-through similar to
partnership taxation; and they many not have more than 100 shareholders - are factors
of what type of business entity?
T/F: Subchapter S corporations may be domestic or foreign but cannot be alien
Who has the power to do each of the following factors: veto a board decision to issue
more capital stock; veto a board decision to pursue venture capital financing; approve
structural changes in the corporation through the amending of the articles of
incorporation; elect and remove directors?
T/F: Shareholders generally have the power and right to elect and remove officers
T/F: The primary market consists of securities sales in public markets while the
secondary market consists of security sales in private placements
T/F: The SEC has the power to initiate criminal actions against individuals or companies
that violate security laws
T/F: Only the Congress may enact securities regulations and only the courts may
interpret securities statutes
T/F: Preferred stock is the most frequently used form of equity instrument
T/F: The SEC has the power to suspend or revoke the licenses of brokers that violate
securities laws
T/F: Public corporation disclosures and filings are made available to the general public
T/F: Preferred stock always has voting rights
T/F: Assumption of risk by the investor is a defense available for allegations of '33 Act
violations
T/F: The promissory note securing a home mortgage is a security instrument
T/F: Blue-sky laws refer to federal security laws that preempt state security laws
T/F: Securities may not be sold or marketed to the public until the SEC has completed its
review phase and the registration becomes effective
T/F: Most common stock enjoys voting rights; however, common stock may be sold
without voting rights
T/F: The foundation and underlying principle of all securities regulation is disclosure
T/F: The Prospectus is a required preregistration document
Micro bonds appeal to small business ventures who wish to take advantage of bond
financing in the ________ range

Whether or not a dividend is paid depends on which body of people within a business
agreeing to pay the dividend
Kate is an underwriter who acted as a third party conducting a sale of securities between
Fox Co. and an investor. Subsequent to the sale it is discovered that the disclosures
made by Fox Co. were fraudulent. The investor has sued both Fox Co. and Kate. What is
Kate's best defense to avoid liability?
The corporate counsel's opinion verifying the business ventures adherence to corporate
formalities and compliance and opinion of the corporation's accounting firm is contained
in the?
The Securities Act of 1934 focuses on which market?
T/F: Common stock is an equity instrument
T/F: Debentures, bonds and promissory notes are debt instruments
What is a regulatory agency that is independent and is not under the direct control of the
president?
Under the emergency escrow provisions created under the Sarbanes-Oxley Act the SEC
may require what?
Eve is a promoter and has approached Adam with an investment opportunity. Eve
anticipates a generous profit and informs Adam that he too can realize a generous profit
also. This opportunity is not being offered to others. Assuming all other requirements to
classify this as a security are in evidence, the commonality of this transaction would be
described as what kind of commonality?
The SEC maintains ________ regional offices throughout the United States where much
of its day-to-day work is done
Sales of securities to accredited investors is one form of what?
T/F:
Some states do not require a written management agreement regarding LLCs.
T/F:
LLCs may choose to be taxed as a pass-through entity or may elect to be taxed as a
corporation.
T/F:
LLCs are not permitted to capitalize by selling equity ownership in the LLC itself.
T/F:
The certificate of organization may restrict membership in an LLC to only those
possessing a professional license in a named field.
T/F:
The name of an LLC must contain a designator such as "Company," "Limited," "Limited
Liability Company," or "LLC."
T/F:
LLPs may choose to be taxed like a corporation or choose pass-through taxation
treatment.
T/F:
When a member of an LLC dies, the business entity automatically ceases to exist.
T/F:
The management structure of a member-managed LLC is similar to that of a general
partnership.
T/F:
Partners in an LLP may choose to have LLP income taxed as a corporation.
T/F:
The IRS has classified the LLC as a type of corporation for tax purposes.

T/F:
All states require that LLPs have a written partnership agreement.
T/F:
An LLC can last until a specified term expires.
T/F:
Jones LLC and Smith LLC both have 10 members and 5 managing members. Both
entities go into dissolution. The procedures for dissolution, including preferences of
members in terms of who is paid first and so on, will be identical for both companies.
T/F:
In an LLC, the members may act as agents of the LLC, but they will not be personally
liable to third parties who successfully sue the LLC.
T/F:
The operating agreement of the LLC often controls the amount and methods of
capitalizing the business.
T/F:
About half of the states provide the same level of protection to general partners in an
LLP as is provided to a limited partner in a limited partnership.
T/F:
LLPs may be capitalized through debt from private or commercial lenders.
T/F:
Trish is a partner in an LLP, and the partnership is having a cash flow problem. To
alleviate the problem, the partnership has initiated a capital call for each partner to
contribute an additional $25,000 to the business. If Trish cannot come up with the
necessary funds, she may be forced to sell her interest in the partnership.
T/F:
LLC members are ALWAYS required to complete a certificate of membership interest,
evidencing the individual member's interest in the business entity.
T/F:
LLCs are pass-through entities for tax purposes; however, LLPs are taxed at the entity
level without tax liability passing to partners other than their personal salary income if
any.
T/F:
States may require that LLPs carry liability insurance to protect clients and customers as
a condition of LLP formation.
T/F:
The Uniform Limited Liability Company Act preempts all state laws in order to maintain
consistency throughout the U.S. business community.
T/F:
A corporation may be a principal of an LLC.
T/F:
When completing the certificate of organization, the organizers of an LLC are not
required to disclose how the business is to be managed.
T/F:
Many states have eased the filing requirements for creating an LLC, switching from
requiring extensive amounts of information to now requiring minimal information similar
to that required in a corporate filing.
T/F:
T/F:
An LLC is required to name a member as its registered agent and may not use a
commercial registered office provider.

T/F:
The organizers of an LLC, who sign the certificate of organization, are required to be
residents of the state in which the LLC is being formed.
T/F:
Both managing members and controlling members owe a fiduciary duty to other
members.
T/F:
Every state in the United States recognizes the existence of LLCs.
LLCs were originally created by the:
Formation of an LLC requires the filing of:
The origins of LLPs were rooted in protection of:
Though they may elect a different structure, for tax purposes LLCs are typically treated
as:
The first LLP legislation was enacted in:
The ability to flow through to the investors the tax deductions and losses that are typically
generated by an emerging company or a company with significant up-front debt is an
advantage of a:
Carlos is a member of an LLC along with three others. After one year, despite their best
efforts, the business closes and the bank that extended them a loan sues for repayment.
The bank may:
LLPs were created to
Typically, day-to-day decision making in an LLC is performed by:
In 1997, the IRS made LLCs:
Burt has gone to a commercial bank to negotiate a loan for the LLC in which he is a
member. He tells the bank that he is authorized to act on behalf of and to bind the
company. What is the best way for the bank to verify whether Burt does in fact have the
authority he claims?
Voting rights of LLC principals are governed by:
LLPs are formed with the filing of ________ with the proper public official.
The ability to distribute earnings without incurring double-level taxation is an advantage
of a
An LLC offers principals the same liability coverage as that of:
LLCs share characteristics in common with each of the following EXCEPT:
Several people have decided to go into business as an LLC. To cover all contingencies,
they want to specify what constitutes an act of dissociation and outline the procedures
upon dissolution. This information would be included in:
With regard to taxation, LLPs are treated as:
LLPs are often currently used to protect family businesses as they provide a way to
resolve:
Personal financial contributions may be required by previous agreement with regard to
If an LLP does not have a partnership agreement, the courts will look to ________ to
resolve internal management disputes.
In an LLP, any income is taxed:
Because it is not a taxable entity, an LLP:
Which of the following would NOT generally be formed as an LLP?
When an LLP is formed, who files the initial paperwork?
All income and losses of an LLP are reported:
Although many LLCs are treated as pass-through entities, an LLC's members may elect
to be taxed as a:
The amount and methods of capitalizing an LLC are often controlled by the

In Lieberman v. Wyoming.com, LLC, Lieberman dissociated from the LLC and
demanded cash for his share of the company. The remaining members voted to continue
the company, and the operating agreement discussed distribution in the case of
dissolution but not simple dissociation. The court decided that:
T/F:
Corporate bylaws are public documents that must be filed with the appropriate state
corporation office.
T/F
Debentures are unsecured promises to pay back money with interest at a certain date
and are backed by the strength of the general credit of the corporation.
T/F:
A corporation exists as an independent person separate from its principals.
T/F:
To qualify for Subchapter S status, a supermajority of the shareholders must consent to
the Subchapter S designation.
T/F:
A corporation is considered formed the moment the articles of incorporation are filed by
the principals.
T/F:
One benefit of the Subchapter S corporation is that there is no double taxation.
T/F:
Corporations may be created by written agreement between the principals, and no strict
or formal filing is required as long as the agreement is written.
T/F:
Officers and directors owe fiduciary duties to the corporation and its shareholders;
however, none of the shareholders owe such duties because they cannot bind the
company.
T/F:
Any corporation that does not make money is classified as a nonprofit corporation.
T/F:
The authority of an officer to bind the corporation must expressly flow from the bylaws or
through the board of director mandates.
T/F:
Corporations are afforded full First Amendment political speech protection.
T/F:
A closely held corporation may be privately held or publicly held depending on the status
determined at creation.
T/F:
Shareholders are the owners of the corporation and, in part, act principally through
electing and removing officers.
T/F:
All publicly held corporations are classified as public corporations.
T/F:
Unless limited by the articles of incorporation, shareholders may vote to remove a
director with or without cause; however, the courts may remove a board member only for
cause.
T/F:
A new start-up corporation has gone to a bank for a commercial loan. Recognizing the
start-up status of the business and the limited assets the corporation currently
possesses, the bank, to protect its interests, may require that either collateral be pledged
or a personal guarantee be signed by shareholders but may not require both.

T/F:
Once a corporation is recognized as existing by the state, the corporation automatically
becomes liable for all contracts that a promoter had entered into on behalf of the
corporation.
T/F:
An insurance company cannot qualify for Subchapter S corporate status.
T/F:
A start-up business planning to incorporate must file for incorporation in the state in
which it originally plans to do business.
T/F:
The Revised Model Business Corporation Act provides that a self-dealing transaction is
not a breach of the duty of loyalty if a majority of disinterested parties approve the
transaction after disclosure of the conflict.
T/F:
For a corporation to be privately held, the number of shareholders will be limited as will
the permitted total of gross revenues.
T/F:
Kathy is the president of a corporation. She has just made the news by being discovered
with a male prostitute while at a conference. Mike, a shareholder, may successfully
present a proposal at the next shareholder meeting calling for a shareholder vote to have
her removed from office.
T/F:
Courts are generally inclined to be predisposed to piercing the corporate veil whenever a
corporation causes economic harm to others.
T/F:
The Revised Model Business Corporation Act mandates that all corporations other than
single-member corporations maintain a board of directors with at least three members
who are independent of the officers and shareholders.
T/F:
Joe and Josephine have started a plumbing business and have incorporated. They
invest nothing into the corporation, and the corporation has minimal assets. One day
Josephine negligently damages in a main pipe in a customer's home, causing the
basement to flood and resulting in $20,000 in damages. The homeowner's only remedy
is to sue the corporation, but the corporation has no funding and only minimal assets.
Thus the homeowner must bear the loss because Joe and Josephine are shielded from
liability due to the corporate protections the business entity affords them.
T/F:
A nonprofit corporation is not permitted to make or produce revenue
T/F:
Kate owns 1,000 shares of stock in a corporation. As an owner of the corporation by
virtue of her stock ownership, if she enters into a contract on behalf of the corporation,
the company will be bound by her actions.
T/F:
Eight businesswomen have formed a privately held corporation. Their stock certificates
and the stock register of the corporation are public documents.
T/F:
Corporate bondholders are creditors of the corporation but are not shareholders.
T/F:
Privately held corporations are more common than are publicly held corporations.
Which of the following is an INCORRECT statement?

In Smith v. Van Gorkom, the court had to determine whether the business judgment rule
protected board members who permitted the sale of a significant amount of stock by the
retiring chairman of the board at an undervalued price, devaluing the company. The court
stated each of the following EXCEPT:
Le Magasin de Vêtements Inc., is a clothing retailer incorporated in France. If it transacts
business in New York, Le Magasin de Vêtements would be characterized as:
An enterprise may not be a Subchapter S corporation if it owns more than ________ of
the stock of a subsidiary corporation.
Each of the following is a factor used by courts to determine whether to pierce the
corporate veil EXCEPT:
Creation and internal governance of corporations is governed by:
A disadvantage of choosing a publicly held corporate form to operate a business is:
Privately held corporations may issue a ________ in lieu of conducting a formal annual
meeting.
Which of the following gives a person the right to vote at an annual meeting?
In Florence Cement Company v. Vittraino, Florence sought to pierce Shelby's corporate
veil and hold the principals personally liable, claiming Shelby mixed personal and
business transactions and had engaged in fraud in a loan application. The appeals court
held that:
Thirteen sorority sisters decide to start a dog-walking business. They incorporate under
the name Pro Canine Walkers Inc., and advertise their services throughout the city in
newspapers and on flyers they post. All stock is owned by the 13 principals, and none is
offered to anyone outside the 13. This corporation would be classified as a:
In H. Carl McCall, Trustee of the New York Common Retirement Fund, et al., Derivatively
on Behalf of Columbia/HCA Healthcare Corporation v. Scott, suit was brought claiming a
breach of fiduciary duties by the board with regard to alleged fraudulent billing practices.
The board defended by citing the corporate charter, which limits the liability of directors
for breach-of-duty claims as long as they did not act in bad faith. The court determined
that:
Bonds Inc., is incorporated in the state of Florida. In Florida, Bonds would be
characterized as:
A corporation formed for the purpose of maintaining a charitable operation is called a:
The owners of a corporation are the:
The corporation with the most shareholders is the
Which of the following is NOT true regarding venture capital firms?
Offering or trading ownership interests in corporations is governed by:
Saul was elected to the board of trustees of Round Way Corp. four years ago. He makes
sure everyone knows he's a board member and always brings it up at parties.
Unfortunately, he cares more about the prestige than doing a good job, so he hasn't
attended board meetings or meetings of committees to which he's been assigned. If the
insiders at Round Way enter into a series of bad business deals causing financial loss to
the corporation:
Corporate officers are:
The corporation is considered to come into existence when:
Initial public offerings (IPO) occur when:
Fred and Barney have incorporated and obtained a $100,000 loan, payable with interest
over five years, in the corporate name. After paying on the loan regularly for two years,
the business falters due to the economy, and they default on their loan. Their business
has no assets.
Happy Hops Brewery Inc., has found that its business is expanding very quickly. The
decision to fire three new delivery drivers would be made by:

Which of the following is an INCORRECT statement regarding Subchapter S
corporations?
The document filed with the state that begins the incorporation process in the majority of
states is called the:
Delaware is a popular state for many corporations to incorporate in. Each of the following
is a Delaware incorporation advantage EXCEPT:
Under the Revised Model Business Corporation Act, if a promoter acts on behalf of a
corporation knowing that incorporation has not yet been completed and liability occurs:
Shareholders generally have the power and right to do each of the following EXCEPT:
Robert Hill Corp. is incorporated in the state of Delaware. If it transacts business in Iowa,
Robert Hill would be characterized in Iowa as:
LLPs are formed with the filing of ________ with the proper public official.
If an LLP does not have a partnership agreement, the courts will look to ________ to
resolve internal management disputes.
LLPs may choose to be taxed like a corporation or choose pass-through taxation
treatment.
LLCs share characteristics in common with each of the following except :general
partnerships.
limited partnerships.
corporations.
sole proprietorships.
Which of the following would not generally be formed as an LLP? three frat brothers
opening a bar
two attorneys operating a law firm
four licensed physical therapists running a clinic
twenty CPAs running an accounting firm
Both managing members and controlling members owe a fiduciary duty to other
members.
In an LLP, any income is taxed:
A corporation may be a principal of an LLC.
The management structure of a member-managed LLC is similar to that of a general
partnership.
In Florence Cement Company v. Vittraino, Florence sought to pierce Shelby's corporate
veil and hold the principals personally liable, claiming Shelby mixed personal and
business transactions and had engaged in fraud in a loan application. The appeals court
held that:
Each of the following is a factor used by courts to determine whether to pierce the
corporate veil except:poor management and decision making by an inadequately trained
or educated manager.
inadequate capitalization.
evidence of fraud or willful misconduct.
failure to follow necessary corporate formalities.
The corporation with the most shareholders is the:
Any corporation that does not make money is classified as a nonprofit corporation.
Corporate bylaws are public documents that must be filed with the appropriate state
corporation office.
Fred and Barney have incorporated and obtained a $100,000 loan, payable with interest
over five years, in the corporate name. After paying on the loan regularly for two years,

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