Chapters 17 & 18 Examination

 

True/False

Indicate whether the sentence or statement is true or false.

 

____    1.            A limited liability company offers the limited liability of a corporation.

 

____    2.            A general partner has no voice in the management of a limited partnership.

 

____    3.            State corporate laws are entirely uniform.

 

____    4.            A corporation can have perpetual existence under most statesí statutes.

 

Multiple Choice

Identify the letter of the choice that best completes the statement or answers the question.

 

____    5.            Sally is considering forms of business organization for her construction-equipment business. For purposes of owning property and being a party to litigation, forms that are legal entities separate from their owners include

a.

corporations only.

b.

limited liability companies only.

c.

corporations and limited liability companies.

d.

none of the above.

 

 

____    6.            Jill is considering forms of business organization for her general-merchandise wholesale business. One advantage of the limited liability company form, with respect to tax options, is its

a.

flexibility.

b.

lack of options.

c.

rigidity.

d.

none of the above.

 

 

____    7.            Alpha Footwear, LP, is a limited partnership. Beth, a limited partner, participates in the firmís management. Crafted Soles Corporation (CSC), is one of the firmís creditors. Based on Bethís conduct, CSC believes that she is a general partner. In terms of her liability for the firmís obligations to CSC, Beth has, in relation to the general partners,

a.

some, but less, liability.

b.

more liability.

c.

no liability.

d.

the same liability.

 

 

____    8.            Anderson Family Enterprises is a closely held corporation and thus may limit the sale of its shares to outsiders

a.

by reasonable restrictions on transfer.

b.

by requiring that shares may be transferred only to certain shareholders.

c.

in all cases.

d.

in no case.

 

 

____    9.            Eve and Fran want to market a new line of cooking appliances. To avoid income taxes at the corporate level, they should form

a.

a C corporation.

b.

a close corporation.

c.

an S corporation.

d.

a private corporation.

 

 

____    10.            Coast-to-Coast Distribution, Inc., is a direct-mail distribution company. Like most corporations, Coast-to-Coastís employees include its

a.

board of directors.

b.

incorporators.

c.

officers.

d.

shareholders.

 


Chapters 17 & 18 Examination

Answer Section

 

TRUE/FALSE

 

           1.           ANS:           T           REF:           397           OBJ:           TYPE: =

 

           2.           ANS:           F           REF:           405           OBJ:           TYPE: =

 

           3.           ANS:           F           REF:           413           OBJ:           TYPE: =

 

           4.           ANS:           T           REF:           417           OBJ:           TYPE: N

 

MULTIPLE CHOICE

 

           5.           ANS:           C           REF:           400           OBJ:           TYPE: =

 

           6.           ANS:           A           REF:           400           OBJ:           TYPE: =

 

           7.           ANS:           D           REF:           405           OBJ:           TYPE: N

 

           8.           ANS:           A           REF:           415           OBJ:           TYPE: =

 

           9.           ANS:           C           REF:           416           OBJ:           TYPE: +

 

           10.           ANS:           C           REF:           422           OBJ:           TYPE: =