Chapters 30 - 32
TRUE/FALSE. Write
'T' if the statement is true and 'F' if the statement is false.
1) An agent
can legally (without civil or criminal liability)usurp an opportunity available
to the principal.
2) An agent
has no duty to disclose her agency status to third parties with whom the agent
deals.
3) A sole
proprietor owns all of the business and has the right to receive all of the
business's profits.
4) In order
to use a fictitious name, a sole proprietorship must incorporate the business.
5) For a
valid partnership to exist, the partnership agreement must be in writing.
MULTIPLE CHOICE. Choose
the one alternative that best completes the statement or answers the question.
6) A
principal hires an agent to place advertising in publications to reach certain
target audiences. The agent places
45 percent of the advertising in a magazine of which he is the owner.
The principal could probably recover from the agent on the grounds of:
A) the agent engaging in self-dealing.
B) the agent usurping an opportunity.
C) the agent breaching the duty of accountability.
D) the agent breaching the duty of obedience.
E) the agent competing with the principal.
7) In which
of the following circumstances can a principal be held liable for the torts of
an independent contractor?
A) in no circumstances
B) in the same circumstances as the principal would be
held liable for the torts of an agent.
C) when the principal is negligent in selecting the
independent contractor.
D) when the independent contractor is hired to undertake a
dangerous activity.
E) both C and D
8) Which of
the following is true about the tests used to determine whether a principal is
responsible for the intentional torts of his agent?
A) In most states the plaintiff can choose which test to
use.
B) Under either of these tests, the plaintiff must also
prove that the agency was fully disclosed in order to recover.
C) The work-related test and motivation test are two names
for the same test.
D) The work-related test will find that the employer is
liable in more circumstances than the motivation test.
9) In order
to form a sole proprietorship, the owner must:
A) apply to the secretary of state and wait for approval.
B) register with the Internal Revenue Service.
C) register with the secretary of state, but no separate
approval is required.
D) execute a sole proprietorship agreement.
E) none of the above
10) What is
an advantage of forming a subsidiary corporation as the way of doing business in
a foreign nation?
A) Assets of the corporation in the United States can be
protected from being used to cover losses arising in the foreign nation.
B) The cost of formation is lower than creating a branch.
C) Import and export duties are generally lower.
D) Large amounts of capital can be raised.
11) Martha
started a flower shop as a sole proprietor.
After one year, she was forced to close the shop because business was so
bad. At that time, the business
assets totaled $50,000, but the business liabilities totaled $125,000.
Which of the following statements is true?
A) Martha is personally liable for the additional $75,000.
B) Once Martha terminates the sole proprietorship, the
business creditors cannot get even the $50,000.
C) Martha's business creditors can collect only the
$50,000 now, but if Martha ever goes into business again, they can get the
assets of the new business.
D) Martha's business creditors can collect only the
$50,000 of business assets.
12) A
partnership is created:
A) once there is a valid partnership agreement.
B) if the managing partner files appropriate papers with
the secretary of state.
C) if two or more persons or entities engage in an ongoing
business activity for profit.
D) upon the issuance of stock to the partners.
13) A
partnership agreement:
A) must be in writing for all partnerships.
B) cannot be implied from the actions of the partners.
C) must be an express agreement for all partnerships, but
can be oral or in writing.
D) may be created inadvertently based on the parties'
conduct.
E) must be in writing, but only for partnerships covered
under the Uniform Partnership Act.
14) What is
the court order called that grants a judgment creditor rights to the profits of
a debtor who is a partner in a partnership?
A) Partnership attachment order
B) Writ of garnishment
C) Charging order
D) Profit allocation order
E) Partner dissolution order
15) Unless
specifically agreed upon by the partners, which of the following rights do
partners not have?
A) participation in management
B) sharing in partnership profits
C) salaries or other compensation for services rendered on
behalf of the partnership
D) choice of who will also be a partner
E) the return of capital
TRUE/FALSE. Write
'T' if the statement is true and 'F' if the statement is false.
1) FALSE
2) TRUE
3) TRUE
4) FALSE
5) FALSE
MULTIPLE CHOICE. Choose
the one alternative that best completes the statement or answers the question.
6) A
7) E
8) D
9) E
10) A
11) A
12) C
13) D
14) C
15) C