Your answers : 15/16 (94%) Submitted on Aug 19, 2013, 9:23 PM

1
Which of the following is true of a corporation?
Corporation owners are only taxed once on earnings.
A corporation terminates upon the death of an owner.
*A corporation is a separate legal entity.
Corporation shareholders are subject to unlimited personal liability.
Correct
2
There are two general partners, each of whom contributes $5,000 in capital to a limited partnership.
There are two limited partners, each of whom contributes $20,000. The total amount of capital
contributed is $50,000. The limited partnership agreement does not stipulate how profits and losses are
to be allocated. Assume that the limited partnership makes $300,000 in profits. Under the Revised
Uniform Limited Partnership Act (RULPA), how much would each partner receive?
*Each general partner would receive $30,000, and each limited partner would receive $120,000.
Each general partner would receive $50,000, and each limited partner would receive $100,000.8/19/13
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All partners would receive $75,000, regardless of whether he or she is a general or limited partner.
Each general partner would receive $120,000, and each limited partner would receive $30,000.
Correct
3
Which of the following is true regarding mediation?
*A mediator does not make a decision or an award.
If a settlement agreement is not reached in mediation, then the parties hire a new mediator.
Was created by the Federal Mediation Act of 1925.
A settlement agreement is never reached with a mediator.
Correct
4
George has served Mary with a complaint alleging breach of contract. Mary has never been sued before
and as such, she seeks your advice on what to do with the complaint. You advise that she
answer Georges complaint but do not provide any affirmative defenses that George can use against her
*answer Georges complaint by admitting or denying the allegations George has asserted against her
write a letter to the judge saying that George is mistaken
should not respond to Georges complaint as an answer implies an admission
Correct
5
Which of the following is true of arbitration?
A judicial referee makes recommendations to the parties.
One party usually drops the case.
*Parties can introduce evidence to support their case.
A resolution may or may not be reached.
Correct
6
Which of the following is one of the major purposes of a settlement conference?
To conduct discovery for a case
To contest the local court rules
*To facilitate the settlement of a case
To structure a settlement payment schedule
Correct
7
What is the effect of having a corporation as the general partner of a limited partnership?
Each shareholder of the corporation will be treated as a limited partner of the limited partnership.
*The liability of the corporate general partner will be limited to the amount of its assets.
The limited liability of the corporation will result in the limited partners having greater liability than they
would
otherwise.
Each shareholder of the corporation will be treated as a general partner of the limited partnership.
Correct
8
Which of the following is true about the choice of business entity for an entrepreneur?
The choice is determined by the Internal Revenue Service based on all the facts and circumstances.
*The choice takes into account many factors, including finding an option that has all the characteristics
desired.
The choice is determined solely by whether the primary business is services or goods.
The choice is determined solely by the amount of capital invested.
Correct
9
Which form of alternative dispute resolution occurs when the parties choose an impartial third party to
hear anddecide their dispute?
Minitrial
*Arbitration
Conciliation
Mediation
Correct
10
Fred and Ginger are general partners in a business. They decide to purchase a building for the
partnership. Gingerwill put up the money for the building, and Fred will complete the remodeling. While
inspecting the building, Fred is informed that the building is packed full of asbestos. He fails to tell
Ginger of the presence of the substance. They buy the building and go into business. During the
remodeling of the building, people from the neighborhood begin complaining about the dust from the
building. Some of them even threaten to sue. Who is liable?
Fred is liable because he was put on notice of the presence of the substance. Ginger is not liable
becauseshe did not have actual knowledge.
Neither Ginger nor Fred are liable personally, nor is the partnership, as they did not put the substance in
thebuilding.
*Both Ginger and Fred are liable, regardless of the circumstances, by virtue of the fact that they are
partners.
Ginger is liable because she is the one who purchased the building. Fred is not liable, even though he
hadactual knowledge, because he did not purchase the building.
Correct
11
Martha started a flower shop as a sole proprietor. After 1 year, she was forced to close the shop
because businesswas so bad. At that time, the business assets totaled $50,000, but the business
liabilities totaled $125,000. Whichof the following statements is true?
-Marthas business creditors can collect only the $50,000 of business assets.
-Once Martha terminates the sole proprietorship, she is no longer liable for the $50,000.
-Marthas 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.
*Martha is personally liable for the additional $75,000 owed to business creditors.
Correct8/19/13 9:24 PM
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12
Which type of business formation is typically reserved for professionals such as accountants, lawyers,
and doctors?
Limited Liability Company (LLC)
*Limited Liability Partnership (LLP)
Franchise
S-Corporation
Correct
13
Which of the following is true in the creation of a general partnership?
*The name selected cannot indicate that it is a corporation.
The business name must have the names of all the partners.
The business cannot operate under a trade name.
The business name cannot be a fictitious name.
Correct
14
Which of the following is true of The Federal Arbitration Act?
It permits an appeal for all arbitration awards.
*It provides that arbitration agreements are valid, irrevocable, and enforceable.
It applies only to breach of contract disputes.
It governs all types of alternative dispute resolution.
Correct
15
When parties agree in advance to adhere to an arbitrators decision and award, it is known as
*binding arbitration
arbitrator discretion
appealable
mediation
Correct
16
The Black Squirrel limited partnership has been in operation for many years, but has recently fallen on
hard times.
The partners have decided to dissolve, although there are few assets remaining in the partnership.
Shortly after the
partnership filed its certificate of limited partnership, the partners had the foresight to incorporate into
their
partnership agreement a provision that, in the event of dissolution, the assets would be distributed in
payment of
claims first to limited partners, then to general partners, then to creditors. Hilda is a limited partner and
feels
relieved that she will receive at least a portion of her capital. Henry, one of the general partners, said
that this
provision is void and unenforceable. Which of the following best describes this situation?
The provision placing limited partners ahead of general partners is unenforceable, thus all partners
would be
on an equal footing and ahead of creditors.
The provision placing the partners ahead of creditors is not enforceable, but the priority of limited
partners
over general partners is enforceable.
The distribution of assets in the event of dissolution is one of the few provisions where the Revised
Uniform
Limited Partnership Act does not allow modification.
The distribution, as called for in the agreement, would be enforceable if it had been included in any
filings
related to the limited partnership.
Incorrect