Question 1: Corporations are created by:
a. contract
b. statute
c. common law
d. magic
Question 2: The double taxation problem for corporations means that corporate earnings are taxed at
a. both the corporate and shareholder levels
b. city and county levels
c. double the individual tax rate
d. both the board of director and officer levels
Question 3: What document must be filed to form a corporation?
a. federal tax return
b. subscriber agreement
c. articles of incorporation
d. security agreement
Question 4: Which of the following is characteristic of a close corporation?
a. shares are owned by only a few shareholders
b. management is informal
c. transfer of shares is restricted
d. all of the above
Question 5: Which of the following is NOT a means for increasing minority shareholder power?
a. cumulative voting
b. long-arm statutes
c. voting trusts
d. shareholder voting agreements
Question 6: A dividend is a
a. distribution of corporate earnings
b. bonus for executives
c. type of operating loss
d. method of separating books on a shelf
Question 7: What is the process by which two or more corporations combine to form a new corporation?
a. merger
b. consolidation
c. cell division
d. Subchapter S
Question 8: What are the 2 phases to terminating a corporation?
a.liquidation and reorganization
b. liquidation and termination
c. dissolution and termination
d. dissolution and liquidation
Question 9: Who is responsible for the overall management of a corporation?
a. shareholders
b. officers and executives
c. employees
d. the board of directors
Question 10: The owners of a limited liability company are called
a. members
b. shareholders
c. associates
d. stockholders
Question 11: Special business forms like syndicates and business trusts are created by
a. statute
b. contract
c. operation of law
d. all of the above
Question 12: What is the name of the written document that sets out partnership rights and duties?
a.contract of partnership
b. articles of incorporation
c. articles of partnership
d. franchise agreement
Question 13: How many general partners are required to form a limited partnership?
a. at least one
b. two
c. ten or more
d. limited partnerships do not have general partners
Question 14: How is contract liability assessed among partners?
a. individually
b. jointly
c. severally
d. jointly and severally
Question 15: How are the profits and losses of a joint venture distributed?
a. equally
b. according to the original investment
c. between general and limited partners
d. among the stockholders
Question 16: A cooperative is a special business form used for the purpose of
a. promoting world peace
b. providing nutrition for everyone
c. controlling boards of directors
d. giving members an economic advantage
Question 17: What type of property is covered by a franchise agreement?
a. real property
b. tangible personal property
c. intellectual property
d. used or refurbished property
Question 18: Which of the following is NOT an advantage of a corporation?
a. limited liability for shareholders
b. the exclusive ability to use a fictitious name
c. potential for perpetual existence
d. ownership is freely transferable
Question 19: What makes it possible for a principal to conduct business in several places at the same time?
a. an cyberspace relationship
b. an ongoing relationship
c. an agency relationship
d. for-profit relationship
Question 20: What are the 2 types of actual authority?
a.believable and unbelievable
b. ordinary and special
c. express and implied
d. apparent and unapparent
Question 21: Actual authority is expressed to the agent - apparent authority is expressed to
a. an agent
b. third parties
c. the government
d. business partners
Question 22: A major DISADVANTAGE of a sole proprietorship is
a. lack of flexibility
b. difficulty in creation
c. personal liability for the owner
d. sharing of profits
Question 23: How are profits normally distributed in a partnership?
a. equally
b. according to seniority
c. according to the amount of investment
d. proportionally
Question 24: Which of the following is TRUE regarding limited partners?
a. they have full management rights
b. they have unlimited personal liability
c. their personal liability is limited to their investment
d. they have limited management rights
Question 25: In certain emergency situations, an agency can be created by
a. agreement of the parties
b. ratification by the principal
c. estoppel
d. operation of law
Question 26: A bailment is created by transferring _________________________ of personal property to
a. another.
b. title
c. possession
d. a life estate control
Question 27: Which of the following is NOT true regarding a bailment?
a. any type of property can be the subject of a bailment
b. only personal property can be subject to a bailment
c. real property cannot be the subject of a bailment
d. a bailment does not transfer title to the property involved
Question 28: The highest degree of care by the bailee is required in what type of bailment?
a. bailment for the sole benefit of the bailor
b. gratuitous bailment
c. bailment for the sole benefit of the bailee
d. mutual benefit bailment
Question 29: What is the primary duty of the bailee?
a. confidentiality
b. loyalty
c. to return the property to the bailor when the bailment ends
d. to exercise reasonable business judgment
Question 30: How is tort liability assessed between partners?
a. individually
b. jointly
c. severally
d. jointly and severally
Question 31: Which of the following is TRUE regarding liability for a common carrier?
a. it is based on principles of strict liability
b. liability is based on principles of ordinary negligence
c. liability is joint and several with the shipper
d. their liability is always limited
Question 32: Which of the following is NOT a type of franchise?
a. distributorship
b. an iTunes store
c. chain-style
d. manufacturing or processing
Question 33: Which of the following is NOT a recognized right of the bailor under a bailment?
a. to have his property returned at the end of the bailment
b. to have his property protected and used as agreed
c. to make a profit on his investment
d. to know of any limitations on liabilty by the bailee
Question 34: Which of the following creates a special bailment?
a. all of the below
b. common carriers
c. warehousemen
d. innkeepers and hotel owners
Question 35: What element necessary to form a valid contract is NOT required to form a valid agency?
a. agreement
b. consideration
c. contractual capacity
d. legal purpose
Question 36: Which of the following describes the nature of the principal/agent relationship?
a. soft and cuddly
b. perpetual
c. common
d. fiduciary
Question 37: Which of the following is NOT a duty owed by an agent to his principal?
a. performance
b. loyalty
c. keeping the principal sober
d. accounting
Question 38: What are the 2 types of personal property?
a. movable and intangible
b. immovable and tangible
c. tangible and intangible
d. fixtures and trade fixtures
Question 39: When may a principal be held liable for the torts of his agent?
a. when they result from the principal's own negligence
b. when the principal authorized the agent to commit the tort
c. when the agent engages in misrepresentation
d. all of the above
Question 40: An agency can be terminated by
a. an act of the parties
b. operation of law
c. both a and b
d. none of the above
Question 41: Agencies are normally created by
a. operation of law
b. agreement
c. estoppel
d. ratification
Question 42: Concurrent ownership is the same thing as __________ ownership.
a. sole
b. single
c. joint
d. future
Question 43: Fee simple ownership applies to ownership of
a. real property
b. personal property
c. intellectual property
d. commonly-owned property
Question 44: What type of joint ownership between spouses is recognized in Texas?
a. tenancy by the entirety
b. joint tenancy
c. community property
d. tenancy in common
Question 45: Which type of joint ownership between spouses does Texas recognize?
a. respondus civilis corpus
b. individual ownership
c. tenancy by the entirety
d. community property
Question 46: What distinguishes tenancy in common from joint tenancy?
a. whether the parties are spouses
b. the length of ownership
c. the right of survivorship
d. whether you are dealing with Texas law
Question 47: What is treasure trove?
a. lost property
b. pirate treasure
c. mislaid property
d. coins or money hidden deliberately
Question 48: Which of the following is NOT an element to establish a valid gift?
a. donative intent
b. a minimum value of $100
c. delivery
d. acceptance by the donee
Question 49: What are fungible goods?
a. perishable items
b. goods that when commingled with others cannot be distinguished from the others
c. a special type of mushroom
d. intangible property
Question 50: How many owners are there in a sole proprietorship?
a. two or more
b. just one
c. no more than ten
d. there is no limit on the number