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85 terms

business law 1 finals

STUDY
PLAY
The simplest form of business is a sole proprietorship
T
A sole proprietorship lacks continuity on the death of the proprietor,
T
A sole proprietor has unlimited liability for all obligations that arise in doing business.
T
The Uniform Partnership Act governs the operation of partnerships
F
An association cannot be a partnership without an express agreement
F
A partner's profit from a partnership is taxed as income to the firm
F
Withdrawal from a partnership for a term prematurely does not constitute a breach of the partnership agreement
F
Under no circumstances can a non-partner be regarded as an agent whose acts are biding on the partnership
F
In general partnership, all partners have equal rights in managing the partnership
T
Each partner is an agent of the partnership in carrying out the usual business of the firm
F
A partner owes to the partnership and the other partners a duty of loyalty
F
A partner who pursues his or her own interests automatically violates the partner's fiduciary duties to the partnership
F
A partner always has the power and the right to dissociate from the partnership
F
A limited liability partnership allows its partners to avoid personal liability for the malpractice of other partners
T
In a limited partnership, a limited partner is personally liable to the partnership's creditors
F
Limited liability companies (LLCs) are governed by state LLC statutes
T
The liability of the members of a limited liability company is limited to the amount of their investments
F
In many states an operating agreement is not required for a limited liability company to exist
T
A limited liability company must be managed by non-member managers
F
Some states provide that in the absence of an agreement to the contrary each member of a limited liability company has one vote
F
Normally a dissociated member of a limited liability company (LLC) has the right to have his or her interest in the (LLC) bought by the other members
F
Most limited liability company statutes have no provisions regarding member's meetings
F
As with partnership, a court can order a limited liability company to dissolve in certain circumstances
F
A corporate director is the owner of the corporation
F
Normally, corporate shareholders are personally liable for the obligations of the corporation
F
A holding company is a company whose business activity consists of holding shares in another company
T
A close corporation cannot operate as an $ corporation
T
When the corporate privilege is abused for personal benefit, the courts will require the owners to assume personal liability
F
A court will not pierce the corporate veil of a corporation that is merely too thinly capitalized
F
Common stock provides a proportionate interest in the corporation with regard to control
F
Firms are obligated to return a principal amount per share to each holder of common stock
F
Common stock provides a proportionate interest in the corporation with regard to net assets
F
Preferred shares normally have a fixed maturity date on which the firm must pay them off
F
Venture capital provided to new business ventures by professional, outside investors
F
A merger involves the legal combination of two or more corporations, only one of which continues to exist
F
After a consolidation there is only one surviving corporation
F
The officers employees of each corporation involved must approve a merger
F
In a share exchange, some or all of the shares of one corporation are exchanged for some or all of the shares of another corporation
F
A short form merger is the legal combination of two or more corporations online
F
Shareholder appraisal rights do not usually extend to short form mergers
F
Once a dissenting shareholder elects appraisal rights, the shareholder loses his or her shareholder status
F
A corporation that is selling all of its assets most obtain approval only from its board of directors
F
Federal securities laws strictly control the terms, duration and circumstances under which most tender offers are made
F
Dissolution can be brought about voluntarily by the directors and shareholders of a corporation
F
When a corporations is dissolved voluntarily, the corporation must notify its creditors of the dissolution
F
The state can bring can action to dissolve a corporation that has failed to pay its annual taxes
F
Corporate shareholders are the ultimate authority in every corporation
F
In most states, a director cannot be removed from a corporation board without cause
F
Incorporators appoint a corporation's first board of directors
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A director usually serves on a corporation's board for a life term
F
An director cannot be elected by the other members of the board
F
All directors must be present before a board can transact business
F
A board of directors can delegate some functions to corporate officers
F
A director is a fiduciary of a corporation
F
Officers are required to exercise a reasonable amount of supervision over the corporate directors
F
Corporate directors and officers are insurers of business success
F
A director my not sit on the board of more than one corporation at a time
F
Shareholders own a corporation
F
Shareholders have no responsibility for the day to day management of a corporation
F
Corporate officers and directors owe no duty to individual shareholders
F
Shareholder's meetings do not have to occur on any regular basis
F
To vote their shares, share holders must attend a meeting and vote in person
F
Cumulative voting refers to the accumulation of proposals presented annually for a shareholders vote
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Shareholder voting agreements are usually held to be invalid and unenforceable
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A preemptive right is preference over other shareholders to cast the determining vote on fundamental changes affecting the corporation
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A corporation cannot refuse a shareholder's request to inspect corporate records
F
Any corporate funds are legally available for paying dividends
F
A stock warrant is a distribution of corporate profits or income
F
A dividend may be paid from undistributed net corporate profits
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Persons whose names appear in a corporation's stock book are ordinarily entitled to notice of shareholders meetings and the right to vote
F
Shares issued for more than their fair market value are known as watered stock
F
The least common forms of securities are bonds issued by corporations
F
A registration statement must include a financial statement certified by an independent public accounting firm
F
A registration statement must state how a corporation plans to use the proceeds from the sale of the securities
F
Sales of securities must occur within five days of registration
F
Generally, stock offerings that are made in a limited manner during any twelve month period are not exempt from the registration requirement
F
A free writing prospectus may be used before the Securities and Exchange Commission completes its review of a related registration statement
F
Before filling a registration statement, an issuer must offer to sell securities
F
A corporation whose security does not qualify for an exemption can avoid the cost and complexity associated with registration
F
Generally stock offerings that involve a small dollar amount are exempt from the registration requirement
F
Private offerings of securities in unlimited amounts can be exempt from the registration requirement of the Securities Act of 1933
F
Few securities can be resold without registration
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Securities that are exempt from the registration requirement can generally be solid and resold without being registered
F
Willful violations of the Securities Act of 1933 may be subject to criminal prosecution
F
Against a charge of a violation of the Securities Act of 1933, only an issuer of stock can assert the due diligence defense
F