UARK BLAW Exam 3 Questions With Correct
Answers
Wally and Karen formed a partnership on January 1, 20XX. Their written
| | | | | | | | | | | |
partnership agreement stated that profits would be distributed in the same
| | | | | | | | | | |
proportion as contributions, which were: Wally: $60,000; Karen: $40,000. There
| | | | | | | | | |
was no agreement as to how losses would be distributed. Which of the following
| | | | | | | | | | | | | |
is correct?
|
A. Both profits and losses will be distributed 50/50
| | | | | | | |
B. Profits will be distributed 60/40; losses 50/50
| | | | | | |
C. Both profits and losses will be distributed 60/40
| | | | | | | |
D. Both profits and losses will be distributed based on the amount of revenue
| | | | | | | | | | | | | |
each individual partner was responsible for in the ordinary course of business. -
| | | | | | | | | | | | |
CORRECT ANSWER✔✔-C |
Fred and Alice formed an at will partnership on January 1, 20XX. There was no
| | | | | | | | | | | | | | |
formal written agreement. Which of the following is correct under the Uniform
| | | | | | | | | | | |
Partnership Act? |
,I. If Fred makes a contract on behalf of the partnership in the regular course of
| | | | | | | | | | | | | | | |
business without first consulting with Alice, the contract is NOT binding on the
| | | | | | | | | | | | |
partnership
II. If Alice dies her heirs will inherit the economic value of her portion of the
| | | | | | | | | | | | | | | |
partnership but will NOT become partners | | | | |
III. Neither partner can legally withdraw from the partnership without just cause
| | | | | | | | | | |
A. I only. B. II only. C. III only. D. I and II only. E. I, II, and III - CORRECT
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ANSWER✔✔-B
Bill, Sam and Helen have decided to create a partnership, and they have heard
| | | | | | | | | | | | | |
that a Limited Liability Partnership (LLP) is preferable to a general partnership.
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Which of the following correctly describes an LLP?
| | | | | | |
A. Bill, Sam and Helen would not be personally liable for unpaid partnership
| | | | | | | | | | | | |
debts.
B. No registration with the state government is needed to create an LLP
| | | | | | | | | | | |
C. LLP's pay a federal income tax of 10%, whereas a regular partnership pays an
| | | | | | | | | | | | | | |
income tax of 20% | | |
D. An LLP will continue after the death of one of the partners
| | | | | | | | | | | |
,E. In an LLP new partners can be admitted without having to be approved by all
| | | | | | | | | | | | | | | |
of the existing partners - CORRECT ANSWER✔✔-A
| | | | | |
Based on the Uniform Business Corporation Code, which of the following is within
| | | | | | | | | | | |
the authority of the board of directors?
| | | | | | |
I. Amend the articles of incorporation
| | | | |
II. Hire the officers
| | |
III. Declare dividends
| |
A. I only. B. II only. C. III only. D. II and III only. E. I, II, and III - CORRECT
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ANSWER✔✔-D
Which of the following would normally be included in the Articles of
| | | | | | | | | | | |
Incorporation of a corporation? | | |
I. Name of the corporation
| | | |
II. Names of the incorporators
| | | |
III. Number of authorized shares of stock
| | | | | |
IV. Names of the officers
| | | |
A. I only. B. I and II only. C. I, II and III only. D. I and III only. E. I, II, III and IV -
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CORRECT ANSWER✔✔-C |
, Certain creditors of a small corporation have brought a lawsuit against the
| | | | | | | | | | | |
corporation and the shareholders of the corporation. They are able to present to
| | | | | | | | | | | | |
the trial court judge convincing evidence that the shareholders have co-mingled
| | | | | | | | | | |
their personal funds with that of the corporation. The plaintiffs are asking for the
| | | | | | | | | | | | | |
judge to hold the shareholders personally liable for the debts of the corporation.
| | | | | | | | | | | | |
Assuming that the creditors can prove the facts that they are alleging, a trial
| | | | | | | | | | | | | |
judge will probably: | |
A. Hold the shareholders liable under the "business judgment rule" doctrine
| | | | | | | | | |
B. Hold the shareholders liable under the "fiduciary duty" doctrine
| | | | | | | | |
C. Hold the shareholders liable under the "pierce the corporate veil" doctrine
| | | | | | | | | | |
D. Hold the shareholders liable under Ch. 11 of the bankruptcy code
| | | | | | | | | | |
E. Not hold the shareholders liable since shareholders are guaranteed limited
| | | | | | | | | | |
liability under corporate law - CORRECT ANSWER✔✔-C
| | | | | |
In which of the following forms of doing business will the owners of the business
| | | | | | | | | | | | | | |
have the benefit of "limited liability?"
| | | | |
I. Ordinary corporation
| |
II. Subchapter S corporation
| | |
III. Limited Liability Company
| | |
Answers
Wally and Karen formed a partnership on January 1, 20XX. Their written
| | | | | | | | | | | |
partnership agreement stated that profits would be distributed in the same
| | | | | | | | | | |
proportion as contributions, which were: Wally: $60,000; Karen: $40,000. There
| | | | | | | | | |
was no agreement as to how losses would be distributed. Which of the following
| | | | | | | | | | | | | |
is correct?
|
A. Both profits and losses will be distributed 50/50
| | | | | | | |
B. Profits will be distributed 60/40; losses 50/50
| | | | | | |
C. Both profits and losses will be distributed 60/40
| | | | | | | |
D. Both profits and losses will be distributed based on the amount of revenue
| | | | | | | | | | | | | |
each individual partner was responsible for in the ordinary course of business. -
| | | | | | | | | | | | |
CORRECT ANSWER✔✔-C |
Fred and Alice formed an at will partnership on January 1, 20XX. There was no
| | | | | | | | | | | | | | |
formal written agreement. Which of the following is correct under the Uniform
| | | | | | | | | | | |
Partnership Act? |
,I. If Fred makes a contract on behalf of the partnership in the regular course of
| | | | | | | | | | | | | | | |
business without first consulting with Alice, the contract is NOT binding on the
| | | | | | | | | | | | |
partnership
II. If Alice dies her heirs will inherit the economic value of her portion of the
| | | | | | | | | | | | | | | |
partnership but will NOT become partners | | | | |
III. Neither partner can legally withdraw from the partnership without just cause
| | | | | | | | | | |
A. I only. B. II only. C. III only. D. I and II only. E. I, II, and III - CORRECT
| | | | | | | | | | | | | | | | | | | | |
ANSWER✔✔-B
Bill, Sam and Helen have decided to create a partnership, and they have heard
| | | | | | | | | | | | | |
that a Limited Liability Partnership (LLP) is preferable to a general partnership.
| | | | | | | | | | | |
Which of the following correctly describes an LLP?
| | | | | | |
A. Bill, Sam and Helen would not be personally liable for unpaid partnership
| | | | | | | | | | | | |
debts.
B. No registration with the state government is needed to create an LLP
| | | | | | | | | | | |
C. LLP's pay a federal income tax of 10%, whereas a regular partnership pays an
| | | | | | | | | | | | | | |
income tax of 20% | | |
D. An LLP will continue after the death of one of the partners
| | | | | | | | | | | |
,E. In an LLP new partners can be admitted without having to be approved by all
| | | | | | | | | | | | | | | |
of the existing partners - CORRECT ANSWER✔✔-A
| | | | | |
Based on the Uniform Business Corporation Code, which of the following is within
| | | | | | | | | | | |
the authority of the board of directors?
| | | | | | |
I. Amend the articles of incorporation
| | | | |
II. Hire the officers
| | |
III. Declare dividends
| |
A. I only. B. II only. C. III only. D. II and III only. E. I, II, and III - CORRECT
| | | | | | | | | | | | | | | | | | | | |
ANSWER✔✔-D
Which of the following would normally be included in the Articles of
| | | | | | | | | | | |
Incorporation of a corporation? | | |
I. Name of the corporation
| | | |
II. Names of the incorporators
| | | |
III. Number of authorized shares of stock
| | | | | |
IV. Names of the officers
| | | |
A. I only. B. I and II only. C. I, II and III only. D. I and III only. E. I, II, III and IV -
| | | | | | | | | | | | | | | | | | | | | | | | | |
CORRECT ANSWER✔✔-C |
, Certain creditors of a small corporation have brought a lawsuit against the
| | | | | | | | | | | |
corporation and the shareholders of the corporation. They are able to present to
| | | | | | | | | | | | |
the trial court judge convincing evidence that the shareholders have co-mingled
| | | | | | | | | | |
their personal funds with that of the corporation. The plaintiffs are asking for the
| | | | | | | | | | | | | |
judge to hold the shareholders personally liable for the debts of the corporation.
| | | | | | | | | | | | |
Assuming that the creditors can prove the facts that they are alleging, a trial
| | | | | | | | | | | | | |
judge will probably: | |
A. Hold the shareholders liable under the "business judgment rule" doctrine
| | | | | | | | | |
B. Hold the shareholders liable under the "fiduciary duty" doctrine
| | | | | | | | |
C. Hold the shareholders liable under the "pierce the corporate veil" doctrine
| | | | | | | | | | |
D. Hold the shareholders liable under Ch. 11 of the bankruptcy code
| | | | | | | | | | |
E. Not hold the shareholders liable since shareholders are guaranteed limited
| | | | | | | | | | |
liability under corporate law - CORRECT ANSWER✔✔-C
| | | | | |
In which of the following forms of doing business will the owners of the business
| | | | | | | | | | | | | | |
have the benefit of "limited liability?"
| | | | |
I. Ordinary corporation
| |
II. Subchapter S corporation
| | |
III. Limited Liability Company
| | |
