BADM 326 UPDATED CERTIFICATION
EVALUATION 2026 QUESTIONS WITH
PRACTICE SOLUTION GRADED A+
◉ english common law (roots). Answer: law, equity, merchant courts
developed by judges issuing opinions + establishing precedent
◉ Sources of Federal Law. Answer: constitution
treaties
statutes (legislative)
executive orders (executive)
regulations (executive)
judicial decisions: federal and administrative courts)
◉ sources of state law. Answer: constitution
statutes
regulations/admin orders
judicial decisions
municipal ordinances
◉ state v federal law. Answer: federal > state
,constitution > statue > regulation
◉ precedent. Answer: court must follow the case law established by
any higher court *in that court's jurisdiction*
◉ stare decisis. Answer: stand by the decision (precedent)
◉ sole proprietorship. Answer: form of business in which owner is
actually the business, not a separate legal entity
most common form of organization
◉ sp advantages. Answer: easy + inexpensive
full ownership control
right to all profits
easily transferred or sold
◉ sp disadvantages. Answer: unlimited liability (personal
capital/assets)
legally responsible for contracts/torts
taxes paid on personal income tax (form 1040, schedule C)
,◉ tort. Answer: a wrongful act/infringement of a right
◉ general partnerships. Answer: association of two or more persons
to carry on as co owners of a business for profit
◉ Uniform Partnership Act (UPA). Answer: model act that codifies
partnership law
◉ Revised Uniform Partnership Act (RUPA). Answer: issued by the
national conference of commissioners on uniform state laws, but not
adopted by many states (limited partnerships)
◉ gp taxation. Answer: flow through taxation
income and losses flow onto and have to be reported on individual
partners' personal income tax returns
◉ gp management right. Answer: each partner has the right to
participate in management of partnership with equal vote (unless
otherwise agreed upon)
◉ general partnership rights. Answer: share profits equally
right to compensation (not entitled to receive salary unless agreed
upon)
right to indemnification (reimbursement for business expenses)
, right to return of loans
right to return of capital
right to information
◉ duty of loyalty. Answer: a duty not to act adversely to the interests
of the partnership
◉ duty of care. Answer: obligation to use same level of care and skill
that a reasonable person in same position would use (breach is
negligence)
◉ duty to inform. Answer: a partner owes to inform his or her
copartners of all the information he or she possesses that is relevant
to the affairs of the partnership
◉ duty of obedience. Answer: requires partners to adhere to
provisions of the partnership agreement and decisions of
partnership
◉ general partnership liability. Answer: unlimited liability for the
debts of partnership
◉ joint and several liability. Answer: tort liability of partners
together and individually
EVALUATION 2026 QUESTIONS WITH
PRACTICE SOLUTION GRADED A+
◉ english common law (roots). Answer: law, equity, merchant courts
developed by judges issuing opinions + establishing precedent
◉ Sources of Federal Law. Answer: constitution
treaties
statutes (legislative)
executive orders (executive)
regulations (executive)
judicial decisions: federal and administrative courts)
◉ sources of state law. Answer: constitution
statutes
regulations/admin orders
judicial decisions
municipal ordinances
◉ state v federal law. Answer: federal > state
,constitution > statue > regulation
◉ precedent. Answer: court must follow the case law established by
any higher court *in that court's jurisdiction*
◉ stare decisis. Answer: stand by the decision (precedent)
◉ sole proprietorship. Answer: form of business in which owner is
actually the business, not a separate legal entity
most common form of organization
◉ sp advantages. Answer: easy + inexpensive
full ownership control
right to all profits
easily transferred or sold
◉ sp disadvantages. Answer: unlimited liability (personal
capital/assets)
legally responsible for contracts/torts
taxes paid on personal income tax (form 1040, schedule C)
,◉ tort. Answer: a wrongful act/infringement of a right
◉ general partnerships. Answer: association of two or more persons
to carry on as co owners of a business for profit
◉ Uniform Partnership Act (UPA). Answer: model act that codifies
partnership law
◉ Revised Uniform Partnership Act (RUPA). Answer: issued by the
national conference of commissioners on uniform state laws, but not
adopted by many states (limited partnerships)
◉ gp taxation. Answer: flow through taxation
income and losses flow onto and have to be reported on individual
partners' personal income tax returns
◉ gp management right. Answer: each partner has the right to
participate in management of partnership with equal vote (unless
otherwise agreed upon)
◉ general partnership rights. Answer: share profits equally
right to compensation (not entitled to receive salary unless agreed
upon)
right to indemnification (reimbursement for business expenses)
, right to return of loans
right to return of capital
right to information
◉ duty of loyalty. Answer: a duty not to act adversely to the interests
of the partnership
◉ duty of care. Answer: obligation to use same level of care and skill
that a reasonable person in same position would use (breach is
negligence)
◉ duty to inform. Answer: a partner owes to inform his or her
copartners of all the information he or she possesses that is relevant
to the affairs of the partnership
◉ duty of obedience. Answer: requires partners to adhere to
provisions of the partnership agreement and decisions of
partnership
◉ general partnership liability. Answer: unlimited liability for the
debts of partnership
◉ joint and several liability. Answer: tort liability of partners
together and individually
