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BUSI 301 BUSI301 FINAL EXAM (LIBERTY UNIVERSITY

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BUSI301 Final Exam (Liberty University)

1. The revised uniform partnership act is the model statute that covers which of the following partnerships?

2. The RUPA imposes both ___liability on general partners for debts and liabilities of the partnership.

3. A limited partnership is composed of

4. The following methods are used by partnerships to raise capital:

5. Romulus, Remus, and Caesar form RRC L.P., a limited partnership to develop land for a shopping center. Romulus and Remus are GP’s, while Caesar is a limited partner. Romulus borrows money for the partnership from a local bank without Remus’s or Caesar’s knowledge. If the business assets of RRC are not sufficient to pay back the loan, where may the bank turn for the balance of the loan?

6. The following are true about withdrawal under the RULPA

7. The following are not covered by the Revised Uniform Partnership Act:

8. A general partnership is composed of:

9. A partnership can NOT do the following to raise capital:

10. The following are NOT true about withdrawal under the RULPA:

11. A limited partnership

12. The following are important factors in choosing a business entity

13. Those with ownership interests in a business entity are called:

14. The following entities is possible for a business with only one principal?

15. The chief drawback to the sole-proprietorship form of entity is

16. Boswell is a sole proprietor and signs a 5 year lease for office space with Roberts. Boswell defaults on the lease. Roberts obtains a judgment against Boswell for $100,000; Boswell’s business is out of assets, thus:

17. The following are elements of a general partnership:

18. a business entity has at least one or more

19. The following entities are possible for a business with 4 principals

20. The following are not elements of a general partnership:

21. The following are elements of a general partnership:

22. Lewis wishes to break off from Clarke Company and form his own business with 100 percent ownership for himself. The following form of entity are available to Lewis for his new business:

Chapter 15:

1. The principals in an LLC are referred to as

2. The following are true about the LLC form of entity:

4. Julian, Curt, and Drew are all principals in JCD Associates LLC. In the operating agreement they agree that any principal is permitted to bind the LLC JDC Associates are:

5. Members of High Rate Return LLC conspired to commit investment fraud. One investor obtains a $50,000 judgment against High Rate Return, but the company is without assets. Thus,

6. Arnold no longer wants to continue being a member of Ace High LLC. His right to withdraw is called

7. In an LLC, the owners are known as:

8. Julian, Curt, and Drew are all principals in JCD Associates LLC. In the operating agreement, they appoint Julian to manage all daily business operations. This business is:

9. Insiders at WidgetCo LLC looted the company and shut down operations, leaving creditors in the cold. One creditor obtains a $50,000 judgment against WidgetCo, but the company is without assets. Thus,

10. Julian, Curt, and Drew are all principals in JCD Associates LLC. In the operating agreement, they agree that Julian will be paid a salary to run day-to-day operations, but any principal is permitted to sign a contract or otherwise bind the LLC. This business is:

11. Members of High Flyer LLC made knowingly false statements on an application with local bank in order to obtain a loan. After high flyer defaults on the loan, local bank obtains a $50,000 judgment against High Flyer, but the company is without assets. Thus,

Chapter 16

1. The formation of a corporation is governed by

2. Corporation that do not sell ownership interests through a broker to the general public or financial institutions are categorized as

3. Fresh Farm Corporation operates produce stands in Georgia and in its home state of Florida. It is incorporated in Florida. In Florida, which category of corporation is FFC?

4. The following are typically handled at an initial organizational meeting:

5. The following factors are considered by a court when judging whether fairness demands that the corporate veil be pierced:

6. In some cases an individual known as the

7. Corporations are created under the authority of

8. The most common category of corporation is

9. Fresh Farm Corporation operates produce stands in Florida and in Georgia, but it is incorporated in Florida. In Georgia, the category of corporation that FFC is in, in Georgia is

10. The following occurs first:

11. The following factors are not considered by a court when judging whether fairness demands that the corporate veil be pierced:

12. In preparation to launch his business, Daniel leases office space and conducts other preliminary matters before he files his articles of incorporation. Daniel’s legal status is

13. ___ set the process and rules related to forming a corporation

14. Corporation that sell ownership interests through sales via a broker to the general public and financial institutions are categorized as

15. Fresh Farm Charities (FFC) operates a charity to benefit migrant farmworkers. They are categorized as

16. The following are not typically handled at an initial organizational meeting:

17. The following factors are considered by a court when judging whether fairness demands that the corporate veil be pierced

18. A___is an individual who conducts pre-incorporation activities necessary to start up the business

19. More than half the states have adopted all or substantial portions of the

20. The formal document sets formation of a corporation in motion:

21. Chef Cranky is the principal of his soon-to-be-formed corporation Cranky’s Kitchen Inc. He finally found a location for his new restaurant and signed a lease. However, several of Cranky’s investors withdrew from the project after learning how angry and volatile Chef Cranky became in the kitchen. Cranky never formally incorporates his new venture. If the landlord sues Cranky individually for the lease payment, who prevails?

22. Start-up Corporation is a newly formed entity applying for a bank loan. The bank will likely require that Start-up’s principals sign a

23. BigCo planned on a significant expansion of its operations. It intends to capitalize this expansion through $5 million in debt and therefore wants the lowest rate possible and to use specific assets to secure the debt. The following is the best option for capital:

24. The following are requirements for qualification as a Subchapter S corporation:

25. The model law used by more than half the states to govern formation and internal governance of a corporation is the

26. Chef Cranky is the principal of his soon-to-be-formed corporation Cranky’s Kitchen Inc. He finally found a location for his new restaurant and signed a lease. Just one year after incorporating, Cranky’s restaurant failed because patrons disliked how angry and volatile he often became. Cranky defaults on the lease. If the landlord sues Cranky individually for the lease payments, who prevails?

27. BigCo plans on a significant expansion of its operations. It intends to capitalize this expansion through $5 million in debt and therefore wants the lowest rate possible and to use only its general creditworthiness (instead of specific assets) to secure the debt. This is the best option for capital:

28. SmallCo planned to introduce a new product to the market. They intend to fund the $50,000 advertising budget for the new product through short term debt. The following is the best option for obtaining capital:

29. A corporation’s ___are responsible for oversight and management of the corporation’s general course of direction

30. Much of the work of the board of directors is accomplished through use of

31. Traditionally, the president of a corporation does not have

32. The following breaches a director’s duty of loyalty:

33. The ___protects officers and directors from shareholder suits that seek redress for decisions that were made in good faith but resulted in a loss for the company

34. A __ action is a lawsuit filed by a shareholder who sues the directors and officers for breach of duty on behalf of the corporation itself

35. Oversight and management of a corporation’s general course of direction is the responsibility of its

36. Directors frequently form

37. Traditionally, the secretary of a corporation has

38. The following breaches a director’s duty of loyalty:

39. A disgruntled shareholder files a breach of duty lawsuit against the officers and directors of WidgetCo on behalf of himself, this is known as a

40. General priorities of a corporation are set by its

41.Depending on the size and scope of a corporation, the vice president has limited

42. When a shareholder alleges a breach of fiduciary duty of care by an insider, the most important procedural requirement for a

Chapter 17

1. Securities transactions occur in two settings. One is the original and reissuance of securities by a business to raise capital also known as the

2. A company issuing securities to the public market for the first time does so through an

3. The following are considered equity instruments

4. Corporations raise capital by issuing

5. Although common stock holders share in the profits, they are

6. The instruments provided to the investor with a return based on profitability of the company are:

7. The following are considered debt instruments:

8. For investors wanting to earn a fixed rate of returns rather than a return based on profitability, companies may raise capital by issuing

9. One of the two types of security transactions is purchase and sale of securities between investors. This is known as the

10. The following are NOT considered equity instruments:

11. For corporations that wish to raise capital through a long-term debt instrument,

12. If a corporation fails, preferred stockholders are

13. The following is an example of a debt instrument:

14. The___is an independent administrative agency charged with regulating issuance and trading of securities.

15. For a variety of reasons, such as economic and legal, most businesses offer their securities on an

16. The Securities Act of 1934 requires disclosures related to:

17. The Private Securities Litigation Reform Act of 1995 provides a

18. State securities laws are commonly known as

19. Under the ’33 act, certain smaller offerings are

20. The ’34 act regulates the relationship between existing shareholders and the corporation by requiring disclosures related to:

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