Business Law Practice Exam (Intermediate Level) Part- III
Questions and Answers
- 1.
The payment of Brian’s debt to Chuck is guaranteed by Bryan’s personal property.This is
- A.
A reorganization
- B.
A secured transaction
- C.
A suretyship
- D.
A violation of most state laws
Correct Answer
B. A secured transactionExplanation
The correct answer is a secured transaction. In a secured transaction, the debtor provides collateral to the creditor as a guarantee for the payment of the debt. In this case, Brian's debt to Chuck is guaranteed by Bryan's personal property, indicating that there is a security interest in place. This means that if Brian fails to repay the debt, Chuck can take possession of Bryan's personal property to satisfy the debt.Rate this question:
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- 2.
The payment of Eden’s debt to Flem is guaranteed by Eden’s personal property. This property is
- A.
A secured party
- B.
A secured transaction
- C.
A security interest
- D.
Collateral
Correct Answer
D. CollateralExplanation
The correct answer is collateral because collateral refers to a valuable asset or property that is used to secure a loan or debt. In this case, Eden's personal property is being used as a guarantee for the payment of their debt to Flem. By using their personal property as collateral, Eden ensures that Flem has a form of security in case they fail to repay the debt.Rate this question:
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- 3.
The Payment of John’s debt to kirsten is guaranteed by John’s personal property. Kirsten is most likely to perfect her interest by
- A.
Attaching a bright label to John’s property
- B.
Calculating the precise amount of John’s debt
- C.
Correcting grammatical errors in the parties’ written agreement
- D.
Filing a financing statement with the appropriate authority
Correct Answer
D. Filing a financing statement with the appropriate authorityExplanation
Kirsten is most likely to perfect her interest by filing a financing statement with the appropriate authority. This is because filing a financing statement gives public notice of Kirsten's interest in John's personal property, which ensures that her claim is recognized and protected. Attaching a bright label to John's property or correcting grammatical errors in the parties' written agreement would not provide the same level of legal protection. Calculating the precise amount of John's debt is important, but it does not directly relate to perfecting Kirsten's interest in the property.Rate this question:
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- 4.
Select Furniture Store sells household consumer goods. To create a purchase-money security interest, Select Furniture must
- A.
Assign, to the collecting agent, a portion of its account payable
- B.
Assign, to a collecting agent, a portion of its accounts
- C.
Extend credit for part or all of the purchase price of the goods
- D.
Refers purchasers to a third-party lender
Correct Answer
C. Extend credit for part or all of the purchase price of the goodsExplanation
Select Furniture Store must extend credit for part or all of the purchase price of the goods in order to create a purchase-money security interest. This means that the store must provide financing or allow customers to make partial or full payments over time for the goods they are purchasing. By doing so, Select Furniture Store can secure its interest in the goods and have a legal claim to them if the customer fails to make the required payments.Rate this question:
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- 5.
City Bank’s financing statement in collateral owned by Delta Waters Corporation will expire in less than a year. Filed timely, a continuation statement could extend the effectiveness of the financing statement for
- A.
One year
- B.
Two years
- C.
Five years
- D.
Ten years
Correct Answer
C. Five yearsExplanation
A continuation statement can be filed to extend the effectiveness of a financing statement in collateral owned by Delta Waters Corporation. Since the financing statement is set to expire in less than a year, filing a continuation statement would extend its effectiveness for an additional period of time. The correct answer is five years, as it is the longest duration among the options provided.Rate this question:
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- 6.
Hal’s hardware store defaults on a debt to Intrastate Bank, which takes possession of the collateral securing the debt. Intrastate sells the collateral. THe proceeds from the sale are applied first to
- A.
Hal’s debt to Intrastate
- B.
Hal’s debt to other creditors
- C.
Intrastate’s fees for the sale
- D.
Payments Hal’s made on the debt to Intrastate
Correct Answer
C. Intrastate’s fees for the saleExplanation
When a debtor defaults on a debt and the collateral is seized by the creditor, the proceeds from the sale of the collateral are typically applied in a specific order. First, any fees or expenses incurred by the creditor for the sale are deducted from the proceeds. In this case, Intrastate Bank would deduct its fees for the sale. After that, the remaining amount would be applied towards Hal's debt to Intrastate. Any payments that Hal has already made on the debt would not be relevant at this stage, as they would have already been accounted for. Hal's debt to other creditors would only be considered after Intrastate's fees and Hal's debt to Intrastate have been satisfied.Rate this question:
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- 7.
Ping’s debt to Oak Furniture Warehouse is past due. Oak obtains a judgement against Ping, but Ping refuses to pay it. Oak asks the court for an order that directs the sheriff to seize and sell any of Ping’s nonexempt real or personal property that is within the court’s geographical jurisdiction. This is a request for
- A.
A writ of execution
- B.
A composition agreement
- C.
An order that would violate most state laws an order that would violate most state laws an order that would violate most state laws an order that would violate most state laws
- D.
An order of garnishment an order of garnishment an order of garnishment
Correct Answer
A. A writ of executionExplanation
The correct answer is a writ of execution. A writ of execution is a court order that authorizes the sheriff to seize and sell a debtor's nonexempt property to satisfy a judgement debt. In this case, Oak Furniture Warehouse is requesting the court to issue a writ of execution to enforce the judgement against Ping and collect the debt by seizing and selling Ping's nonexempt property.Rate this question:
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- 8.
Doral, Eduard, and Francesca are co-sureties on Glenda’s debt to Hi-Credit Company. Doral Pays Glenda’s entire debt. Doral’s right to seek proportionate payments from Eduard and Francesca is the right of
- A.
Contribution
- B.
Redemption
- C.
Reimbursement
- D.
Subrogation
Correct Answer
A. ContributionExplanation
Doral, Eduard, and Francesca are co-sureties, which means they are all equally responsible for Glenda's debt. Doral pays off the entire debt on Glenda's behalf, but this does not absolve Eduard and Francesca of their responsibility. Doral has the right to seek proportionate payments from Eduard and Francesca, as they should contribute their fair share towards the debt. This right to seek proportionate payments is known as the right of contribution.Rate this question:
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- 9.
Seth files for bankruptcy. Seth must include with the petition
- A.
Proof of each creditor's claim
- B.
A list of creditors and the amount of debt owed to each
- C.
All of his debt and credit cards to be disposed of by the court
- D.
An affidavit testifying to have read the bankruptcy code
Correct Answer
B. A list of creditors and the amount of debt owed to eachExplanation
When filing for bankruptcy, it is necessary for Seth to include a list of creditors and the amount of debt owed to each. This is important because it allows the court to have a clear understanding of Seth's financial obligations and helps in the process of determining how the debts will be handled during the bankruptcy proceedings. Including this information ensures transparency and provides a comprehensive overview of Seth's financial situation to the court.Rate this question:
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- 10.
Teona files a voluntary petition in bankruptcy for relief through a liquidation. Debts that will not be discharged include claims for
- A.
Domestic support obligation
- B.
Money to be paid for goods not delivered
- C.
Contributions to employee benefit plans
- D.
Long overdue credit card debt
Correct Answer
A. Domestic support obligationExplanation
A domestic support obligation refers to debts owed for child support or alimony. These types of debts are not dischargeable in bankruptcy, meaning they cannot be eliminated or forgiven through the bankruptcy process.Rate this question:
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- 11.
Tracy borrows $30,000 from Secure State Bank. The lender accepts Tracys equity in her home as collateral which ca preceding that occurs if Tracn be seized if the loan isn't paid on time. With respect to any fails to make payments this loan is subordinated. This means that
- A.
Takes a higher priority
- B.
Takes a lower priority
- C.
Has the same priority as the primary mortgage
- D.
Fluctuates with the market value of the property
Correct Answer
B. Takes a lower priorityExplanation
In this scenario, the term "subordinated" indicates that the loan takes a lower priority compared to the primary mortgage. This means that if Tracy fails to make payments on time and her home is seized, the primary mortgage will be paid off first before any funds are allocated towards paying off the loan from Secure State Bank. Therefore, the loan from Secure State Bank is considered to have a lower priority in terms of repayment.Rate this question:
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- 12.
Denise borrows $90,000 from Clear Lake Credit Union to buy a home. Denise loses her job and fails to make payments, but assures Clear Lake Union that she will secure a new job. The lender agrees to postpone the payments. This is
- A.
A bridge loan
- B.
Forbearance
- C.
A renoitization
- D.
Restructure
Correct Answer
B. ForbearanceExplanation
Forbearance is the correct answer because it refers to an agreement between a borrower and a lender where the lender agrees to temporarily suspend or reduce the borrower's monthly payments due to financial hardship. In this case, Denise lost her job and was unable to make payments, but the lender agreed to postpone the payments until she secured a new job. This demonstrates forbearance as the lender is showing leniency and understanding towards Denise's situation.Rate this question:
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- 13.
Erin and Dooley, a married couple, borrow $120,000 from Capital & Credit Bank to buy a home. When Erin and Dooley divorce, they are unable to make payments on the mortgage. The market value of the home has declined to less than the balance of the loan. Capital and Credit agrees to a sale of the property for this amount. This is
- A.
A deed in lieu of foreclosure
- B.
A home equity loan
- C.
A reverse mortgage
- D.
A short sale
Correct Answer
D. A short saleExplanation
A short sale occurs when a homeowner sells their property for an amount less than the outstanding balance of their mortgage, with the agreement of the lender. In this scenario, Erin and Dooley are unable to make mortgage payments and the market value of the home has dropped below the loan balance. Capital and Credit Bank agrees to sell the property for this lower amount, which is a short sale. This allows Erin and Dooley to avoid foreclosure and potentially reduce their financial obligations.Rate this question:
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- 14.
Agnes borrows $110,000 from Bay Harbor Bank to buy a home under a mortgage with an acceleration clause. After eighteen payments, Agnes stops making payments on the mortgage. Bay Harbor
- A.
Can foreclose once on the entire amount of the loan
- B.
May seek only the amount of the missed payments, not the entire loan
- C.
Must foreclose on small amounts over time as each payment comes due
- D.
Must notify Agnes to accelerate the steps to cure the default
Correct Answer
A. Can foreclose once on the entire amount of the loanExplanation
The correct answer is "can foreclose once on the entire amount of the loan" because the mortgage has an acceleration clause. This clause allows the lender to demand immediate payment of the entire loan if the borrower defaults on the mortgage. Since Agnes has stopped making payments, Bay Harbor Bank has the right to foreclose on the entire amount of the loan. They do not have to wait or foreclose on small amounts over time.Rate this question:
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- 15.
Reed borrows $150,000 dollars from Suburban Credit Union to buy a home, which secures the loan. Three years later, reed stops making payments. After suburban credit repossesses and auction off the property to Tyler equity remains. This amount most likely belongs to
- A.
Reed
- B.
Suburban credit union
- C.
Tyler
- D.
The equity in which the property is located
Correct Answer
A. ReedExplanation
The correct answer is Reed because the question states that Reed borrowed the money from Suburban Credit Union and used the property as collateral for the loan. Therefore, any remaining equity after the property is auctioned off would belong to Reed.Rate this question:
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- 16.
Ozzy is an officer of Prudent Financial Corporation. Ozzy serves in a representative capacity for Prudent Financial’s owners. With respect to binding Prudent Financial to Contracts, Ozzy is
- A.
An agent and has the authority
- B.
An agent but does not have the authority
- C.
Not an agent and does not have the authority
- D.
Not an agent but does have the authority
Correct Answer
A. An agent and has the authorityExplanation
Ozzy is an agent of Prudent Financial Corporation because he serves in a representative capacity for the company's owners. As an agent, he has the authority to bind Prudent Financial to contracts.Rate this question:
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- 17.
Delite Candy Company hires Elton to sell Delite’s products in a certain area. Delite agrees to pay Elton a salary, plus commission, for a trial period. They also agree that Elton can sell using any methods and during any hours that seem appropriate. The key factor in whether Elton is Delite’s employee is
- A.
The amount of Eltons salary
- B.
The control Delite has over the Details of the work
- C.
The length of the trial period
- D.
The title that designates Elton’s position
Correct Answer
B. The control Delite has over the Details of the workExplanation
The key factor in determining whether Elton is Delite's employee is the control that Delite has over the details of the work. This means that if Delite has the authority to dictate how and when Elton sells the products, then Elton would be considered an employee. The amount of salary, the length of the trial period, and the title are not the determining factors in this case.Rate this question:
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- 18.
Jim agrees to act on Kit’s behalf, subject to Kit’s control, and Kit trusts Jim to go act. This describes a relationship between
- A.
A business and its competitors
- B.
A government and its governed
- C.
A parent and a child
- D.
A principal and an agent
Correct Answer
D. A principal and an agentExplanation
The given scenario describes a relationship between a principal and an agent. Jim agrees to act on Kit's behalf, subject to Kit's control, indicating that Jim will be acting as an agent for Kit. Kit trusts Jim to go act, further emphasizing the agency relationship. In this relationship, the principal (Kit) delegates authority to the agent (Jim) to act on their behalf while still maintaining control over the actions of the agent.Rate this question:
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- 19.
Elle is an agent for Fine Cosmetics, INC. Elle owes Fine Cosmetics the duty of
- A.
Avoidance
- B.
Cooperation
- C.
Indemnification
- D.
Performance
Correct Answer
D. PerformanceExplanation
As an agent for Fine Cosmetics, INC, Elle is obligated to fulfill her duties and responsibilities towards the company. This includes carrying out her tasks and responsibilities to the best of her abilities, meeting performance expectations, and achieving the desired results. Performance is crucial for Elle as it ensures that she is actively working towards the success of Fine Cosmetics and fulfilling her obligations as their agent.Rate this question:
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- 20.
Lather Up Soap Products Company grants its agent Kathy an exclusive territory in which to sell Lather Up products. The firm cannot compete with Kathy in that territory under the principal’s duty of
- A.
Avoidance
- B.
Cooperation
- C.
Indemnification
- D.
Reimbursement
Correct Answer
B. CooperationExplanation
The correct answer is cooperation. The principal's duty of cooperation means that the firm cannot compete with Kathy in her exclusive territory. Cooperation implies that the principal supports and assists the agent in their sales efforts, rather than engaging in competition within the same market.Rate this question:
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- 21.
Cory employs Daily Delivery Agency as an agent under a written agreement that describes the rights and the duties of both parties. This is a
- A.
Apparent authority
- B.
Equal authority
- C.
Express authority
- D.
Implied authority
Correct Answer
C. Express authorityExplanation
The written agreement between Cory and Daily Delivery Agency clearly outlines the rights and duties of both parties, indicating that there is a clear and explicit expression of authority. This means that the authority granted to Daily Delivery Agency is explicitly stated and agreed upon in the written agreement.Rate this question:
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- 22.
Sonia manages a Tasty Party Store for United Food Company. To manage the business Sonia’s authority can be implied by
- A.
An inference from the position Sonia occupies
- B.
Any inference a reasonable customer or supplier would make
- C.
Any inference Sonia chooses to make
- D.
No inference
Correct Answer
A. An inference from the position Sonia occupiesExplanation
Sonia's authority can be implied by an inference from the position she occupies because her position within the Tasty Party Store suggests that she has been given the responsibility and power to manage the business. This implies that she has the authority to make decisions, oversee operations, and represent the store in dealings with customers and suppliers. A reasonable inference from her position would be that she has the necessary authority to fulfill her managerial role effectively.Rate this question:
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- 23.
Based on Nan’s conduct Odel reasonably believes that Poppy has the authority to act on Nan’s behalf even though Poppy does not have the actual authority to do so. In this circumstance Poppy has
- A.
Apparent authority
- B.
Express authority
- C.
Implied authority
- D.
No authority
Correct Answer
A. Apparent authorityExplanation
In this scenario, even though Poppy does not have actual authority to act on Nan's behalf, based on Nan's conduct, Odel reasonably believes that Poppy has the authority to do so. This is known as apparent authority. Apparent authority occurs when a person who does not have actual authority is perceived by others to have authority due to the actions or words of another person. In this case, Nan's conduct creates the appearance that Poppy has the authority to act on Nan's behalf, leading Odel to reasonably believe so.Rate this question:
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- 24.
Iggy hires Joy to act as his agent to purchase Kup-a-Koffee Kompany. Iggy tells Joy to reveal only that she is buying the firm on behalf of a third party without telling the Kup-a-Koffee seller who that third party is. Iggy is
- A.
A disclosed principal
- B.
An implied principle
- C.
An undisclosed principal
- D.
A partially disclosed principal
Correct Answer
D. A partially disclosed principalExplanation
In this scenario, Iggy is considered a partially disclosed principal. This is because Iggy has disclosed to Joy that he is the buyer of Kup-a-Koffee Kompany, but he has not disclosed the identity of the third party on whose behalf he is purchasing the firm. The seller of Kup-a-Koffee Kompany is aware that there is a third party involved, but does not know who that third party is. Therefore, Iggy's status as the principal is partially disclosed.Rate this question:
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- 25.
Myron is an employee of Neto. Either party can terminate the employment relationship at any time for any reason without liability. With respect to the employment at will doctrine this is
- A.
An example of the doctrine
- B.
An exception based on contract theory
- C.
An exception based on public policy
- D.
An exception based on tort theory
Correct Answer
A. An example of the doctrineExplanation
This scenario is an example of the employment at will doctrine, which allows either the employer or the employee to terminate the employment relationship at any time and for any reason without incurring liability. In this case, both parties have the freedom to end the employment without facing legal consequences.Rate this question:
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- 26.
Research statistics corporation uses a merit system to pay its employees according to their job performance. Suki, a female and Troy a male are research employees with comparable jobs. Due to superior performance Suki is paid more than Troy. This is
- A.
Disparate-impact treatment
- B.
Gender discrimination
- C.
Not discrimination
- D.
Reverse discrimination
Correct Answer
C. Not discriminationExplanation
This situation is not discrimination because the employees are being paid based on their job performance, not their gender. Suki is being paid more than Troy because she has demonstrated superior performance, regardless of her gender. Discrimination would occur if Suki was being paid more than Troy solely because she is a female, without considering their job performance. However, in this case, the merit system is being used to determine pay, which is a fair and non-discriminatory approach.Rate this question:
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- 27.
Rona is Stu’s administrative assistant and both work for Tricounty Labor Inc. Stu tells Rona that for sexual favors, he will give her an excellent performance review and recommend a raise. this is
- A.
Harassment on sexual preference basis
- B.
Hostile-environment harassment
- C.
not harassment
- D.
Quid pro quo-harassment
Correct Answer
D. Quid pro quo-harassmentExplanation
The given scenario describes a situation where Stu, Rona's superior, offers her a positive performance review and a raise in exchange for sexual favors. This aligns with the concept of quid pro quo-harassment, which refers to a form of sexual harassment where employment benefits or opportunities are conditioned upon the submission to or rejection of unwelcome sexual advances. In this case, Stu is using his position of power to exploit Rona and create a hostile work environment.Rate this question:
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- 28.
Dag is an employee of Eagle Mining company. Under federal labor law, dag and other employees have the right to
- A.
Bargain collectively with Eagle through their representatives
- B.
Insist that Eagle require union membership as a condition of work
- C.
Interfere with the efforts of others to form labor organizations
- D.
Refuse to bargain with Eagle through their representatives
Correct Answer
A. Bargain collectively with Eagle through their representativesExplanation
Under federal labor law, employees have the right to bargain collectively with their employer through their representatives. This means that Dag and other employees have the right to negotiate and discuss work conditions, wages, and other employment terms with Eagle Mining company through their chosen representatives, such as a labor union. This allows employees to have a voice and be involved in the decision-making process that affects their working conditions.Rate this question:
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- 29.
Carl sells Direct Marketing Enterprises, a sole proprietorship, to Eve. This a transfer of
- A.
A license
- B.
A trade name
- C.
The formula to make a product
- D.
The ownership of the business
Correct Answer
D. The ownership of the businessExplanation
The transfer of Direct Marketing Enterprises from Carl to Eve implies a transfer of ownership of the business. This means that Carl is selling his rights, assets, and liabilities associated with the business to Eve, making her the new owner of the sole proprietorship.Rate this question:
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- 30.
Jim organized, and owns and operates, Jim’s Landscaping Service in the simplest form of business organization. This is
- A.
None of the choices
- B.
A limited liability company
- C.
A partnership
- D.
A sole proprietorship
Correct Answer
D. A sole proprietorshipExplanation
The given answer is a sole proprietorship because the description states that Jim owns and operates the business. In a sole proprietorship, the owner has complete control and is solely responsible for the business. This form of business organization is the simplest and most common, where the owner has unlimited liability for the business's debts and obligations.Rate this question:
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- 31.
Denise and Elke do business as Final Curtain Decorators. In most states, for purposes of holding title to property, this partnership would be treated as
- A.
An aggregate of the individual partners
- B.
A natural person
- C.
An entity
- D.
A non-existent party
Correct Answer
C. An entityExplanation
This partnership would be treated as an entity for purposes of holding title to property. This means that Denise and Elke, doing business as Final Curtain Decorators, would be seen as a separate legal entity from the individual partners. As an entity, they would have the ability to own property, enter into contracts, and be held liable for any debts or obligations incurred by the partnership.Rate this question:
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- 32.
Rona and Savannah do business as Treasure Island Traders. Acting in good faith on the firm’s behalf in a deal with Unlimited Potential. Inc. Rona makes an honest error in overestimating the profit. To her firm, Rona is
- A.
Liable for breach the duty of care
- B.
Liable for breach of the duty of economic sense
- C.
Liable for breach of the duty of loyalty
- D.
Not liable
Correct Answer
D. Not liableExplanation
Rona is not liable for her honest error in overestimating the profit on behalf of her firm. This is because Rona acted in good faith and made an honest mistake, which does not constitute a breach of duty.Rate this question:
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- 33.
Megan and Nicole do business as One World Realty. In acting on the firm’s behalf in a deal with Property Acquisition company, Megan fails to account for the profit. To her firm, Megan is:
- A.
Liable for breach of the duty of common sense
- B.
Liable for the breach of the duty of economic sense
- C.
Liable for the breach of the duty of loyalty
- D.
Not liable
Correct Answer
C. Liable for the breach of the duty of loyaltyExplanation
Megan is liable for the breach of the duty of loyalty because she failed to account for the profit while acting on behalf of her firm, One World Realty. The duty of loyalty requires individuals to act in the best interests of their organization and to prioritize the organization's interests over their own. By not accounting for the profit, Megan has violated this duty and is therefore held liable for the breach.Rate this question:
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- 34.
FACT PATTERN 23-2: Luann and Mace are partners in Networx, a computer peripherals firm.Refer to fact pattern 23-2. Luann signs a contract with Oleo Chips, a retail component supplier, apparently on Networx’s behalf. The contract is binding on:
- A.
Luann, Mace & Networx
- B.
Luann only
- C.
Networx only
- D.
Oleo only
Correct Answer
A. Luann, Mace & NetworxExplanation
Luann, Mace, and Networx are all bound by the contract with Oleo Chips. This is because Luann signed the contract apparently on behalf of Networx, indicating that she had the authority to bind the partnership. As partners in Networx, both Luann and Mace are responsible for the actions and obligations of the partnership, including contracts entered into by one partner on behalf of the partnership. Therefore, all three parties are bound by the contract.Rate this question:
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- 35.
Greta is a member of Hovercraft LLC. As a member Greta is:
- A.
A manager or officer, but not an owner
- B.
An investor, but not a manager, officer, or owner
- C.
An owner
- D.
A participant, but not an investor, manager, officer or owner
Correct Answer
C. An ownerExplanation
Greta is an owner of Hovercraft LLC. This means that she has a stake in the company and holds ownership rights. As an owner, Greta has a financial interest in the success of the company and may have decision-making power regarding its operations and direction. However, the information provided does not specify whether Greta holds any other roles within the company such as being a manager or officer.Rate this question:
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- 36.
B2B, LLC is a limited liability company. Among its members, a dispute arises that the operating agreement does not cover. The dispute is governed by:
- A.
The applicable state LLC statute
- B.
The federal uniform LLC law
- C.
The principles of partnership law
- D.
The state corporation statute.
Correct Answer
A. The applicable state LLC statuteExplanation
In this scenario, the dispute among the members of B2B, LLC is governed by the applicable state LLC statute. Since B2B, LLC is a limited liability company, the laws and regulations regarding LLCs in the state where it is registered will apply. The operating agreement does not cover the dispute, so the members will need to refer to the state LLC statute to determine how the dispute should be resolved.Rate this question:
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- 37.
Energy Green LLC, is a limited liability company. Instead of distributing its profits to its members, Energy wants to reinvest the profits in its business. For this reason Energy may prefer to be taxed as:
- A.
A corporation
- B.
A partnership
- C.
A sole proprietorship
- D.
Natural person
Correct Answer
A. A corporationExplanation
Energy Green LLC may prefer to be taxed as a corporation because it wants to reinvest its profits in its business. As a corporation, Energy Green LLC can retain its profits and use them for business expansion, research and development, or other investment opportunities without having to distribute them to its members. This allows the company to have more flexibility and control over its financial resources, enabling it to grow and thrive in the long term.Rate this question:
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- 38.
Felipe is a member of Great States Transportation LLC. Felipe’s relationship to Great States ends, but the firm continues to do business. This is
- A.
Dissociation
- B.
Dissolution
- C.
Winding Up
- D.
Wrongful
Correct Answer
A. DissociationExplanation
Dissociation is the correct answer because it refers to the situation where a member of a limited liability company (LLC) leaves or has their relationship with the company terminated, but the LLC continues to operate and conduct business. In this scenario, Felipe's relationship with Great States Transportation LLC ends, but the company itself continues to function and carry out its operations.Rate this question:
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- 39.
Felicity and Gideon want to form and do business as Home Healthcare Corporation. A corporation is
- A.
A natural being
- B.
A tangible thing
- C.
An artificial person
- D.
A visible radiance
Correct Answer
C. An artificial personExplanation
A corporation is considered an artificial person because it is a legal entity separate from its owners or shareholders. It has its own rights, obligations, and liabilities, just like a natural person. This legal concept allows corporations to enter into contracts, own property, sue or be sued, and engage in various business activities. While a corporation is not a tangible thing or a visible radiance, it exists in the legal realm as a distinct entity, capable of conducting business and being held accountable under the law.Rate this question:
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- 40.
Ivy and Justin want to form and do business as Kayak Adventures Corporation. A corporation can be owned by
- A.
A natural person only
- B.
An artificial person only
- C.
Artificial or natural persons
- D.
Neither “artificial” or “natural” persons
Correct Answer
C. Artificial or natural personsExplanation
A corporation can be owned by both artificial and natural persons. This means that individuals as well as other legal entities, such as other corporations or organizations, can have ownership in a corporation. This allows for a diverse range of ownership and investment opportunities in the corporation, promoting business growth and development.Rate this question:
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- 41.
Caffine Cafe, Inc., files its articles of incorporation with the appropriate government agency. Least likely to appear in the articles is the name of:
- A.
Each of the incorporations
- B.
Each of the corporation’s shareholders
- C.
The corporation
- D.
The corporation’s initial registered agent
Correct Answer
B. Each of the corporation’s shareholdersExplanation
The articles of incorporation typically include important information about the corporation, such as its name, purpose, registered agent, and initial shareholders. However, the least likely to appear in the articles is the name of each of the corporation's shareholders. While the shareholders are important to the operation of the corporation, their names are not typically required to be included in the articles of incorporation. The articles primarily focus on the legal and structural aspects of the corporation rather than the individual shareholders.Rate this question:
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- 42.
Superior powers is a corporation. Superior’s implied powers enable it to:
- A.
Amend the articles of incorporations
- B.
Bring a derivative suit
- C.
Declare dividends
- D.
Perform all acts reasonably appropriate and necessary to accomplish its corporate purposes
Correct Answer
D. Perform all acts reasonably appropriate and necessary to accomplish its corporate purposesExplanation
Superior's implied powers allow it to perform any actions that are reasonably appropriate and necessary to achieve its corporate goals. This means that the corporation has the authority to take any actions that are deemed necessary for the success and functioning of the company, even if these actions are not explicitly stated in its articles of incorporation. These implied powers give Superior the flexibility to adapt and make decisions that may not have been anticipated when the articles of incorporation were created.Rate this question:
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- 43.
Mari buys 500 shares of common stock in N.L.T. As a shareholder of record, Mari owns a proportionate interest in terms of:
- A.
Control, earnings and net assets
- B.
Control only
- C.
Earnings and net assets
- D.
Neither control nor earnings and net assets
Correct Answer
A. Control, earnings and net assetsExplanation
As a shareholder of record, Mari owns a proportionate interest in terms of control, earnings, and net assets. This means that Mari has a say in the decision-making process of the company (control), is entitled to a portion of the company's profits (earnings), and has a claim on the company's assets (net assets).Rate this question:
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- 44.
A merger between Green Mills Company and Farm2Fork can be expressed as Grain Mills + Farm2Fork=
- A.
Farm2Fork
- B.
Harvest Dining
- C.
Harvest Dining + EZ Brewing
- D.
EZ Brewing
Correct Answer
A. Farm2ForkExplanation
The correct answer is Farm2Fork because the question states that a merger between Green Mills Company and Farm2Fork can be expressed as Grain Mills + Farm2Fork. Since there is no other option that includes Farm2Fork, it can be concluded that Farm2Fork is the correct answer.Rate this question:
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- 45.
Office company and Keep company wish to combine all assets, stock, and personnel into a new firm called OK corp. This is
- A.
Consolidation
- B.
Merger
- C.
Share exchange
- D.
Takeover
Correct Answer
A. ConsolidationExplanation
The correct answer is consolidation. In this scenario, both Office company and Keep company are combining their assets, stock, and personnel to form a new firm called OK corp. This process of combining and integrating resources from multiple entities into one is known as consolidation.Rate this question:
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- 46.
Realty Company and Security Corp plan to consolidate. Most likely, the articles of incorporation will be filed with
- A.
County recording office
- B.
Local realtors association
- C.
State’s secretary of state
- D.
Federal Bureau of Land Management
Correct Answer
C. State’s secretary of stateExplanation
When a company plans to consolidate, the articles of incorporation, which outline the company's structure and purpose, need to be filed. This filing is typically done with the state's secretary of state. The secretary of state is responsible for maintaining corporate records and ensuring compliance with state laws. Therefore, it is most likely that the articles of incorporation for the consolidation of Realty Company and Security Corp will be filed with the state's secretary of state.Rate this question:
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- 47.
Egan is a director of First Realty Corp. As a director, Egan can act as an agent to bind First Realty:
- A.
In all circumstances
- B.
In no circumstances
- C.
To any contract in which Egan does not have a conflict of interest.
- D.
To any contract that represents an opportunity for Realty.
Correct Answer
B. In no circumstancesExplanation
As a director, Egan cannot act as an agent to bind First Realty in any circumstances. This means that Egan does not have the authority to enter into contracts on behalf of First Realty.Rate this question:
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- 48.
Sophie and Tiny incorporate their beverage container business as U-Twist Products, Inc. The first board of directors may be appointed by who?
- A.
CEO
- B.
Incorporators
- C.
Shareholders
- D.
Anyone related to the corporation
Correct Answer
B. IncorporatorsExplanation
The correct answer is "Incorporators". When a business incorporates, the incorporators are the individuals or entities responsible for filing the necessary paperwork and forming the corporation. They are typically the ones who appoint the first board of directors. The CEO, shareholders, and anyone related to the corporation may have roles within the company, but they are not specifically responsible for appointing the first board of directors.Rate this question:
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- 49.
Sol is chairman of the board of Tasty Foods. Uma, a consumer, falls sick after eating a Tasty Foods product. Uma sues Tasty, and Sol individually. Tasty may pay Sol’s legal fees
- A.
Only if Sol wins the suit
- B.
Only if Tasty wins the suit
- C.
Only if Uma wins the suit
- D.
Regardless of the outcome
Correct Answer
D. Regardless of the outcomeExplanation
Tasty Foods may pay Sol's legal fees regardless of the outcome because Sol is the chairman of the board of Tasty Foods. This suggests that there is a close relationship between Sol and the company. Even if Uma wins the suit, Tasty Foods may still choose to cover Sol's legal fees as a way to protect their reputation and maintain a positive relationship with Sol. Alternatively, if Tasty Foods wins the suit, they may also decide to pay Sol's legal fees as a gesture of appreciation for his role as chairman.Rate this question:
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- 50.
Frawsty Corporation distributes beverages in the greater northwest. Frawsty’s board of directors can delegate some of their functions to
- A.
Frawsty’s incorporators
- B.
Frawsty’s officers
- C.
Frawsty’s shareholders
- D.
No one
Correct Answer
B. Frawsty’s officersExplanation
The correct answer is Frawsty's officers. The board of directors of Frawsty Corporation has the authority to delegate some of their functions to the officers of the company. This means that certain responsibilities and decision-making powers can be transferred from the board to the officers, allowing them to manage and oversee various aspects of the company's operations. By delegating these functions, the board can focus on higher-level strategic decisions while still ensuring that the day-to-day operations are effectively managed by the officers.Rate this question:
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Mar 21, 2023Quiz Edited by
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Dec 14, 2014Quiz Created by
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