Final Test Review

With respect to sales at those locations, Roz is a. an independent contractor. . ot Trina's agent or employee, or an independent contractor. c. Trina's agent and employee. d. Trina's employee only. 2. Refer to Fact Pattern 17-1. At the shop, Roz and Sara are a. independent contractors. b. not Trina's agents or employees, or independent contractors. c. Trina's agents and employees. d. Trina's employees only. 3. Refer to Fact Pattern 17-1. Trina hires Unity Cleaning Company to clean the carpets of her shop. Trina gives Unity instructions as to what needs to be cleaned and when. Unity is 4. Cody contracts with Drew to act as her agent in a fraudulent marketing scheme.Cody does not successfully complete the scheme. Drew can re cover from Cody for a. breach of contract. b. breach of implied warranty. c. breach of the duty of performance. d. none of the above. 5. Irma retains Jerry as her authorized agent, unaware that Jerry is a mi nor. Jerry enters into a contract with Ken on Irma's be h alf. The contract is a. binding on Irma. b. binding on Jerry and Ken, but not Irma. c. binding on Ken, but not Irma or Jerry. d. void. 6. Jill introduces Kelly to her friends as â€Å"my associate. † Kelly purports to act as Jill's agent in several business transactions with those friends.If Jill is liable for Kellys actions, it will be under . the equal dignity rule. c. the fiduciary principle. d. the good faith statute. 7. Macro Corporation and National Purchasing Company may create an agency agreement a. by conduct, in writing, or orally. b. by conduct or orally only. c. in writing only. d. under no circumstances. 8. Jay holds himself out as possessing special accounting skills. As an agent, he must exercise the degree of skill or care expected of a. a person having those skills. b. an average, unskilled person. c. a reasonable person. d. the principal. 9.Dan, an agent for Eve, signs an agreement with Fred on Eve's behalf but ne glects o tell Eve that the agreement require s the payment of a certain tax. The government prosecutes Eve for failing to pay the tax. Eve is a. liable, because Dan's knowledge is imputed to Eve. b. liable, because Fred's knowledge is imputed to Eve. c. not liable, because Dan did not tell Eve about the tax. d. not liable, because Fred did not tell Eve about the tax. 10. Prospective Enterprises (PE) employs Quinn to buy property for a possible com mercial development. Quinn secretly buys some of the property and sells it to PE at a profit.Quinn has breached a. no duty. b. the duty of accounting. c. the duty of loyalty. d. he duty of notification. Internet Services, Inc. , employs Joe as an agent. During the agency, Joe acquires 11. new skills. After the termination of the relationship, Joe uses those skills in a new Job. Joe has breached a. no duty. b. the duty of loyalty. c. the duty of notification. d. the duty of performance. 12. Regional Investment Corporation (RIC) hires Sam, a real estate agent, to locate investment prop erties for RIC. Sam learns of a warehouse avail able for $100,000, buys it himself, and offers it to RIC for $200,000.Under the reasoning of the court in Case 17. 3, Cousins v. Realty Ventures, Inc. , Sam a. reached the agent's fiduciary duties to the principal. b. did nothing wrong. c. failed to take advantage ofa business opportunity. d. set an unreasonable price based on current market value. 13. Pam is an agent for Refined Chemicals Corporation. Refined Chemicals owes Pam the duty of a. accounting. b. obedience. d. safe working conditions. 14. Regional Products, Inc. , hires Sam to act as its agent. Tina sues Regional for Sam's negligent conduct. Regional's right to sue Sam for an equal amount of damages is the right of a. voidance. b. cooperation. c. indemnification. d. reimbursement. 15. Glen is an agent for High Flight, Inc. On High Flight's behalf and at its request,Glen pays ‘Isa for certain plane maintenance and repair serv ices. Glen's right to obtain the amount of those payments from High Flight arises under the principal's duty of 16. Ann is a businessperson acting as an agent for Business Sales, Inc. (BSI). In an ordinary business situation, Ann a. can contract on BSI's behalf without further authority or ratification. b. cannot contract on BSI's behalf. c. must obtain BSI's written authority to enter into a contract for BSI. . must obtain BSI's later ratification ofa contract entered into for BSI. 17. Lyn may hire employees to work in the Main St. Computer Store that she manages de spite the fact that her employment agreement with Main St. says noth ing about her being able to hire employees. This is a. apparent authority. b. equal authority. c. express authority. d. implied authority. 18. Quick Supplies Company (QSC) requires its customers to pay by check. Ron, a QSC driver, tells customers on his route that they can pay him with cash. When QSC learns of Ron's collections, it takes no action to stop it.Ron steals some of the cash. QSC may be suffer the loss under the doc trine of a. apparent authority. 9. Alpha Sales, Inc. , employs Britney as a sales agent. Alpha gives Britney a furnished office and an expense account. Consumer Retail Company (CRC) orders goods from Britney, who fills the order with goods from Deal EZ Corpora tion. The goods are defective. CRC may recover damages from Alpha on the ground of a. apparent authority. 20. Elin, an agent for First Credit Corporation (FC), enters into an unau thor ized contract with Great Expectations, Inc. (GE), purportedly on FC's be half.This contract a. b. 21. any third party. Elin. Carol hires Dick to act as her agent in the purchase of an office building. Carol does not want the seller to know that she is the buyer, so she asks Dick to epresent that he is buying the building for himself. Carol is a. a disclosed principal. b. an independent contractor. c. an undisclosed principal. d. a partially disclosed principal. 22. Jack says that he placed an order with Internet sales. com, which did not fill it, causing Jack to lose money. If the order was taken via an e-agent, under the Uniform Electronic Transactions Act (UETA), Internetsales. om can a. claim it did not receive the order but at any rate the risk was Jacks. b. claim it did not receive the order if the firm was not yet aware of it. c. claim it did not receive the order if the order had ot yet been reviewed. d. not claim it did not receive the order. 23. Bizonline. com uses an electronic agent, or e-agent, to perform certain tasks in e-commerce.With respect to the e-agent's actions, Bizonline. com is bound by a. all of the actions. b. only those actions of which Bizonline. com is aware. c. only those actions that Bizonline. com does not refute within ten days. d. nly those actions that Bizonine. com ratifies. 24. Aron, an agent for Bright Sales, Inc. (BSI), enters into an unauthorized contract with Consolidated Corporation (CC) purportedly on behalf of BSI, which refuses to perform. Aron is liable to . BSI and CC for breach of contract. b. BSI for misrepresentation. c. CC for misrepresentation. d. no one. 25. Agnes is a salesperson for Beta Technical Instruments, Inc. (BTI). She misrepresents to Curt, a customer, that a certain device has a certain ca pability. In reliance, Curt buys the device. Liable for this misrepresen ta tion is a. Agnes and b.Agnes only. c. only. d. neither Agnes nor BTI. 26. Elle is an agent for Fresh Food Corporation. Elle makes a mis representa tion when entering into a contract on be half of Fresh with Gala Grocery Stores, Inc. Gala a. is estopped from performing the contract. . may rescind the contract. c. must perform the contract. d. must ratify the contract. 27. AAA Auto Sales, Inc. , employs BBB Collection Company as a collection agent. injures Cathy. Cathy can recover from a. AAAonly. b. AAAor BBB. c. BBB only. d. Cathys insurance company only. 28. Eve hires Frank to do some remodeling work in her office.The relation ship be tween Eve and Frank is client and independent contractor. While working, Frank drops a tool on Gary, Eve's customer, causing an injury. Eve is a. liable to Gary because he was injured on Eve's property. b. liable to Gary unless Franks act is intentional. . not liable because Frank is an independent contractor. d. not liable to Gary because Frank is Eve's employee. 29. Common Carrier Corporation (CCC) employs Don as an agent. Without CCC's knowledge but otherwise acting within the scope of em ployment, Don commits a crime. The state can successfully prosecute a. ccconly. b. CCC or Don. . Don only. d. neither CCC nor Don. 30. Gil is a purchasing agent for H;H Ranch with the authority to buy cat tle at a certain auction. After the cattle have been bought, the agency rela tionship terminates a. automatically. b. following notice to all actual cattle sellers. c. ollowing notice to all potential cattle sellers. d. following published notice in a local newspaper. 31. Myra, an agent for National Buys , Inc. , has often done business with Owen on National's behalf. Myra and National terminate their agency. For Myra and National to avoid liability for later deals, Owen must be no tifled by a.Myra only. b. National only. c. Myra and National. d. neither Myra nor National. 32. Ida hires Jim, a real estate broker, to act as her agent to sell her land for $10,000. Oil is discovered beneath the land, causing its market value to in crease one hundred-fold. The agency agreement is likely . still in force if Ida gives Jim additional consideration. b. still in force if Jim does not mention the oil to prospective customers. c. terminated by mutual consent of the parties. d. terminated by operation of law. Fact Pattern 17-2 (Questions 33-34 apply) Quinn employs Roy as his authorized business agent on April 1.Quinn's son Stan peti tions a court to declare Quinn mentally incompetent. The court grants Stan's request on May 1 . 15. After May 1, the contract, which has not been performed, is a. b inding on Quinn. b. binding on Roy. c. binding on Stan. 34. Refer to Fact Pattern 17-2. Roy enters into a contract on Quinn's be half on May 15, before Roy knows of the court's action. The contract is 35. Mary hires Nina, a real estate broker, to sell her warehouse. The ware house burns down be fore being sold. Nina is a. Marys agent until Marys insurer pays Nina's commission. b. Marys agent until the burnt warehouse is sold. c.Marys agent until the warehouse is rebuilt and sold. d. no longer Marys agent. MULTIPLE-CHOICE QUESTIONS-Bustness Entities 1. Fred starts up, and assumes the financial risk of, Graphic Ads, a new en terprise. Fred is a. a franchisee. b. a franchisor. c. an agent. d. sole proprietor. 2. Jody owns Kappa Sales, a sole proprietorship. Jodys liability is a. statute and varies from state to state. b. limited to the extent of capital expenditures. c. limited to the extent of his or her original investment. d. unlimited. limited by state 3. Bree, who runs a livestock breeding business, owes the Circle C Ranch $400,000.Bree agrees to pay the Circle C a percentage of her profits each month until the debt is paid. Because of this agreement, the Circle C is a. Bree's creditor and partner. b. Bree's creditor only. c. Bree's partner only. d. neither Bree's creditor nor her partner. Adam, the owner of Adam's Apples, a sole proprietorship, wishes to in crease his busi ness capital. This objective can best be accomplished by a. issuing additional stock. borrowing funds from lenders. . bringing in additional partners. d. none of the above. 5 unlimited. limited to the amount of his or her original investment. capital expenditures. d. imited by state statute and varies from state to state. 6 Amy wants to go into the business of construction contracting. Among the reasons that would probably convince Amy to set up her business as a sole proprietorship would be a. its greater organizational flexibility. . its limited liability. c. its perpetual existence. d. the ease of transferring the business to other family members. 7 Owen and Paula agree to operate an espresso stand. They purchase their supplies and split the costs equally. They agree to share profits equally, and decide that each of them will have an equal say in how the stand will operate.Nothing is put in writing. Owen and Paula have formed a. a partnership. b. a sole proprietorship. c. a corporation. d. nothing because their agreement was not reduced to writing. 8 Computer Networks, LLC, is a limited liability company. Unless indi cated otherwise on Computer Networks' federal tax form, the firm will be taxed as a. a corporation. b. a partnership. c. a sole proprietorship. 9 General Construction, LLC, is a limited liability company. Among the members, a dispute arises that their operating agreement does not cover. The dispute is governed by a. the applicable state LLC statute. b. the federal Uniform LLC Law. c. he International LLC Governing Resolution. 10 Computer Games, LLC, is a limited liability company. Among the mem bers, a dispute arises that their operating agreement does not cover. No statute applies. The dispute is governed by the principles of a. orporate law. b. partnership law. c. sole proprietorship law. 1 1 Sue is considering forms of business organization for her construction-equipment business. For purposes of owning property and being a party to litigation, the form that is not a legal entity separate from its owner is a. a corporation. b. a limited liability company. 12 Tasty Pastry, a retail bakery, is a partnership.In terms of the firm's in come taxes on its profits, each partner is liable for a. a pro rata share only if the profits are distributed. b. a pro rata share whether or not the profits are distributed. c. the entire amount. Dean starts up E-Sites, an Internet service, and leases office space in a build ing owned by Fred. The lease requires Dean to pay Fred a base rental of $250, plus 10 percent of E-Sites' profits, each mont h. The term is two years. Dean hires Gina to work at E-Sites' tech support desk at an hourly wage of $9. 00, plus a commis Sion of 10 percent of the prof its. The term is also two years. 13 Refer to Fact Pattern 19-1.Dean and Fred are a. not partners, because Fred does not have an ownership interest or manage ment rights in E-Sites. b. not partners, because the lease includes a â€Å"base rental. † c. not artners, because the rent includes only 10 percent of the profits. d. partners in a partnership for two years. 14 Refer to Fact Pattern 19-1. Dean and Gina are a. not partners, because Gina does not have an ownership interest or manage ment rights in E-Sites. b. not partners, because the pay includes an hourly wage. c. not partners, because the pay includes only 10 percent of the profits. d. partners in a partnership for two years. 5 Quik Pizza is operated as a partnership. For tax purposes, Quik Pizza a. is a tax- paying entity. b. is required to file an information return but is not a tax-paying entity. . pays 1/2 of the taxes if there are two partners. d. pays 1/4 of the taxes if there are three partners. 16 Jay is a member of Kappa, LLC, a limited liability company. Jay is liable for Kappa's debts a. in proportion to the total number of members. b. to the extent of his capital contribution. c. to the extent that the other members do not pay the debts. d. to the full extent. 17 Dan is considering forms of business organization for his financial advisory firm.Like most states, Dan's state requires that to form a limited liabil ity company, he must file with a central state agency a. rticles of certification. b. articles of formation. c. articles of organization. d. no specific documents. 18 Computer Games, LLC, is a limited liability company. Among the mem bers, a 19 Accounting Applications, LLC, is a limited liability company. Unless indi cated otherwise on Accountings federal tax form, the firm will be taxed as a. a corporation. d. a syndicate. 20 American Products, LLC, is a limited liability company. Rather than dis tribute its reason, American may prefer to be taxed as a.MULTIPLE CHOICE QUESTIONS-corporanons a corporation. 1. American Goods, Inc. , is a corporation. Responsibility for the overall management of American Goods is entrusted to a. the board of directors. b. the corporate officers and managers. c. the owners of the corporation. d. the shareholders. 2. Statewide Distributors, Inc. (SD'), is a corporation. Owen is an SDI off cer. Which of the following possess Fifth Amendment rights in a crimi nal case? a. SDI only b. Owen only c. SDI and Owen d. none of the above 3. Federal Home Products, Inc. (FHP), is a corporation. The implied powers of FHP are powers necessary to a. mend the corporate charter. b. bring a derivative suit. c. declare dividends. d. erform all acts reasonably appropriate and necessary to accom plish its corporate purposes. 4. Web Design, Inc. , is a close corporation. Web Design is a. eligible t o make public offerings of securities. b. exempt from corporate duties such as filing a certificate of incorporation. c. generally allowed to restrict transfer of stock. d. taxed in the same manner as a partnership. 5. Acme, Inc. , is incorporated in the state of California and is doing busi ness in the state of Nevada. In Nevada, it is properly referred to as a. an alien corporation. . a foreign corporation. c. a close corporation. d. national corporation. 6. Eve and Fran want to market a new line of cooking appliances. To be taxed the same as a partnership but enjoy limited liability, they should form a. ac corporation. b. a close corporation. c. an S corporation. d. a private corporation. 7. Jean and Nathan want to incorporate to market DVD products. The first step in the incorporation procedure is to a. file the articles of incorporation. b. hold the first organizational meeting. c. obtain a corporate charter. d. select a state in which to incorporate. 8. Ron and Nancy form Eagl e Equipment Corporation.Eagle has a board of directors, overned by its a. board of directors. b. incorporators. c. officers. d. shareholders. 9. Bart and Cary are directors of Digital Designs, Inc. Voting by Bart and Cary at corporate directors' meetings a. may be cumulative. b. may be done by proxy in all states. c. must be done in person. d. all of the above. 10. Intech Corporation makes and sells computer chips. In most states, the minimum number of directors that must be present before Intech's board could transact its business is a. all of the directors authorized in the articles or bylaws. b. a majority of the number authorized in the articles or bylaws. any odd number (so that tie votes are avoided). 11. Joe and Diana form Consumer Goods, Inc. Ultimate responsibility for policymaking decisions necessary to the management of corporate affairs rests with Consumer's a. board of directors. 12. James and Quincy are directors of Monroe Investments Corporation. Monroe has fifty-two shareholders. A dividend on Monroe stock can be declared by a. one member of the board. b. a majority vote of the board. c. a majority vote of the board and majority vote of the shareholders. d. a unanimous vote of the board and majority vote of the shareholders. 13. Visual PlayCompany makes DVD players. Visual Play is like most cor porations in that its officers are hired by the firm's a. board of directors. c. other officers. 14. Frosty Drinks Corporation distributes soft drinks in the Midwest. Frostys board of directors can delegate some of its functions to the firm's a. incorporators. b. officers. c. shareholders. 15. Coast-to-Coast Distribution, Inc. , is a direct-mail distribution company. Like most corporations, Coast-to-Coast's employees include its a. board of directors. 16. Fran is a director of Global Enterprises, Inc. To the corporation, Fran owes a duty of a. care only.