Reference no: EM133297748

Question 1.

Zena, age17, lives on her own and pays all her own expenses, including groceries, rent and electric bills. If she makes a contract to buy a surround sound system for her television, she may not, in most jurisdictions, assert her minority status and set aside the contract.

True

False

Question 2.

In some states, minors are liable for contracts involving bank accounts and student loans and cannot avoid these contracts even though they can avoid other types of contracts.

True

False

Question 3.

Intoxicated persons are liable in quasi-contract for necessaries purchased during their incapacity.

True

False

Question 4.

A general partnership is formed without any formality and no documents need be filed with the state.

True

False

Question 5.

Which of the following is NOT true about a limited liability company?

It is a noncorporate business organization.

In most states, an LLC must have at least two members.

It may elect not to be a separate taxable entity.

An ownership interest may be considered a security.

Question 6.

Which of the following is NOT an advantage of a partnership?

Partners' income taxes may be less than the income taxes would be on a corporation.

Each partner has limited liability.

It is possible to bring together more managerial skills than in a sole proprietorship.

It is possible to bring together more capital than in a sole proprietorship.

Question 7.

Sole proprietors have limited liability for the sole proprietorship's debts.

True

False

Question 8.

Under Subchapter S of the Internal Revenue Code, a corporation's income is taxed only at the shareholder level.

True

False

Question 9.

Which of the following would not usually be found in the articles of incorporation of a corporation?

The number of directors necessary for a quorum.

The name of the corporation.

The name and address of each incorporator.

The number of authorized shares.

Question 10.

A corporation is a creature of the state and may be formed only by substantial compliance with a state incorporation statute.

True

False

Question 11.

Bill Bonney, the sole stockholder of Kidd Corporation, wrongfully used the corporation to avoid a personal liability. A court order that disregards the corporate entity and holds Bonney personally liable is called:

limited liability.

ultra vires.

diversity of interest.

piercing the corporate veil.