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Corporations and LLPs

1) Which of the following is not one of the functions of the Securities and Exchange Commission?

A) Adopting rules to further the functions of the securities laws
B) Providing government-backed insurance to purchasers of securities
C) Bringing enforcement actions against suspected violators of securities laws
D) Regulating securities brokers and advisors

2) What is the most important difference between a limited partnership and a limited liability partnership?

A) There must be one partner with unlimited liability in a limited partnership, but not in a limited liability partnership.
B) There must be one partner with unlimited liability in a limited liability partnership, but not in a limited partnership.
C) A limited partnership is not a taxable entity, but a limited liability partnership is a taxable entity.
D) There is a maximum number of partners permitted in a limited partnership, but not in a limited liability partnership.

3) Mary is a partner in the Flatirons partnership. The partnership agreement provides that no partner may withdraw from the partnership for 10 years. Mary attempts to withdraw from the partnership before the 10-year period is up. Which of the following statements best describes this situation?

A) This is a wrongful dissolution; the partnership will be dissolved, but Mary will be liable for any damages caused by it.
B) This clause of the partnership agreement is unenforceable, thus the dissolution is proper.
C) Because Mary could not withdraw from the partnership, there is no dissolution.
D) Because Mary could not withdraw from the partnership, her action is treated as an assignment of her partnership interest.

4) Which statement is true about franchisor liability for acts of a franchisee?

A) Franchisors are liable for acts of their franchisees in most circumstances.
B) Franchisors are never liable for the acts of their franchisees unless the franchisor was a party to the act of the franchisee.
C) Whether a franchisor is liable for the acts of its franchisee depends on the terms of the franchise agreement.
D) Franchisors are usually not liable for the acts of their franchisees when the franchisee is an independent contractor.

5) Which of the following is NOT a characteristic of a corporation?

A) free transferability of shares
B) perpetual existence
C) decentralized management
D) limited liability of shareholders

Solution Preview

1. B
Explanation: The SEC holds primary responsibility for enforcing the federal securities laws and regulating the securities industry, the nation's stock and options exchanges, and other electronic securities markets in the United States

2. B
Explanation: A limited liability partnership (LLP) is a partnership in which some or all partners have limited liability. It is a ...

Solution Summary

Characteristics of corporations, partnerships and liabilities

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