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Business Law 265 Fall 2002, Exam #2 October 30, 2002 Multiple Choice: Each question is two points. ____ 1. Evan owns First Enterprises, a sole proprietorship. In a sole proprietorship, the liability of the owner is a. limited by state statute and varies from state to state. b. limited to the amount of his or her original investment. c. limited to the amount of his or her original investment plus any subsequent capital expenditures. d. unlimited. ____ 2. 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. c. pays 1/2 of the taxes if there are two partners. d. pays 1/4 of the taxes if there are three partners. ____ 3. 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 type of business firm that is not a partnership or a sole proprietorship. d. nothing because their agreement is not in writing. ____ 4. Mike is an architect who works for General Construction Company. The most important factor in determining whether Mike is Generals employee or an independent contractor is a. the degree of control that General exercises over Mike. b. the distinction between Generals business and Mikes occupation. c. the length of the working relationship between General and Mike. d. the method of payment. ____ 5. Ellen, a salesperson at Top Tile Company, tells a customer, Buy your tile here, and Ill install it myself for half of what Top would charge you. The customer makes the purchase based on Ellens representation. Ellen installs the tile, charges the customer $500 for installation, and keeps the money. Ellen has breached the duty of a. loyalty. b. notification. c. Due care. d. Vicarious liability. ____ 6. International Software, Inc., employs Jill as an agent. During the agency, Jill acquires new knowledge and skills. She also learns Internationals trade secrets, including customer lists. After the termination of the relationship, Jill uses her acquired skills and knowledge, but not Internationals trade secrets, in a new job. Jill has breached the duty of a. loyalty. b. obedience. c. performance. d. Jill has breached no duty. ____ 7. Doug employs Executive Personnel Agency as an agent. They sign a written agreement that describes the rights and duties of both parties. This is a. apparent authority. b. express authority. c. implied authority. d. none of the above.... View Full Document

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