1. ?The tighter the control exercised by the franchisor
a.?the more likely the franchisor will be income taxed as a partner in a partnership.
b.?the more likely the franchisor will be sued for violating the wage and hour law.
c.?the more likely the franchisor will be income taxed as a C corporation.
d.?the more likely the franchisor will be held responsible for the acts of the franchisee's employees.

2. ?Sole proprietors
a.?are income taxed as C corporations.
b.?are income taxed as S corporations.
c.?pay only personal income tax on business profits.
d.?can elect to be income taxed as limited liability companies.

3.? An often cited disadvantage of doing business as a sole proprietor
a.?is that sole proprietors seldom obtain sufficient liability insurance.
b.?is that sole proprietors bear all business financial risks.
c.?is that liability insurance for sole proprietors is prohibitively expensive.
d.?is that a sole proprietor has no one with whom he/she can consult such as a partner or shareholder.

4.? A franchisee
a.?is generally legally independent of the franchisor.
b.?is often prevented by state statute from doing business in a particular state.
c.?can only operate one franchise at a time.
d.?must do business in corporate form.

5.? Partnership law
a.?is based on equitable principles.
b.?is not recognized at the federal level.
c.?state statutes cannot be changed by agreement of the partners.
d.?is based on agency law.

6. ?For federal income tax law
a.?a partnership is not recognized.
b.?a partnership is treated exactly as an S corporation.
c.?a partnership is treated as an aggregate of individual partners.
d.?a partnership can elect to be taxed as a sole proprietorship.

7.? A partner
a.?has partnership voting rights commensurate with his/her capital contribution.
b.?is not co-owner of property acquired in the name of the partnership.
c.?has a transferable interest in property owned by the partnership.
d.?can pledge partnership property as collateral for a personal loan.

8. ?A partner
a.?is generally not entitled to compensation for conducting partnership business.
b.?is generally entitled to compensation for conducting partnership business.
c.?has a partner's lien against the partnership for unpaid compensation.
d.?can require the partnership to pay him/her compensation based on quantum meruit.

9.? For jurisdictional purposes a LLC
a.?is solely a citizen of the state in which its articles of organization are filed.
b. ?can choose the jurisdiction that controls it.
c. ?is a citizen of the state in which the majority of its member reside.
d. ?is a citizen of every state in which its members are citizens.

10.? A LLC with at least two members
a.?will be income taxed as an S corporation.
b.?will be income taxed as a partnership.
c.?can elect to be income taxed as a corporation or a partnership.
d.?can elect to be income taxed as a sole proprietorship,corporation or partnership.

11.? Unless the articles of organization specify otherwise
a.?a LLC will be managed by a board of directors.
b.?a LLC will be considered to be member managed.
c.?a LLC will be considered to be manager managed.
d.?a LLC will be managed by a board of control.

12.? If a LLC legal issue is not covered by an agreement between the members or a state statute
a.?the principles of partnership law apply.
b.?the principles of corporate law apply.
c.?the principles of syndicate law apply.
d.?the principles of cooperative association law apply.

13. ?A corporation exists
a.?by agreement of its shareholders.
b.?by legislative fiat.
c.?for a limited period of time as stated in its article of incorporation.
d.?only by statute.

14. ?A shareholders agreement
a.?can control the voting of preferred but not common shares.
b.?is often used to extend the duration of the legal life of the corporation.
c.?is often used to control the transfer of shares of a close corporation.
d.?is often subject to anti-trust law.

15. ?An S corporation
a.?may have only 75 shareholders.
b.?must be a domestic corporation.
c.?may have a partnership as a shareholder.
d.?may have common and preferred stock.

16.? Piercing the corporate veil
a.?can expose shareholders to personal liability.
b.?will result in an S corporation being taxed as a C corporation.
c.?is an obsolete 19th century legal concept applicable to not-for-profit corporations.
d.?will invalidate certain contracts entered into by the corporation.

17.? A director of the corporation
a.?can act as corporate agent and bind the corporation to contracts.
b.?must be a shareholder of the corporation.
c.?must own at least 1 share of preferred stock if the corporation has issued preferred shares.
d.?cannot act as a corporate agent and bind the corporation to contracts.

18. ?A director of a corporation
a.?has an inherent right to compensation for serving as a director.
b.?is immune from lawsuits challenging his/her decisions as director.
c.?has no inherent right to compensation for serving a director.
d.?like a trustee, holds title to corporate property for the benefit of the corporation's shareholders.

19. ?As a general rule a quorum of directors
a.?is defined by corporate by-laws.
b.?is a majority of the directors.
c.?is at least 45% of the directors.
d.?is not a requirement for meetings of boards of directors of not-for-profit corporations.

20. ?Preemptive rights
a.?allow each shareholder to maintain his/her proportionate interest in the corporation.
b.?are inappropriate for closely held corporations.
c.?can be misused to oppress minority shareholders.
d.?as a general rule can be challenged by the board of directors of the corporation.

21. ?After a corporate merger
a.?a new corporation results.
b.?the shares of the shareholders of the corporation that does not survive are purchased by the surviving corporation.
c.?the boards of directors of both corporations are automatically combined.
d.?only one of the corporations continues to exist.

22. ?In a corporate consolidation
a.?only one corporation survives.
b.?two or more corporations are created.
c.?two or more corporations combine to form a new corporation.
d.?two or more boards of directors are automatically combined to form one board of directors.

23.? As a general rule a short form merger.
a.?cannot take place absent a minimum capitalization determined by state law.
b.?can be accomplished without shareholder approval.
c.?must have the approval of at least 80% of the affected shareholders.
d.?cannot take place if preferred stock has been issued by the apparent surviving corporation.

24.?As a general rule a corporation purchasing all of the assets of another corporation
a.?is not responsible for any liabilities of the selling corporation.
b.?is responsible for the liabilities of the selling corporation as though the transaction were a merger.
c.?must obtain the consent of a majority of its (the purchasing corporation's) shareholders.
d.?must first obtain the consent of the anti-trust authorities of its (the purchasing corporation's) state of incorporation.

25.The Securities Act of 1933
a.?was passed in response to the stock market crash of 1932.
b.?created the Securities and Exchange Commission.
c.?is not binding on states that have enacted Blue Sky Laws.
d.?requires the disclosure of essential information upon the issuance of securities.

26.?The Securities Act Amendments of 1990
a.?replaces the Securities Act of 1933.
b.?applies to bonds and common stocks but not preferred stocks.
c.?permits sanctions against those who violate foreign securities laws.
d.?created an oversight board to regulate public accounting firms.

27.?The Howey test
a.?is used to determine if a security is debt or equity.
b.?is used to determine if a transaction is an investment contract.
c.?is used to determine if federal or state securities law is to be first applied to a transaction.
d.?is used to determine if the Securities and Exchange Commission or the Dept. of Justice has initial jurisdiction of a transaction.

28.?Rule 144
a.?deals with re-sales of securities without registration.
b.?defines "well known seasoned issuers."
c.?deals with investment company offerings up to $1million in a 12 month period.
d.?deals with an issuer's offerings of up to $5million during a 12 month period.

29.?A bailment
a.?includes real property and personal property.
b.?is a criminal law concept.
c.?must be in writing.
d.?includes only personal property.

30.?Ownership of personal property
a.?can only be proven in writing
b.?can only be transferred in the presence of one witness.
c.?can often be proved by simple possession.
d.?proof requires conspicuous display of the personal property item.

31.?Trade fixtures
a.?cannot be legally removed from real property.
b.?generally remain the lessee's property.
c.?must be identified as such in a written lease.
d.?must be removed, if at all, from real property within 10 years of installation according to the statutes of most states.

32.?A completed gift requires
a.?donative intent, delivery, acceptance.
b. ?Identification, donor, donee.
c. lawful purpose, donor, donee.
d. identification, adult donor, adult donee.

33. ?A tenancy by the entirety is
a.?real estate owned by spouses.
b.?real estate ownership by spouses as tenants in common.
c.?real estate owned by spouses as community property.
d.?real estate owned by spouses as the result of inheritance.

34.?Marketable title to real estate is
a.?ownership of real estate being offered for sale.
b.?title free from undisclosed encumbrances and defects.
c.?title that cannot be legally challenged.
d.?ownership of real estate that has been transferred for consideration at least 3 times.

35.?The deed that offers the most protection to a buyer of real estate is a
a.?quit-claim deed.
b.?special warranty deed.
c.?warranty deed.
d.?grant deed.

36.?Eminent domain
a.?cannot be exercised outside the limits of a municipality.
b.?cannot be exercised over real estate declared to be environmentally sensitive.
c.?cannot result in a payment exceeding $5million.
d.?is a governmental power to take (and pay for) private property for public use.

37.?An insurable interest in property
a.?must exist when the loss to property occurs.
b.?must exist when the property insurance is purchased.
c.?must not lapse.
d.?can continue after the insured has transferred ownership of the property.

38. An incontestability clause in an insurance policy
a. prevents the insurer from contesting statements made by the insured in the policy application.
b. prevents the insurer from contesting statements made by the insured in the policy application after a statutorily mandated period.
c. prevents the insurer from refusing to pay a death claim resulting from suicide.
d. requires that disputes between the insurer and insured bearbitrated.

39. Ambiguities and uncertainties in an insurance contract
a. must be resolved by arbitration.
b. must be resolved in a declaratory judgment action.
c. are interpreted by the court against the insurance company.
d. must be severed from the insurance contract.

40. A bad faith action
a. results from a false claim by an insured.
b. refers to the refusal of an insured to cooperate with the insurance company's investigation of a claim.
c. refers to an insured's false reporting to the insurance commissioner of the insured's state of residence.
d. refers to an insurer's denial of a claim or refusal to settle a claim for a reasonable amount within policy limits.

41. During the settlement of an estate abatement occurs
a. when the personal representative is removed by the court.
b. when fees of the personal representative or attorney or both are reduced by the court.
c. when charitable bequests in a will are disallowed by the court.
d. when estate assets are insufficient to pay in full all general bequests.

42. A divorce or annulment after a will has been signed
a. has no effect on the will.
b. revokes the entire will.
c. revokes that part of the will concerning the testator's/testatrix's former spouse.
d. requires that the will be re-signed in the presence of new witnesses.

43. A testamentary trust
a. can be created during the lifetime or after the death of the testator/testatrix.
b. can be created after the death of the testator/testatrix.
c. can be used to protect a decedent's estate from his/her unsecured creditors.
d. must have at least 2 co-trustees at all times.

44. A spendthrift trust (or spendthrift clause)
a. prevents a beneficiary from squandering trust assets.
b. is invalid in some states as being contrary to public policy.
c. can only be in the form of an inter-vivos (living) trust.
d. if generally exempt from state income taxation in those states having an income tax.

45. A witness to a will
a. need not read the will.
b. must first read the will.
c. must first read the will unless another witness states that he/she has read the will.
D. must be a U.S. citizen if the testator/testatrix is a U.S. citizen.

46. A grace period in an insurance policy
a. will be provided for in an anti-lapse clause.
b. is defined as the interval between applying for the policy and the issuance of the policy.
c. is the period to time allowed the insurance company after a claim is made until investigation of the claim must be commenced.
d. is the period of time allowed the insurance company after a claim is approved and the claim is paid.

47. Appraisal rights
a. are available to dissenting shareholders in a merger or consolidation.
b. are available to shareholders of a corporation that intends to buy substantially all of the assets of another corporation.
c. are not available in a short-form merger.
d. can be revoked by vote of the affected corporation's board of directors if a state statute so provides.

48. A tender offer
a. is a public offer to shareholders of a corporation to purchase their stock in the corporation.
b. must be an unconditional offer to purchase stock at a set price.
c. is seldom higher than the market price of the target stock at the time of the offer.
d. must be higher than the market price of the target stock at the time of the offer.

49. A lapsed legacy occurs
a. when the beneficiary of the legacy dies before the testator/testatrix.
b. occurs when the estate is insolvent.
c. occurs most often in intestate estates.
d. cannot occur when the legacy consists of real estate.

50. A trustee of a U.S. situs trust
a. can be anyone legally capable of holding title to and dealing in property.
b. must be an adult U.S. citizen.
c. cannot be a beneficiary of the trust.
d. cannot have been convicted of a felony.