LES 305 Final Exam questions with
complete solutions
Andy, Tim, Roy, and Adrian are partners in a real estate firm. Adrian has just died. Adrian's widow -
correct answer ✔✔only receives the value of the partner's interest
Acme, Ltd. is in the process of dissolution. Which is the proper order for distribution of assets upon
dissolution of a limited partnership? - correct answer ✔✔outside creditors; distributions owed to
partners; capital contributions; remainder split according to distribution agreement
The CEO of Citigroup announced an $8 billion write-down for the company because of bad loans. This
announcement followed a previous announcement of a $5 billion write-down three quarters earlier. The
board asked him to step down. Which of the following statements is correct? - correct answer ✔✔The
board has the authority to remove a CEO
Melissa wants to form an entity to start her new business. Which of the following forms of business
structure has the easiest means of transfer of ownership interests should she decide to go public? -
correct answer ✔✔Profit Corporation
Brant is forming an entity to start a new business, and wants to ensure that his personal assets are
protected from a judgment creditor. Which of the following forms of business structure would provide
limited liability for the personal assets of the owner? - correct answer ✔✔LLC
Chris has a great idea for a new company and approached Daryl about possibly partnering in the
company. Daryl thinks the idea is great, but does not have time to be a part of the management team.
While Chris seems knowledgeable about the business, Daryl is also worried about becoming personally
liable if the company fails. What type of business structure would be best for Daryl and Chris to agree
on? - correct answer ✔✔limited partnership
The Winston family owns a chain of restaurants in California by partnership. Due to liability concerns,
they want to be protected from unlimited liability but still maintain discretion in the operations. They do
not want to make their share of stock open to the public so they can maintain management control.
What type of corporation would be best for them? - correct answer ✔✔close corporation
, GTS, Inc. has developed a new product and would like to build a new facility to run the production. They
need money to do this and are looking for a source of debt financing. Which of the following would meet
their needs? - correct answer ✔✔issuing bonds
Clay, Devin and Elliott decide to go into business together and open a bowling alley in their hometown.
They have invested $100,000 each and all 3 want to share in the management decisions, however they
do not want to have unlimited liability. Which business structure would be best for them? - correct
answer ✔✔limited liability company
Jordan has just purchased 50 shares of stock in Kolman, Inc. The stock gives Jordan the right to vote at
stockholder's meetings but does not guarantee a dividend and does not have priority in receiving
dividends if they are paid. What type of stock does Jordan hold? - correct answer ✔✔common stock
Stock transfer restrictions are void. - correct answer ✔✔false
Limited partnership interests are generally not transferable - correct answer ✔✔false
A limited partnership can exist by implication. - correct answer ✔✔false
Limited liability companies are peculiar to the United States. - correct answer ✔✔false
AIG was not involved in the subprime mortgage debacle. - correct answer ✔✔false
Dissolution of a partnership is termination of a partnership - correct answer ✔✔false
Sharing of profits is prima facie evidence that a partnership exists - correct answer ✔✔true
Partners are not liable for each others' torts committed in the scope of business. - correct answer
✔✔false
Only the general partner in a limited partnership has personal liability. - correct answer ✔✔true
complete solutions
Andy, Tim, Roy, and Adrian are partners in a real estate firm. Adrian has just died. Adrian's widow -
correct answer ✔✔only receives the value of the partner's interest
Acme, Ltd. is in the process of dissolution. Which is the proper order for distribution of assets upon
dissolution of a limited partnership? - correct answer ✔✔outside creditors; distributions owed to
partners; capital contributions; remainder split according to distribution agreement
The CEO of Citigroup announced an $8 billion write-down for the company because of bad loans. This
announcement followed a previous announcement of a $5 billion write-down three quarters earlier. The
board asked him to step down. Which of the following statements is correct? - correct answer ✔✔The
board has the authority to remove a CEO
Melissa wants to form an entity to start her new business. Which of the following forms of business
structure has the easiest means of transfer of ownership interests should she decide to go public? -
correct answer ✔✔Profit Corporation
Brant is forming an entity to start a new business, and wants to ensure that his personal assets are
protected from a judgment creditor. Which of the following forms of business structure would provide
limited liability for the personal assets of the owner? - correct answer ✔✔LLC
Chris has a great idea for a new company and approached Daryl about possibly partnering in the
company. Daryl thinks the idea is great, but does not have time to be a part of the management team.
While Chris seems knowledgeable about the business, Daryl is also worried about becoming personally
liable if the company fails. What type of business structure would be best for Daryl and Chris to agree
on? - correct answer ✔✔limited partnership
The Winston family owns a chain of restaurants in California by partnership. Due to liability concerns,
they want to be protected from unlimited liability but still maintain discretion in the operations. They do
not want to make their share of stock open to the public so they can maintain management control.
What type of corporation would be best for them? - correct answer ✔✔close corporation
, GTS, Inc. has developed a new product and would like to build a new facility to run the production. They
need money to do this and are looking for a source of debt financing. Which of the following would meet
their needs? - correct answer ✔✔issuing bonds
Clay, Devin and Elliott decide to go into business together and open a bowling alley in their hometown.
They have invested $100,000 each and all 3 want to share in the management decisions, however they
do not want to have unlimited liability. Which business structure would be best for them? - correct
answer ✔✔limited liability company
Jordan has just purchased 50 shares of stock in Kolman, Inc. The stock gives Jordan the right to vote at
stockholder's meetings but does not guarantee a dividend and does not have priority in receiving
dividends if they are paid. What type of stock does Jordan hold? - correct answer ✔✔common stock
Stock transfer restrictions are void. - correct answer ✔✔false
Limited partnership interests are generally not transferable - correct answer ✔✔false
A limited partnership can exist by implication. - correct answer ✔✔false
Limited liability companies are peculiar to the United States. - correct answer ✔✔false
AIG was not involved in the subprime mortgage debacle. - correct answer ✔✔false
Dissolution of a partnership is termination of a partnership - correct answer ✔✔false
Sharing of profits is prima facie evidence that a partnership exists - correct answer ✔✔true
Partners are not liable for each others' torts committed in the scope of business. - correct answer
✔✔false
Only the general partner in a limited partnership has personal liability. - correct answer ✔✔true
