Business Structure

Card Set Information

Business Structure
2009-11-24 01:00:37
Business Structure

Business Structure section of BEC section of CPA exam
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  1. What type of liability does a silent partner in a General Partnership have

    What type of liability does a general partner ina General Partnership have
    A limited partner has unlimited liability for debts of the partnership

    A Gneral Partner has joint and several liability for not olnly torts but breaches of contract
  2. Who can be a General Partner?
    A General Partner has a voice in management and has unlimited personal liability. Anyone, including a secured creditor of the Limited Partnership may be a General Partner if he takes on these responsibilities
  3. How are loses divided if partner agree on unequal profit sharing but are silent on loss sharing?
    Loses are are shared per the profit sharing proportions
  4. What type of consent is required for admission of a new partner?
  5. Although individual partners normally have implied authority to buy and sell goods for the partnership, they do not have implied authority to do such things as....
    • - Making the partnership a surety
    • - Admitting a new partner
  6. How are profits divided in a Limited Partnership
    Profits are split in proportion to capital contribution
  7. Do the names of the limited partners need to listed in the files with Secretary of State for an LP
    No but the GPs do
  8. Can a Limited Partener act as an agent of the LP without losing his protection of limited liability?
    Yes. They may also vote on the removal of a GP
  9. What is required for the admission of a new Limited Partner?
    Written approval of not only all of the General Partners but also all of the Limited Partners
  10. In a Limited Partnership, what is the result of a death or bankrupcy of a General Partner
  11. What differentiates a Joint Venture from a General Partnership
    The death of a Joint Venture does not automatically dissolve the Joint Venture
  12. Does a manager of a Corporation have limited liability for his deeds?
  13. Can a Corporation make contracts in its own name with both its shareholders and 3rd parties?
  14. How does a Professional Corporation compare to a regular Corporation?
    In a Professional Corporation, the professional has most of the benefits of a corporation such as limited liability of corporate debts. However the professional has personal liability for professional acts. Only licenced professional can own shares in a Professional Corporation
  15. Corporate Debt Securites include.....
    • - Registered Bonds
    • - Bearer Bonds
    • - Debenture Bonds
    • - Mortgage Bonds
    • - Redeemable Bonds
    • - Convertible Bonds
    • - A warrant is not debt security but written evidence of a stock option
  16. What is Watered Stock
    Watered Stock is when the cash or property exchanged to qcquire the stock is less than the par value or stated value of the stock
  17. Can a corporation make loans to directors?
    Yes, but it requires shareholder approval.
  18. What are "preemptive rights of stockholders"?
    Gives the shareholder the right to purchase newly issued stock so as to keep the same overall % of ownership of the corporation (no dillution).
  19. What is a shareholder allowed to do if his rights may be adversly affected?
    The right to dissent and receive payment of the fair value of his/her shares.
  20. When a Corporation owns 90% of the outstanding shares of each class of stock of the subsidiary and they want to merge, there is a requirement of...
    • - A merger resolution by the board of directors of the parent coroporation
    • - The dissenting shareholders of the subsidiary must be given an "appraisal remedy", aka the right to obtain payment from the parent for their shares.
  21. In order for a merger of two public corporations to be accomplished, it requires....
    • - A formal plan of merger
    • - This plan must be approved by a majority of the board of directors and stockholders of both corporations
  22. In order for a Corporation to voluntarily dissolve the...
    Board of directors must pass a resolution to disssolve and liquidate