Running head SENSORY INTEGRATION THERAPY SEN.docx

Running head: SENSORY INTEGRATION THERAPY
SENSORY INTEGRATION THERAPY
Sensory Integration Therapy
Name
School
Sensory Integration Therapy
Fully describe sensory integration treatment using information
from at least one scholarly sources.
Pro and Con Statement
Identify one pro and one con statement regarding sensory
integration treatment, and provide significant context around
these statements, and cite information from at least one
scholarly sources.
Evaluation of the Treatment
Evaluate sensory integration treatment using at least three of the
BACB ethical code elements and justifies one's own opinion on
the topic.
1 - 1.01 Reliance on Scientific Knowledge - Behavior analysts

rely on professionally derived knowledge based on science and
behavior analysis when making scientific or professional
judgments in human service provision, or when engaging in
scholarly or professional endeavors.
2 - 1.02 Boundaries of Competence (b-New Areas) - Behavior
analysts provide services, teach, or conduct research in new
areas (e.g., populations, techniques, behaviors) only a er rst
undertaking appropriate study, training, supervision, and/or
consultation from persons who are competent in those areas.
3 - 1.03 Maintaining Competence through Professional
Development - Behavior analysts maintain knowledge of current
scientific and professional information in their areas of practice
and undertake ongoing efforts to maintain competence in the
skills they use by reading the appropriate literature, attending
conferences and conventions, participating in workshops,
obtaining additional coursework, and/or obtaining and
maintaining appropriate professional credentials.
Conclusion
Explain how to communicate the importance of using evidence-
based strategies to colleagues and family members using
language appropriate for the audience.

References
1 – Scholarly source
Topic 11: International Law and Ethics
11.1Learning Objectives
Learning Objectives
1. Summarize the fundamental principles which govern
international law.
2. Describe different arrangements of international laws which
affect international trade and relationships.
3. Illustrate the basic organization of the United Nations and
explain the UN’s purpose.
4. Describe the political organization of the European Union.
5. Compare the purposes and organization of the three main
world banking institutions.
6. Identify different methods or tools by which international

disputes are typically resolved.
7. Describe the regulations imposed by the Foreign Corrupt
Practices Act.
8. Compare different standpoints on businesses’ obligation to
fulfill social responsibility requirements.
9. Summarize the basic tenets of the foundational ethical
philosophies that are commonly applied to business practices.
10. List and describe the five areas which govern the consensus
view of good corporate citizenship.11.2General Principles of
International Law
International law describes the set of rules and sanctions which
govern the relationships between sovereign states. It is a
consent-based system where nation-states bind themselves to
international rules to achieve some economic or political goal:
trade, technology transfer, peace, and so on. International law is
very successful in establishing uniform standards for such
things as codifying construction rules for fire prevention,
setting standards for weights and measures, and establishing
international protocols for airplane safety. In terms of
regulating issues of war and peace, and even trade, it is much
less so. International law is guided by several principles,
including Comity of Nations, Act of State Doctrine, and
Sovereign Immunity
Comity of Nations
A fundamental principle of international law is the notion
of Comity of Nations. Comity is the doctrine that a sovereign
nation’s legal system will adopt or implement the law of
another sovereign nation out of deference, mutuality, and
respect. For example, in the interpretation of an international
contract, a court in Nation A will give deference to that
contract’s interpretation under the laws of Nation B, where it
was created, as long as the laws of Nation B are consistent with
the public policy and law of Nation A. More specifically, a
court in Nation A may uphold the ruling of a court in Nation B
in a particular case, even if the case may have been decided

differently in Nation A. Factors that a court in Nation A would
consider in granting comity for a decision in Nation B would be
Nation B’s apparent fairness and impartiality of its legal
system, jurisdiction over the defendant and subject matter, and
the absence or presence of fraud or excess politicization of the
legal system.
Act of State Doctrine
Another principle of international law is that each state has the
power to regulate its internal affairs unfettered by the legal
rulings in another nation. Under the Act of State Doctrine, the
United States holds to the principle that every sovereign state
must respect the independence of every other sovereign state
and that courts in one country may not pass legal judgments
upon the acts of national governments done within their
borders. For example, suppose the People’s Republic of China
outlaws the practice of all religions in the country. Saul, a
Jewish U.S. citizen living in California, disagrees with China’s
new law. Saul brings a lawsuit against China in a U.S. district
court located in the state of California, arguing to the court that
China’s law should be illegal. The U.S. district court will apply
the Act of State Doctrine and rule that China’s law is an act of
that state and that a U.S. court has no authority to hear and
decide Saul’s case. The court will dismiss Saul’s lawsuit against
China.
Sovereign Immunity
The third fundamental principle of international law is the
doctrine of Sovereign Immunity. Sovereign immunity is a long-
standing principle of international law and a legal doctrine
which holds that a sovereign nation is immune from civil suit or
criminal prosecution. It comes from the traditional notion that
"a king can do no wrong.” The US recognizes this concept
under the Foreign Sovereign Immunities Act (1976). The
immunity is not absolute and may be forfeited if a state has
waived it or has engaged in a primarily economic activity which

has affected the United States. In those cases, a foreign nation
may have to defend a lawsuit against it arising in a state or
federal court in the United States. An example of sovereign
immunity is found in the 2012 North Carolina case Bullard v.
Wake County. Dennis and Wendy Bullard sued Wake County for
negligent inspection of their new home, which had significant
structural defects within only a few months. Their builder went
into bankruptcy, so suing the county was the Bullards’ only
option. When the case went to the Court of Appeals, the court
found that Wake County had not waived its sovereign immunity;
thus, the Bullards were unable to recover anything against Wake
County.11.3Sources of International Law
The U.S. businessperson is governed by both domestic and
international sources. Trade between a firm in the United States
and a foreign business are first and foremost regulated by the
United States Constitution by way of both the Treaty Clause and
the Foreign Commerce Clause.
The President of the United States is empowered by Article II,
Section 2, Clause 2 of the Constitution, the so-called Treaty
Clause, to negotiate agreements between the United States and
other countries, subject to a two- thirds approval vote by the
Senate. A treaty is an agreement between sovereign states to act
in a certain manner, usually on trade matters. Akin to contracts,
a treaty is binding on the nations involved and subject to
enforcement under the principles of international law. Once
approved, the treaty has the full force and effect of law. This
means, using a hypothetical situation, that a small wallet
manufacturer in Kemmerer, Wyoming, is subject to an
international treaty governing the use of snake skin in the
manufacture of wallets. Moreover, in an area of law which is
the domain of the states, an international treaty could become
the law of the land, even if Congress and the President
traditionally have little authority over such matters. For
example, education law is a domain of the states, but an
international treaty which sets standards for the qualifications
of elementary school teachers would become the law. This could

be true even though Congress and the President traditionally
have little authority over education.
A treaty must meet the standards of the U.S. Constitution or it
is void, or at least the violating provision is a nullity. Because
the treaty becomes U.S. law, Congress retains the power to
amend it without reference to the international party with whom
the treaty is made. The scope of the authority of the President to
unilaterally withdraw from a treaty remains uncertain.
Many treaties are bilateral treaties, which are agreements
between two nations. Some trade agreements are between
several or more nations, as in the North American Free Trade
Agreement (NAFTA), which is between Canada, the United
States, and Mexico. Perhaps the most important of any of
these multinational agreements is the creation of the United
Nations.
Related to the Treaty Clause, which can include many non-
business related issues like missile defense, is the Foreign
Commerce Clause. Here, the Constitution in Article I, Section
8, Clause 3, gives Congress the power to regulate commerce
with foreign nations. This gives Congress the power to regulate
international trade. Business must look then at federal trade law
to understand which rules apply to a particular international
transaction.
In addition to U.S. law governing international trade, business
must also comply with what is called customary international
law. When a consistent recurring practice develops between
nations in the course of their relationship, that practice becomes
a binding principle between the nations whether it is accepted
into a treaty or not. Most often, customary law is codified into a
treaty. An example would be the immunity from criminal
prosecution for a visiting Head of State.11.4The United Nations
It would be impossible to discuss international business without
touching on the increasingly important role the United
Nations (UN) plays in world affairs. Founded in 1945 as a
venue for the resolution of nation-state conflicts leading to war,
the UN is comprised of 193 member nations and is

headquartered in New York City. It is financed by voluntary
contributions from member states, of which the United States is
a leading contributor, and its goals now include the maintenance
of peace, the fostering of human rights, the promotion of
economic development, and the provision of humanitarian aid.
The UN is comprised of various subset organizations.
The Secretariat is the executive arm of the UN and is comprised
of the Secretary General, currently Ban Ki-Moon of South
Korea, and staff. The Secretariat provides a forum for member
states to discuss and resolve issues, conducts research, and
carries out the administrative duties of the UN.
The General Assembly is the main deliberative body of the UN,
comprising a representative from each member state. Out of the
General Assembly comes the Security Council, which is tasked
with keeping international peace. The Security Council is
comprised of fifteen member states, five of which are permanent
members - The United States, Russia, China, France, and the
United Kingdom. Other nations serve in two-year term rotations
based upon a regional allocation. The Security Council is a very
important body because it can establish international sanction
rules and issue binding resolutions to member states. Moreover,
the permanent members of the Security Council may veto
nominations for Secretary General or member nations serving
on the Council itself. Perhaps the most important power the
Security Council holds is the ability to authorize and execute
military action through UN security forces, called UN
peacekeepers. Despite the name, UN peacekeepers are military
forces voluntarily provided by member states and have recently
totaled a force of 116,837 soldiers.
The matrix of UN operations includes the World Bank Group,
which consists of the World Bank and the IMF; the World
Health Organization, dedicated to disease prevention and cure,
primarily in the developing world; and aid programs such as the
World Food Programme, UNESCO, and UNICEF. Finally, the
UN sponsors the International Court of Justice to mediate
disputes between member nations. It is to this area of

international law to which we now turn.11.5The European
Community
Perhaps the largest international agreement between nations is
the European Union (EU). With the recent addition of Croatia,
the EU is a unification of 28 states creating a political and
economic community spanning much of modern-day Western
Europe. Following in the footsteps of earlier agreements
regarding coal, steel, and atomic energy production after World
War II among the nations of Belgium, France, Germany, Italy,
Luxembourg, and the Netherlands, the European Union was
designed to create a "single market" for trade to compete
favorably against America and Asia for commerce.
Aims of the European Union
Officially established by the Treaty of Maastricht on February
7, 1992, the EU has five aims:
1. To strengthen the democratic governing among nations;
2. To improve the efficiency of nations;
3. To establish economic and financial unification;
4. To develop the Community social dimension; and
5. To establish a security policy.
To achieve these goals, the EU has established wide-ranging
policies regarding business, education, and social issues. The
EU has come under criticism for its unwieldy governing
structure, which involves an "institutional triangle" composed
of 1) the Council – representing nations; 2) the European
Parliament – representing citizens; and 3) the European
Commission – responsible for holding up Europe's main
interests. The European Council is, essentially, the meeting of
the heads of state of member nations. Originally an informal
body, it now is officially recognized as an official organ of the
EU with authority for directing the EU's general political
priorities. It has no power to pass laws. The European
Parliament is the primary legislative arm of the EU and its
members are directly elected by member nations. The European
Commission acts as the executive arm of the EU, and its

members - one for each member state - are to look to the
interest of Europe as a whole, not just a self-interested member
state when making decisions. Because its members are
appointed, not elected, and have tax free income, the
Commission has come under criticism as an elitist body.
Many of the EU countries have adopted a unified currency
known as the Euro. The area in which the Euro is used is known
as the Eurozone.11.6World Financial Institutions
There are three main world banking institutions which deserve
the attention of an international business person: the World
Bank, the International Monetary Fund, and the Bank for
International Settlement.
Established in 1944, primarily under the sponsorship of the
United States and the United Kingdom, the World Bank is a
financial institution designed to provide loans to developing
nations for capital improvements such as roads, dams, and
telecommunications facilities, and it loans approximately $25
billion annually. Its Articles state that the purpose of the Bank
is “to assist in the reconstruction and development of territories
of members by facilitating the investment of capital for
productive purposes” and “to promote the long-range balanced
growth of international trade and the maintenance of
equilibrium in balances of payments by encouraging
international investment … thereby assisting in raising the
productivity, the standard of living, and conditions of labour in
their territories.”
The Bank makes loans at a rate of 0.5 percent above its own
operating costs. Loans were originally made only for specific
structural improvements, but in 1980 the World Bank began
providing loans for the promotion of social reforms.
The World Bank has been criticized as promoting the goals of
western nations over those it was ostensibly designed to
promote. For example, the United States, a single nation, has
one director, while the 47 sub-Saharan African nations who are
member nations have only two.
The World Bank also attaches conditions to its loans which give

it broad authority to ensure a nation structures its internal
economy so as to repay the loan. Every president of the World
Bank since its creation has been a U.S. citizen.
Created at the same time as the World Bank is the International
Monetary Fund (IMF) International Monetary Fund (IMF).
Member countries of the IMF contribute money to a pool
through a quota system from which countries with payment
imbalances can borrow funds temporarily. The balance of
payments includes a country's exports and imports of goods,
services, financial capital, and financial transfers. When added
together, they must sum to zero, with no overall surplus or
deficit. For example, if a country is importing more than it
exports, its trade balance will be in deficit. If a nation has a
deficit shortfall, it will have to counterbalance it in some way –
such as by funds earned from its foreign investments, by
running down central bank reserves, or by receiving loans. This
is where the IMF seeks to help.
The Bank for International Settlements (BIS) is the central
banker to the world and is located in Basel, Switzerland. It
serves member state’s central banks in their pursuit of monetary
and financial stability by providing research, promoting
cooperation, and acting as a bank for central
banks.11.7International Dispute Resolution
International disputes may be resolved informally between
nations through diplomacy and negotiation. However, when that
fails, nations may submit complaints to the International Court
of Justice (ICJ) in The Hague, Netherlands. The ICJ’s main
function is to hear and settle legal disputes among UN member
states and to provide advisory opinions—something that we
discussed earlier that U.S. courts do not do—on legal questions
submitted to it by international agencies and the UN General
Assembly. When deciding cases, the ICJ relies for authority
upon international conventions, international custom, and the
"general principles of law recognized by civilized nations." It
may also rely upon "the teachings of the most highly qualified
publicists of the various nations" and its previous judicial

decisions to help interpret the law. Interestingly, the Court
expressly states that it is not bound by the common law
principle of precedent or stare decisis. The decisions of the
Court are therefore binding only on the parties in a specific
dispute.
Another way international disputes are resolved is through
the World Trade Organization (WTO). Signed in 1947,
the General Agreement on Tariffs and Trade (GATT) is a
multilateral agreement regulating trade among 153 countries,
and its purpose is to effect the "substantial reduction of tariffs
and other trade barriers and the elimination of preferences, on a
reciprocal and mutually advantageous basis." Over a series of
negotiations lasting years, member nations fine-tuned the
agreement and eventually, in 1994, created a permanent
institutional structure for regulating the massive trade
agreement called the World Trade Organization.
The WTO’s goals include creating a trade system free of
discrimination, barriers, uncertainty, and anti-competitive
practices. Under WTO rules, all agreements on reducing tariffs
and barriers to trade must be passed by all 150 members, on the
theory that if all can agree on a rule it must be a fundamentally
fair precept. Most nations of the world, at least those of any
consequence, have signed on to the GATT and are members of
WTO. Of course, as we saw earlier, international law and
agreements are consent-based, and nations often ignore WTO
rulings if national interest prevents following the rulings. For
example, the U.S. has been called out, but continues to ignore,
WTO rules in the so-called “Irish music” case. The U.S. allows
restaurants and store owners to play Irish music without
compensating the owners of the material, a violation of WTO
rules. The WTO has in place a dispute resolution mechanism
where nation states may bring complaints. When a member
nation enacts a policy or takes action which another state
considers as breach of the WTO agreed rules, it may seek
resolution through the Dispute Settlement Body. The WTO
procedures are perhaps the most active international dispute

resolution mechanisms in the world.11.9Social Responsibility of
Business
The foregoing discussion about the Foreign Corrupt Practices
Act (FCPA), leads us to a general discussion of what constitutes
the general ethical obligations of business. With respect to
appropriate business behavior—exercising our duty to act as
morals and customs demand—the law sets only a minimum
standard. Conduct in the business world is measured for its
morality, or its ethics; indeed, both for its adherence to social
constructs of right and wrong and for its social responsibility to
the citizens in the countries in which it operates. Virtually all
agree that an action may be legally permissible while being
unethical. An example is a marketing tactic employed by a
credit card company to sell certain products to people who
aren’t eligible for any of the product benefits. While this
marketing tactic may not qualify as deceptive advertising under
the law, it is unethical because it takes advantage of an
unsophisticated consumer.
Beyond a duty to obey the law and act morally, does a business
owe a greater duty to society? Some, like economist Milton
Friedman, maintain that business has only one responsibility
and that is to maximize profits for shareholders. He said: “There
is one and only one social responsibility of business – to use its
resources and engage in activities designed to increase its
profits so long as it stays within the rules of the game, which is
to say, engages in open and free competition without deception
or fraud.” Friedman also stated: “So that the record of history is
absolutely crystal clear. That there is no alternative way, so far
discovered, of improving the lot of the ordinary people that can
hold a candle to the productive activities that are unleashed by a
free enterprise system.” A case example of maximizing profits
occurred in the 1919 Dodge v. Ford Motor Company, in which
founder Henry Ford sought to reduce prices on his cars which
would increase vehicle production and allow more people to buy
cars. The Dodge brothers, two shareholders, sued Ford and
claimed that his plan would not increase shareholder dividends.

The court sided with the shareholders, saying that Ford’s plan
benefitted the public more than the shareholders.
Others vigorously disagree with Friedman and argue that
business, by having the privilege of being organized under law,
bears a social responsibility to the citizens of the country in
which it operates. Moreover, they argue that corporate
citizenship requires a firm to actively do good in the
communities in which it operates and that the bottom line
includes profits, plus a social responsibility factor. This is
especially the case for so-called “green” environmental policies.
For example, a manufacturing plant that dumps its hazardous
waste into a nearby lake is negatively affecting the community
and not being socially responsible.
Yet others argue that a firm is ethical if it meets the moral
minimum of behavior. That is to say that the ethical duty a
business owes to a community and other businesess is to “do no
harm.” For example, an oil company that pollutes a body of
water and then compensates those whom the pollution has
negatively impacted has met its moral minimum of social
responsibility.
Finally, stakeholder theory argues that in the calculation of
ethical business behavior, a firm is unethical if it does not
consider the parties impacted by its decisions. For example, a
corporation that viewed its employees simply as means of
expanding shareholder wealth would be in violation of the
stakeholder theory. As the theory goes, persons or entities who
have taken no risk in developing the business, but who may
suffer some negative consequence of the firm behavior, should
have a say in business decisions or should have their views
considered. The definition of who is actually a stakeholder and
how broad the stakeholder definition should be applied has not
yet been fully agreed upon. Certainly under the theory,
employees, customers, suppliers, financiers, communities,
governmental bodies, political groups, trade associations, and
trade unions and others are considered
stakeholders.11.10Foundational Ethical Philosophies Guiding

Business
Business ethics is informed by different ethical philosophies
such as utilitarianism, Kantianism, social justice theory, and
virtue ethics.
Utilitarianism
Under the ethical theory of Utilitarianism, an action is ethical if
it maximizes the greatest happiness for society. For example, if
a citywide poll is taken that 85 percent of its population would
be happier with a new central park, the park should be built.
This theory holds to the notion that results govern what is
ethical and society would be best served by the legislature
considering which proposed law would benefit the most in
society. A few of this theory’s weaknesses are the difficulty of
measurement, the lack of sufficient information to make
choices, and the very notion of what is beneficial. The
principles of utilitarianism may be seen in administrative
actions, cost-benefit analyses, and the balancing provisions we
discussed in environmental impact statements.
Kantian Ethics
Kantian ethics, named after its originator, German philosopher
Immanuel Kant, hold that ethical action arises from executing a
duty and that duties arise from rational thought. Kantianism
holds that any action must be able to be universalized–applied
to all persons equally–in order to be ethical. If the action can be
consistent–applied in all circumstances, and reversible–
returning in kind to the doer without harm, it is ethical. For
example, if you rationalize that it is acceptable for you to not
fulfill contract terms to your utmost ability, it is acceptable for
competitors to do the same. Kant espoused the notion of one
categorical imperative–one rule from which all moral action
could derive–which is: “Act only according to that maxim by
which you can, at the same time, will that it should become a
universal law.” It most closely aligns with the “golden rule”
which is present in many ethical systems.

Social Justice Theory
Twentieth century thinker John Rawls espoused a social justice
theory wherein he argues the greater good compels the loss of
some freedom for individuals. In other words, social justice or
fairness is the measurement of whether an action is ethical.
Rawls' work was founded on the philosophy of John Locke and
Jean-Jacques Rousseau who argued under so-called social
contract theory that a person’s moral obligations are founded on
a social contract with others to live in an ordered society. Rawls
wrote that “Each person possesses an inviolability founded on
justice that even the welfare of society as a whole cannot
override. For this reason, justice denies that the loss of freedom
for some is made right by a greater good shared by others."
Very simply, he argued that each individual must surrender
some rights to a legislative trustee who acts in good faith for
the greater good and that the least advantaged in society should
be afforded special treatment. Social justice theory has been
criticized because fairness and justice are subjective terms
which can never be quantified. For example, state seatbelt laws
compel people to forgo the choice of wearing a seatbelt, but the
laws have an overall good effect on society.
Virtue Ethics
Virtue ethics is a theory developed by the Greek philosopher
Aristotle which emphasizes the value of virtuous qualities
rather than rules or results. Aristotle argued that the individual
should choose personal inward behavior to be ethical rather than
relying solely on external law and customs. The idea is that if a
person's character is virtuous, his or her choices and actions
will be also. For example, regarding lying, a virtuous ethicist
will focus less on the lying and more on what telling a lie says
about one’s character and moral behavior.11.11Corporate
Governance
Recent corporate misconduct has resulted in a renewed focus by
regulators, shareholders, and business thought leaders on the

concept of corporate governance. Corporate governance is
defined as the systems of control, both external and internal,
which monitor the actions of directors and management in an
effort to mitigate risk and prevent misdeeds.
External Controls
External controls include law, customs, and reporting
requirements. In recent years, corporate reporting requirements
have become more onerous for firms as legislatures around the
world have sought to protect investors from corporate
malfeasance. Additionally, the rules governing disclosure of
misconduct by those providing services to a firm, like
accountants and lawyers, have become more demanding. As
noted earlier, the passage of Sarbanes-Oxley is just such a
response.
Internal Controls
Internal controls are measures that regulate a corporation’s
actions, auditing, and authorizations and accounting to major
creditors. It consists of monitoring of board and management
action, auditing internal procedures and finances, reviewing
remuneration rubrics, reporting to shareholders, maintaining a
balance of power over financial decisions, and authorizations
and accounting to major creditors.
Areas of Corporate Citizenship
There are five areas which govern the consensus view of good
corporate citizenship.Disclosure and Transparency
First is the requirement of disclosure and transparency.
Organizations must make known the roles and responsibilities
of key players in the business and maintain best practices
procedures for financial recording and reporting.Safeguarding
the Rights and Interests of Shareholders
Second, a firm must safeguard the rights and interests of
shareholders. A modern organization has the duty to inform
shareholders of corporate actions, encourage shareholders to

exercise their rights and responsibilities, and promote
participation of shareholders in the annual meeting.Strong
Board of Directors
Third, a firm must have a strong board of directors. Much of the
criticism of recent years about corporations has been the
lackadaisical approach of the board of directors to executive
manager oversight. Many boards were only too happy to hear
the good news of high profits, without delving into the details
of how some of those extraordinarily high results were
achieved. The modern view is that a board of directors must be
skilled, active, and vigilant in protecting the interests of
shareholders with oversight.Considering the Interests of
Stakeholders
Fourth, a modern firm must account for the interests of
stakeholders. As we saw earlier, it is often difficult to identify
who is a stakeholder to which a corporation owes a duty, as
many persons wholly unconnected with a company may be
impacted by a corporate decision. Nevertheless, with every
major action, a firm should take into consideration the interests
of employees, customers, local communities, and policymakers,
as well as environmental interests. These stakeholders may not
have formal legal or contractual rights, but the modern view is
that corporate social responsibility compels their inclusion into
the decision-making process.Integrity and Ethical Conduct
Finally, and perhaps most importantly, integrity and ethical
behavior must permeate the culture of an organization. The
possession of high ethical and moral conduct should be the
highest priority in selecting board and executive officers of the
firm. Every firm must have a code of ethics that is taught and
modeled by senior executives.
Topic 2: Business Organizations
Learning Objectives
1. Compare the advantages and disadvantages taken on by the
owner of a sole proprietorship.

2. Identify the elements that constitute a general partnership, as
well as the advantages and disadvantages of a general
partnership.
3. Differentiate between a limited and general partnership and
list the advantages and disadvantages of a limited partnership.
4. Describe the characteristics of a corporations and the benefits
derived from choosing a corporation as a form of business.
5. Explain how a corporation is formed and describe the groups
that constitute the organization of most corporations.
6. List and describe the financial tools used by corporations.
7. Summarize the basic purpose and function of a limited
liability company as compared to a traditional corporation.
8. Separate franchises by category and explain how different
kinds of franchises function.
9. Describe the legal protections that assist franchisees in
franchise relationships.
2.2Small Business Structures
David Parker, J.D. discussing Small Business Structures
Types of Business Structures
One of the earliest decisions an entrepreneur starting a new
business needs to make is under what form should the business
operate: sole proprietorship, partnership, corporation, or some
specific form of one of them. Each has benefits and
disadvantages. We will take a look at each.
Sole Proprietorship
A sole proprietorship, sometimes simply called a proprietorship,
is the simplest form of business entity, and is one where the
business is owned and managed by one individual. It is the most
common form of U.S. business. This makes sense because of the
advantages a sole proprietorship has over other business
entities.
Advantages of Sole Proprietorship
1. A sole proprietorship is very easy to set up from a regulatory
point of view. Usually, there is no government approval or
documentation required, except perhaps for a local business
license.

2. The cost of setting up a sole proprietorship is very minimal.
If a sole proprietor is doing business in a name other than his or
her own, he or she may have to publish in the newspaper, at
minimal cost, a fictitious business name statement, or a d/b/a
statement “doing business as” statement to alert the public and
creditors that he or she is running the business under another
name. For example, Tom owns a restaurant named Jade Palace.
Jade Palace is his fictitious business name.
3. Another advantage of the sole proprietorship is the flexibility
or ease with which the business may be managed. That is not
that to say that conducting the business is easy, but rather the
formal requirements of the day-to-day business are limited. The
proprietor is free to operate the business according to his or her
discretion without having to answer to a partner, a board of
directors, or shareholders.
4. The proprietor is the sole owner of the assets of the business.
5. A sole proprietorship is easy to terminate.
6. The sole proprietor pays only personal taxes, so the tax
calculations for sole proprietorships are usually straightforward
and easy to calculate.
7. Finally, the assets of a sole proprietorship are easy to transfer
to another person.
Disadvantages of Sole Proprietorship
The sole proprietorship is often the best choice for a beginning
or small business, but sometimes when a business starts to grow
the disadvantages of the sole proprietorship begin to show.
1. Under a sole proprietorship, there is no legal distinction
between the owner of the business and the business itself. That
means the owner bears 100 percent of liability for tort claims
against the business, and that liability is personal. A successful
claimant in a tort lawsuit against the business could attach for
payment of the judgment the sole proprietor’s personal assets,
like a home or a car.
2. The sole proprietor is personally responsible for all contracts
into which he or she enters.
3. If the owner dies, the business usually dies as well.

4. Finally, the only access to capital the proprietor has is what
he or she can develop on his or her own through personal funds
or loans from others.2.3General Partnerships
Konrad Lee, J.D. discussing General Partnerships
The general partnership form of business enterprise is
characterized by two or more persons agreeing to bind
themselves to each other by contract – the partnership
agreement – for a common business purpose.
Essential Elements of a General Partnership
The three essential elements of a general partnership include the
sharing of losses and profits, an equal right to engage in the
management of the business, and joint ownership of partnership
assets.Sharing of Losses and Profits
The profits and losses pass through to the partners in accord
with the partnership agreement. Therefore, in Partnership A&B,
A may be entitled to 60 percent of the profits and liable for 30
percent of the losses.
Konrad Lee, J.D. discussing PartnershipsEqual Right to Manage
the Business
At common law, a partnership was treated as a collection of
separate individuals and did not have a separate legal status.
The modern view is the opposite, and a partnership is now
considered in most states as a legal entity. This means that the
partnership may own property in the name of the partnership,
and sue, or be sued, as a partnership.Joint Ownership of
Partnership Assets
Additionally, unlike a typical agency relationship or a simple
contract relationship, partners in a general partnership are equal
owners of the assets of the business. As such they stand
together in a fiduciary relationship. That is, each owes the other
due care in actions associated with the partnership, including
just reporting, avoiding conflicts of interest, and not usurping a
partnership opportunity. If the object of the partnership may not
be completed within one year, the partnership agreement must
be in writing.

Advantages of a General Partnership
Like a sole proprietorship, a general partnership is easily
formed at little cost and may easily operate across states. Its
management is at the discretion of the partners, and it is often
easy to dissolve. Partnerships, although a legal entity, are not
taxed directly, rather, the individual partners are taxed at the
individual rate that applies to each.
Disadvantages of a General Partnership
Perhaps the biggest disadvantage of a general partnership is that
each partner is joint and severally liable for the torts and other
claims against the partnership. Therefore, if in the Partnership
A&B, A commits a tort against C while acting to further the
partnership interests, C may sue A, or sue B, or sue A&B
together. Moreover, under the agency relationship which
partners share, A may bind B, and vice versa, to terms of
contracts entered into as long as A or B do not contract outside
the scope and mission of the partnership.
2.4Limited Partnerships
A limited partnership is an agreement between two or more
partners to conduct business, but where only one of the partners
is responsible for the day-to-day management of the business.
The managing partner is known as the general partner and the
other partners as the limited partners. This kind of partnership
is a creation of state statute, as virtually all states have adopted
some version of the Uniform Limited Partnership Act (ULPA),
which governs limited partnerships.
Advantages of a Limited Partnership
The key advantage of the limited partnership is that it allows
limited partners to escape the joint and several liability that
exists in a general partnership. If a limited partner’s
contribution to the limited partner enterprise is solely financial,
with some small administrative involvement, then the limited

partner gets the benefit of partnership while avoiding liability
for torts, contract claims, or debt of the partnership. If a limited
partner becomes too involved in the management of the
business, he or she may lose limited liability status. A limited
partner has the right to access the partnership books and may
expect, just like in a general partnership, a duty of loyalty from
the general partner.
Disadvantages of a Limited Partnership
Because of the risks associated with the formation of a limited
partnership, and the fact that it is a creation of state statute, it is
much more difficult to form than a general partnership. The
partners must sign a certificate of limited partnership – a
document that describes the partnership, its purpose, and
members - and files it with the appropriate state agency. The
certificate of limited partnership becomes a public document
open to scrutiny.
While the limited partners are shielded from liability beyond the
amount of the investment contribution, general partners are
personally liable for the obligations and claims against the
partnership. Sometimes, general partners seek to avoid this
problem by setting up a corporation, which does have limited
liability, to act as the general partner.
Terminating a Partnership
In both a general and a limited partnership, the partnership may
be terminated by agreement, by judicial decree—bankruptcy, by
death or incompetence of a partner, by destruction of the object
of the partnership, or by impracticability of the project. In the
event that a limited partnership is terminated, the limited
partners receive back any capital contribution or profit in
priority to the general partner.
2.5Introduction to Corporations
Konrad Lee, J.D. discussing Corporations
Characteristics of a Corporation
The corporation is a form of business where the ownership is

divided into shares and is authorized by state statute to act as a
single legal entity. Having been in existence for many hundreds
of years, the corporation has several unique characteristics
which make it a favorable business form for many enterprises.
1. A corporation is a legal person under the law. Therefore, a
corporation can sue and be sued, own property, and enter into
contracts. Also, as a legal person a corporation has some limited
protections under the Constitution.
2. The shareholders of the corporation have limited liability for
the torts, debt obligations, and contracts claims, only up to the
amount of the value of the shares owned – capital contribution.
3. Shares in a corporation are easily transferrable. Indeed, with
the right online account, a party could buy or sell corporation
shares in the time it took this author to write this sentence.
4. A corporation has infinite duration. For example, the
Hudson’s Bay Company, a Canadian department store chain,
was incorporated in 1670 in London and is still going strong.
Types of Corporations
So-called subchapter s corporations are those having few
shareholders, where the Internal Revenue Service allows for the
passing of corporate profits directly to shareholders so as to
avoid the double tax associated with corporations. Corporations
that are formed within a state are called domestic corporations.
Those who are operating in a particular state, but were formed
in another state are called foreign corporations. For example,
the Ford Motor Company, incorporated in Delaware, is a
domestic corporation in Delaware and a foreign corporation in
the other 49 states in which it distributes vehicles. Alien
corporations are those formed outside of the U.S. Some
corporations are created to conduct a charitable or other
humanitarian purposes, and because they do not exist to make
money for shareholders are called non-profit or not-for-profit
corporations. That is not to say that the employees of such
organizations are not paid. For example, the commissioner of
the National Football League, a not-for-profit corporation, was
paid upward of $40 million in 2013. A publicly held

corporation is one where there are many shareholders extant in
the world, while a closely held corporation is where just a few
persons own its shares, like S.C. Johnson. Some corporations
are created to assist doctors, lawyers, accountants, and so on,
and are called professional corporations. Usually, in these types
of corporations, the agents of the corporation may not subject
the corporation to liability, but the professional him or herself
is subject to malpractice claims. Most corporations are privately
owned, but a public corporation may be formed by the
government to achieve some social good, like the Public
Broadcasting Corporation.2.6Corporate Formation and
Management
Formation of the Corporation
Once a business has decided on using the corporate form, it
must determine which state will be the state of incorporation.
Many large businesses have incorporated in the state of
Delaware because it has laws favorable to corporations;
however, many businesses choose the state where it will be
doing business for incorporation. Upon selection of a suitable
name, the incorporators – those persons seeking to establish the
business – file Articles of Incorporation with the state. These
articles provide the corporate name and address, number of
shares to be issued, the agent of service and, usually, the name
and address of each incorporator.
The identification of an agent is important because the
corporation has legal status and, therefore, there must be some
person empowered to accept service of process from creditors or
others who may have a claim against it. The Articles also
provide information about the nature of the business of the
corporation. Traditionally, the law required a detailed
description of all business activities in which the corporation
planned to engage. In times past, if a corporation exceeded its
stated purpose it would have been said to have engaged in
an ultra vires act, outside its authority, which could be
challenged by shareholders as improper. A corporation could be

committing an ultra vires act if it makes loans that are
prohibited by law or makes excessive contributions to charities.
Over time, that strict rule has lessened.
Once the incorporators or promoters complete the formation of
the corporation, they will quickly execute new contracts, called
novations, with any party with whom they have had dealings
related to the creation of the contract. This is done so that the
corporation takes over the contract and the third party releases a
promoter. The promoter will now be shielded from liability, one
of the primary purposes of forming the corporation in the first
place.
Management of the Corporation
There are three actors in the management of the corporation:
shareholders, the board of directors, and executives. Often these
groups are overlapping in their rights and
responsibilities.Shareholders
The shareholders are the owners of the corporation. As owners,
shareholders, by voting rights, have power to elect a board of
directors which then governs the corporation by determining
strategy and hiring executive officers to manage the day-to-day
affairs of the firm. Shareholders also have the right to amend
the Articles of Incorporation or the bylaws and to approve
mergers or corporate dissolutions or the sale of substantial
assets. They do not have responsibility for management of the
business.Board of Directors
The board of directors has a high duty of care to the
shareholders and may not engage in any activity which would
indicate disloyalty or a conflict of interest. Sometimes, the
board of directors will make a decision which results in losses
to the corporation. Under the business judgement rule, as long
as the directors acted in a reasonable and prudent way, directors
will not be subject to lawsuit from shareholders on a breach of
duty claim.Executives
The executives in a corporation are those officers charged with
carrying out the daily operations of the corporation according to

the direction provided by the board of directors and the wishes
of the shareholders. The executives are subject to the same duty
of care in carrying out the purposes of the corporation as are
the board of directors. Usually the members of the top
management team are also members of the board of directors
and shareholders. The executives are tasked to see that the
business runs according to the Articles of Incorporation and
the Bylaws. The Bylaws are the detailed rules governing the
management of the firm and sets the requirements for annual
meetings, the process for approving major corporate decisions,
stock issues, and shareholder voting rights.
Finally, a major shareholder who comingles his or her funds
with the corporation, or uses it solely for his or her personal
benefit, will lose the limited liability protection of the corporate
form under the doctrine known as piercing the corporate
veil.2.7Corporate Financing and Termination
Financing of the CorporationStocks
A primary advantage of corporations over other business forms
is the ability of the firm to raise capital through the issuance of
stocks. Stocks represent an equity interest, or ownership share,
of the corporation. Some small businesses issue stocks to
employees as a way to compensate them when money is tight.
This is what Comer Cottrell, one of the most successful
African-American entrepreneurs and now worth over a $1
billon, did to keep his employees loyal during the early days of
his Pro-Line hair care business.Common Stock
The most fundamental equity interest a shareholder has in a
corporation is common stock. This stock provides the owner
with an interest in the control, assets, and earnings of the
corporation in proportion to that stock's value. That is, one
share equals one vote. Common stock shareholders generally
have preemptive rights. This is the right to purchase newly
issued stocks over other parties in order to maintain the percent
of stock owned.Preferred Stock
Some stockholders own preferred stocks. These are stocks that

generally cost more to purchase, but carry a preference for the
payment of dividends, a priority right to purchase other stock
offered, and priority for payment when the corporation is
dissolved.Dividends
A dividend is a distribution of corporate profits to the
shareholders as ordered by the directors. Normally, there is no
requirement that the directors order dividends, but stocks which
regularly pay dividends are seen as more favorable to investors.
Sometimes a corporation will be required to declare a dividend
payment to shareholders when retained earnings - undistributed
profits – get too high, or the Articles of Incorporation or
Bylaws demand it.Bonds
Another way a corporation finances its activities is
through bonds. A bond is a debt security sold to investors. The
collateral is the credibility of the firm and its ability to repay
the loan. Sometimes the physical assets are used as collateral on
the bond. A corporation needs to have some regular earnings, or
earnings potential, to be able to offer a bond to the public at a
favorable rate. The higher a company's perceived credit quality,
the easier it becomes to issue debt at low rates and issue higher
amounts of debt.
Termination of the Corporation
Dissolution of the corporation may occur when the board of
directors and shareholders vote to end it. It may also be
terminated by bankruptcy, court decree, or legislative
action.2.8Limited Liability Entities
David Parker, J.D. discussing Limited Liability Entities
The partnership carries specific tax advantages to the partners
because tax is paid not on the partnership profits, but upon the
individual partner’s personal financial circumstances. A
corporation carries with it other advantages in terms of
protection from liability, but the corporation pays a separate
corporate tax, and thus shareholders are taxed twice. In an
effort to obtain the best of both business forms for
entrepreneurs – limited liability and only one taxing event –

many states have enacted laws that create the limited liability
company (LLC). Limited liability company owners are
called members. In the LLC, the company may elect to be taxed
as either a partnership or a corporation. If taxed as a
partnership, income from the business passes through to the
individual members in the company. Additionally, unlike a
traditional corporation which retains all losses, in the LLC
losses may be passed through to the individual members just
like profits. This allows a member, when needed, to declare a
loss to offset gains in other areas for tax purposes. Perhaps even
more importantly, the losses of an LLC do not have to be
distributed evenly among members. That means the LLC can
manage which members receive profits and losses.
Because it is a creation of state statute, the formation of the
LLC is very similar to that of a corporation. Moreover, its
management may either be by a management group or by all the
members. Under either scenario, the members of an LLC owe
each other a duty of due care and loyalty and may not engage in
activities that would damage the LLC or its members' interests.
If a member of an LLC wishes to extract him or herself from the
company, that member will immediately lose the right to
manage the affairs of the LLC and, while a duty of loyalty no
longer exits, the member must continue to exercise due care so
as not to harm the interest of the other members. The exiting
member has no authority to dissolve the LLC, but may force the
other members to a buyout.2.9Franchises
Konrad Lee, J.D. discussing Franchises
Basics of Franchises
Another kind of business is a franchise, which may be operated
under any business form. Franchises are businesses where the
owner of a trademark, trade name, proprietary manufacturing
process, or intellectual property licenses that asset to a third-
party business person. The creator of the franchise is called
a franchisor and the purchaser is named the franchisee.
Franchises are successful because they offer advantages to all

parties. For the franchisor, the franchising process allows him
or her to sell a proven concept to another and capture revenue
from the sale, from ongoing training and supplies, and from
taking a percentage of the franchise profits. For the franchisee,
he or she is assured a business which has a proven name
recognition and a success rubric. For the consumer, a franchise
offers certainty, uniformity of price, and quality.
Types of FranchisesManufacturing or Plant-Processing
Franchise
There are at least three types of franchises. The first is known
as the manufacturing or plant-processing franchise. This is
where, in Coke for example, the secret formula is sent from
Atlanta to bottling facilities all over the world, where is it is
added to water and rendered into Coke. The independent
bottlers are franchisees.Chain-Style Franchise
The second kind of franchise, the chain-style franchise, was
made famous by Ray Kroc, the former CEO of McDonald's. In
the chain-style franchise, the franchisor licenses the franchisee
to sell or make its products. In these types of relationships, the
franchisee may be required to purchase the product, uniforms,
or advertising from the franchisor.Distributorship Franchise
The distributorship is the last kind of franchise.
A distributorship model is a franchise where a manufacturer
licenses the franchisee to sell a product within a specific
geographic area. Car dealerships are the best example of
distributorship franchises.
Legal Protections for Franchises
The franchisor and the franchisee have a complicated
relationship because they are separate legal entities but are
bound together by the franchise relationship and the goal of
success. Over the years, because they have the better bargaining
position, franchisors have taken advantage of franchisees by 1)
overcharging for products which must be purchased from them,
2) arbitrarily increasing the percentage of profits taken under

the franchise agreement, or 3) terminating the franchise
agreement without notice or cause. To address these problems
both the federal government and state legislatures have acted to
protect franchisees. These protections include prohibiting the
franchisor from setting unrealistic sales goals, setting
conditions for when a franchise may be lawfully terminated,
requiring transparency on financial data, and giving the
franchisee proper notice. The Federal Trade Commission has
established the Franchise Rule which requires the franchisor to
provide written notice to the franchisee of facts relating to the
representations made, data collected, earnings projected, and
terms of the franchise contract.
2 Apply Assignment
Tips for Success:
· Read the question first, before reading the scenario.
· Read the question again and answer the question in your mind
before looking at the answer choices.
· Read every answer choice option carefully. Eliminate
implausible answers.
· Choose the BEST answer. You may not think any of the
answer options are 100% spot on.
· Pay attention to absolutes like always, never, not, clearly, etc.
Any counterexample that applies to the question would make it
incorrect.
· Be alert for the use of double negatives within a question.
Such questions should be read carefully to ensure you fully
understand what is being asked.
· Go with your first instinct on the answer based on the
knowledge you gained from reading the text.
Points:
120
Started on Jan 15 at 07:25
Your Submission:
Top of Form

1. Bookmark question for later
Lily wants to build a business. She has very little capital. She
does, however, have a partner with which she could run a
business. Lily wants to be able to avoid being held personally
liable for any problems the business has. Which of the
following would lead Lily to choose a sole proprietorship
organization for her business?
· Little capital
· None of the above
· Avoidance of personal liability
· Possession of a partner
·
What is the appropriate description for a distributorship?
· A franchisee makes or sells a franchisor’s product.
· A franchisee produces and sells a franchisor’s product using
the franchisor’s name.
· A franchisee sells a franchisor’s product in a specific
geographic area.
·
Hal organized his business in Canada. Most of his customers are
in Montana. In Montana, Hal’s business would be considered
a(n) __________ corporation.
· Subchapter S
· Closely-held
· Alien
· Professional
· Domestic
·
Mario and Johnny want to start a business. They have very little
capital. They are new partners and largely unfamiliar with each
other’s management practices. They are happy, however, to be
organizing a business together in order to avoid full liability for
the business. Which detail(s) of this situation would be the

largest contributor toward Mario and Johnny's decision to
organize a general partnership?
· Avoiding full liability
· Sharing profits
· Little capital
· Unfamiliar with each other’s management practices
·
J-Chron's board of directors periodically meets with the CFO of
the company. The CFO reports on the financial status of a
company project, after which the board inquires about the
project's compliance with legally-required accountings
principles. It asks no other questions about the project. Which
of the following is true?
· The board is not meeting any basic vigilance requirements.
· The board is meeting legally-required vigilance standards, but
not necessarily those which would
protect shareholders' interest.
· The board is not legally required to meet vigilance
requirements.
· The board is meeting all of its vigilance requirements.
·
What is the correct order of events for the formation of a
corporation?
· Novations are executed; Articles of incorporation are filed;
Incorporators select a name for the corporation;
· Business selects a state of incorporation
· Business selects a state of incorporation; Incorporators select
a name for the corporation;
· Articles of incorporation are filed; Novations are
executed
· Incorporators select a name for the corporation; Articles of
incorporation are filed; Business selects a
· state of incorporation; Novations are executed
· Business selects a state of incorporation; Novations are

executed; Incorporators select a name for the corporation;
· Articles of incorporation are filed
·
Loptech, a technology firm, wants to issue bonds for investment
purposes. Loptech has one of the best credit ratings in the
industry. Market rates for debt instruments average at .5%
interest. Based on its credit rating, Loptech would likely sell
bonds that pay _____.
· Indeterminable with current information
· 0.75%
· 0.25%
· 0.5%
·
Noodleoo, a struggling restaurant chain, wants to enact a
franchise agreement with Stephen to sell its product through a
chain-style franchise. Stephen agrees and opens the store, and 6
months later Noodleoo goes bankrupt. Which is most likely true
of this situation?
· If Noodleoo was transparent with its financial data, it owes no
recompense to Stephen.
· If Noodleoo was not transparent with its financial data,
Stephen has no recourse.
· More than one response is correct.
· If Noodleoo was not transparent with its financial data, it has
broken the franchise rule.
·
What is the appropriate description for a chain-style franchise?
geographic area.
·

What role best fits the following situation?
Manny wants to be involved in a business but is not sure which
type of business to join or create. He has capital to invest. He
has a good network of potential investors and partners. He has
no experience in management.
· Neither a limited or general partner would be a good choice.
· General partner in a limited partnership.
· Limited partner in a limited partnership.
·
Tucker works for a retail distribution company that was recently
started. Tucker has invested a lot of his earnings into shares of
the company. When quarterly earnings are posted, Tucker
receives a check for 8% of the quarterly profit of the company.
Tucker belongs to a __________ corporation.
· Domestic
· Closely-held
· Subchapter S
· Alien
· Professional
·
Abigail is a manager at her company. The company just
launched an initiative to improve its corporate citizenship
practices. Abilgail is responsible for all but which of the
following areas?
· Safeguarding shareholders' interests
· Vigilance of the board of directors
· Integrity and ethical behavior
· Disclosure and transparency
·
Rita wants to be involved in business. She has a fair amount of
money to invest, but she does not want to be involved in
management. She wants to form a business in the quickest way

possible under her circumstances. Which form of business
would be best for Rita?
· LLC
· Corporation
· Limited partnership
· Sole proprietorship
·
What is the appropriate description for a plant-processing
franchise?
geographic area.
·
Zoey is the CEO of a corporation she organized herself, and the
corporation has 15 shareholders. The company operates in
several states, as well as outside of the U.S. Her business
consists mostly of training services for in-home medical care
personnel. Her company would be a __________ corporation.
· Subchapter S
· Closely-held
· Domestic
· Alien
· Professional
·
Koffman Corporation is trying to raise capital. What method
would be the least risky to raise capital if it has a less-than-
favorable credit rating?
· Stock issuance, since stocks are more valuable as finance
instruments.
· Stock issuance, since a credit rating won’t negatively affect
Koffman’s ability to sell stock.

· Bond issuance, since additional debt can provide the company
with more leverage.
· Bond issuance, since nobody wants to buy shares of a
company with a less-than-perfect credit rating.
·
Hal and Miranda have a general partnership business for
landscaping projects. Hal makes a contract with a customer for
a project one day while Miranda is absent and leaves on
vacation the next day. Miranda does not feel she has the time to
perform the contract for the customer. Which of the following is
true?
· Indeterminable without more information.
· Only Hal is obligated to perform the contract.
· Miranda may relinquish her obligation to perform the contract
since Hal signed it without her knowledge.
· Miranda is obligated to perform the contract.
Cadence works for WilderCorp. She meets with a team to make
all-encompassing decisions concerning the direction of the
business. She also personally supervises managers and conducts
training for supervisors and plant managers. Cadence also buys
stock in WilderCorp. What is Cadence’s position in the
company?
· Director
· More than one option
· Shareholder
· Executive
·
Lenny organized his business in Delaware. He has customers in
Delaware, other states in the U.S., and in foreign countries.
Lenny’s business is __________ in Delaware.
· Professional
· Domestic

· Closely-held
· Subchapter S
· Alien
·
Piper is a manager in a corporation that was organized in
Canada by one of his former coworkers. The company provides
consulting services and training for architects employed by
construction companies. The company recently went public,
with shares being sold to about 500 investors. Piper’s company
would be a __________ corporation.
· Professional
· Alien
· Closely-held
· Domestic
· Subchapter S
2 Practice Assignment
Points:
50
Started on Jan 15 at 06:54
Your Submission:
Top of Form
What is the definition of a foreign corporation?
· A business formed outside the U.S.
· A business formed in a different state
· A business formed within a state
· A business that passes profits directly to shareholders
What is the definition of a Subchapter S corporation?
· A business formed in a different state
· A business that passes profits directly to shareholders
· A business formed within a state

· A business formed outside the U.S.
Wade and Hunter want to start a business. They have a large
amount of capital. They have a good working relationship and
believe they will do well sharing management responsibility and
in sharing profits. They are happy to be organizing a business
together in order to avoid full liability for the business. Which
detail(s) of this situation would be most unhelpful toward Wade
and Hunter’s decision to organize a general partnership?
· Avoiding full liability
· Large amount of capital
· Sharing management responsibility
· Sharing profits
What is a public corporation?
· A business with a large number of shareholders
· A business formed to assist experts in a particular business
field
· A business formed by the government
· A business with a small number of shareholders
What is a closely-held corporation?
· A business formed to assist experts in a particular business
field
· A business with a large number of shareholders
· A business formed by the government
· A business with a small number of shareholders
·
Albus wants to build a business. He wants to start the business
fast and reach a large customer base, but he only has a small
amount of opening capital. He has no partner with whom to

form the business. Which of the following is not a valid reason
for Albus to choose a sole proprietorship organization for his
business?
· Wants to reach a large customer base
· Small amount of capital
· Has no partner with whom to form the business.
· Wants to start the business fast
·
Which of the following is false concerning LLCs?
· LLC owners are called members.
· LLCs are formed in much the same way as a general
partnership.
· LLCs can be taxed as corporations.
· LLCs are governed by state statute.
·
Tawny wants to be involved in a business. She has lots of
capital to invest and she wants to be involved in management,
but does not want to be exposed to personal liability for losses
the business might incur and she does not want to have to pay
excessive taxes on her gains. Which form of business would be
best for Tawny?
· Sole proprietorship
· General partnership
· LLC
· Corporation
·
Kim wants to be involved in a business but is not sure what type
of business to join or create. She has some capital to invest,
several years of managing experience, and a good network of
potential investors and partners. What role would be best for
Kim?
· General partner in a general partnership

· More than one possible option
· General partner in a limited partnership
· Limited partner in a limited partnership
·
Jaden works for LeoHart. He meets with a team to discuss
shareholders’ interests and assign managers to run certain parts
of the company. What is Jaden’s position in the company?
· Shareholder
· Director
· Executive and shareholder
· Executive
·
Leo and Josh have a welding business organized as a general
partnership. A customer comes into the business seeking a
welding contract. Leo agrees to do the work for the customer as
a separate project from his business with Josh. Which of the
following is true?
· Leo has usurped the concept of joint ownership of the
business.
· Leo is free to make contracts separate from his business with
Josh.
· Leo cannot contract with the customer unless the customer has
had previous business dealings with Leo.
· Leo may make a separate contract with the customer as long as
the customer doesn’t already have a contract with the business
itself.
·
Del organized his business in Alaska. He does business in both
the U.S. and Canada. In Texas, Del’s business would be
considered a(n) __________ corporation.
· Domestic
· Foreign

· Alien
·
What type of franchise would a car dealership typically belong
to?
· Chain-style franchise
· Distributorship
· Plant-processing franchise
·
Which of the following is true concerning bonds?
· A bond’s collateral is always based on physical assets.
· As a company’s credit increases, the interest on its bonds tend
to decrease.
· Bonds are considered assets.
· A bond is an equity interest.
·
The primary purpose for a company’s issuance of stocks is:
· To clarify ownership levels for shareholders
· To increase shareholders’ income
· To increase a firm’s leverage
· To raise capital
·
The board of directors for Glenncorp makes an investment in
distribution services that ultimately result in a net loss for the
company and its shareholders. Shareholders in the company
may:
· Do nothing, as the board is protected by the business judgment
rule
· Demand compensation for their losses in proportion to their
number of shares
· Sign a petition to fire the board of directors
· Sue the board of directors.

·
Hector is opening a sole proprietorship. Which of the following
would not be included in a list of possible steps Hector would
take in setting up his business?
· Publish his fictitious business name
· Obtain a local business license
· File a d/b/a statement
· Obtain federal government approval
·
Reed works for Marimart. He assembles components for
consumer products. He also conducts training for new hires at
Marimart. Reed additionally purchases stock in the company?
What is Reed's position in the company?
· Director
· Executive
· Shareholder
· More than one option
·
Papapop makes a franchise agreement with a bottling factory to
sell its product to the company for bottling and subsequent sale.
Over the next several years, Papapop steadily demands a higher
percentage of the bottler’s profit from sales. Which of the
following is true?
· Papapop is restricted from demanding a higher profit
percentage.
· Papapop is restricted from demanding a higher profit
percentage if such increases are arbitrary.
· Papapop may demand a higher percentage without restriction.
·
Chloe is a non-executive supervisor at her company. She directs

other employees but has no control of financial information or
decision-making responsibilities. She would be responsible for
contributing to which of the following areas?
· Maintaining a strong board of directors
· Promoting integrity and ethical behavior
· Disclosure and transparency
· Safeguarding the rights and interests of shareholders
·
Which of the following is not a basic requirement of good
corporate citizenship?
· Strong and vigilant board of directors
· Provision of benefits to employees
· Disclosure
· Ethical environment
Under the notion of effective corporate governance, which of
the following is not an example of an internal control?
· Accounting disclosure requirements
· Employee satisfaction surveys
· Reporting to shareholders
· Performance reviews for managers
Bottom of Form
Wk 2 Discussion - Learn: Analyzing Business Structure
Respond to the following three questions in a minimum of 175
words each question.
1. Select a business you are familiar with or by conducting a
search of the internet. (Electrical Contractor Company)
2. Identify its business structure.
3. Explain the advantages and disadvantages of that designation
for the business.

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