Multiple-Choice Questions
1. CPA QUESTION: Assuming all other requirements are met, a corporation may elect to be treated as an S corporation under the Internal Revenue Code if it has:
A. Both common and preferred stockholders
B. A partnership as a stockholder
C. 100 or fewer stockholders
D. Th e consent of a majority of the stockholders

2. Which of the following statements is false:
A. Partners are liable to the partnership for their own negligent conduct.
B. Partners must turn over to the partnership any earnings from an activity that is related to the partnership’s business.
C. If a partner is off ered an opportunity that is related to the partnership business, he must fi rst seek permission of the other partners before accepting it.
D. A partner must turn over any profi ts from an activity that is a confl ict of interest with the partnership.
E. Partners are personally liable for intentional misconduct.

3. Th e following event does not automatically dissolve a term partnership:
A. Th e partnership achieves its goals.
B. A partnership is dissociated and all of the remaining partners vote to wind up the business.
C. A court determines the partnership cannot be run at a profi t.
D. A partner withdraws.
E. Th e partners agree to dissolve before the end of the term.

4. Joint and several liability means that:
A. A creditor of the partnership must sue all of the partners together.
B. A creditor of the partnership must sue the partnership and all of the partners together.
C. A creditor of the partnership can recover the full amount owed from the partnership or from any of the partners.
D. A creditor of the partnership can recover the full amount owed from the partnership and from each partner, even if this results in the creditor receiving more than his original debt.
E. A creditor of the partnership can recover from the partners individually, but not from the partnership.

5. While working part-time at a Supercorp restaurant, Jenna spills a bucket of hot French fries on a customer. Who is liable to the customer?
A. Supercorp alone
B. Jenna alone
C. Both Jenna and Supercorp
D. Jenna, Supercorp, and the president of Supercorp
E. Jenna, Supercorp, and the shareholders of Supercorp