In order to create an agency relationship, there must be a written agreement bet

Question

In order to create an agency relationship, there must be a written agreement between the principal and the agent.

True

False

2 points   

QUESTION 32

Male as well as female employees are eligible to take unpaid leave under the Family and Medical Leave Act.

True

False

2 points   

QUESTION 33

If you earn $10,000 from a webpage design business that you established as a sole proprietorship, the $10,000 will be taxed as personal income.

True

False

2 points   

QUESTION 34

If you innocently buy a used textbook that was stolen, you will acquire good title to the book because you bought it in good faith.

True

False

2 points   

QUESTION 35

If a limited liability company (LLC) chooses to be taxed as a partnership, the LLC members face the same "double taxation" as shareholders in corporations.

True

False

Explanation / Answer

QUESTION 31: In order to create an agency relationship, there must be a written agreement between the principal and the agent.

False

Explanation: A written agreement is not a mandatory condition to form an agency relationship, the agreement can be both verbal (oral) or written.

QUESTION 32: Male as well as female employees are eligible to take unpaid leave under the Family and Medical Leave Act.

True

Explanation: Under Family and Medical Leave Act (FMLA), both male and female are eligible to take upto 12 weeks of unpaid leaves without any threat of job loss. The leaves can be taken for taking care of a new born child or serious illness of a family member - spouse, parents, children, etc.

QUESTION 33: If you earn $10,000 from a webpage design business that you established as a sole proprietorship, the $10,000 will be taxed as personal income.

True

Explanation: For a sole proprietor, all income from the business will be reported on his personal income tax return. In Schedule C of the Individual form 1040 return, the sole proprietor will list all the income and expenses of the business and his net sole proprietorship income will be taxed as personal income.

QUESTION 34: If you innocently buy a used textbook that was stolen, you will acquire good title to the book because you bought it in good faith.

False

Explanation: In case of thefts, under the Uniform Commercial Code (UCC), a person who himself does not have a title of ownership on the goods cannot transfer the title of goods to a person who purchased the goods in good faith. Since, the thief had no title himself to transfer to the purchaser.

QUESTION 35: If a limited liability company (LLC) chooses to be taxed as a partnership, the LLC members face the same "double taxation" as shareholders in corporations.

False

Explanation: Unlike Corporate owners who are subject to double taxation, an LLC owner is not taxed twice. For tax purposes, IRS treats LLCs as sole proprietorships. As the owner of LLC, its members report all profits or losses from the business on Schedule C of 1040 tax return form.

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