CPA REG Business Structure Practice Questions
Business Structure makes up 2 of every 50 questions on a Tigertest CPA REG practice test. Here are 8 of the 8 questions on it, each with the answer and the reason.
Updated by the Tigertest team. Based on the AICPA's 2026 REG blueprint. Original multiple-choice questions; 50 per test, weighted like the real section's five areas, 75% target. Not affiliated with the AICPA or NASBA.
1. Partners in a general partnership are liable for partnership debts:
- A.Only if the veil is pierced
- B.Personally, jointly and severally
- C.Only up to their investment
- D.Only for debts they signed
Answer: B. Under the Revised Uniform Partnership Act, partners are jointly and severally liable for partnership obligations, though a creditor generally pursues partnership assets first.
2. A limited partner who takes no part in managing the partnership is liable for its debts:
- A.In proportion to profits
- B.Up to twice her investment
- C.Jointly and severally
- D.Only up to her investment
Answer: D. A limited partner's risk is limited to her contribution. The general partners are personally liable for the limited partnership's obligations.
3. Under the Revised Model Business Corporation Act, a corporation comes into existence when:
- A.Its articles are filed
- B.Its directors first meet
- C.Its bylaws are adopted
- D.Its first shares are issued
Answer: A. Corporate existence begins when the articles of incorporation are filed with the secretary of state. Bylaws and the organizational meeting follow.
4. A promoter signs a lease for a corporation not yet formed. After it is formed, the corporation adopts the lease. The promoter is:
- A.Liable for one month only
- B.Never liable on the lease
- C.Liable until a novation
- D.Released by the adoption
Answer: C. A promoter stays personally liable on a pre-incorporation contract even after the corporation adopts it. Only a novation, in which the other party releases the promoter, ends that liability.
5. A director makes an informed, good-faith decision that later loses the company money. Under the business judgment rule, the director is:
- A.Liable for half the loss
- B.Liable if shareholders vote so
- C.Not personally liable
- D.Liable for the full loss
Answer: C. The business judgment rule protects directors who act in good faith, with reasonable care and in the corporation's best interest, even if the decision turns out badly.
6. Who has authority to declare a cash dividend in a corporation?
- A.The board of directors
- B.The chief executive
- C.The corporate treasurer
- D.The majority shareholders
Answer: A. Declaring dividends is a board decision. Once declared, a cash dividend becomes a debt the corporation owes to its shareholders.
7. A shareholder sues the directors for harm done to the corporation. Any recovery generally goes to:
- A.The directors' insurer
- B.The suing shareholder
- C.All shareholders pro rata
- D.The corporation
Answer: D. In a derivative suit the shareholder sues on the corporation's behalf, so recovery belongs to the corporation. The shareholder may recover litigation costs.
8. A partner transfers her transferable interest in a general partnership to a creditor. The creditor receives:
- A.Full partner status
- B.Her share of distributions
- C.Her right to manage
- D.Her vote on new partners
Answer: B. A transferee of a partner's transferable interest gets only the right to that partner's distributions. Management and voting rights stay with the partner.
Practice all 8 business structure questions, and the rest of the 200-question bank, in the free CPA REG training sets. Questions you miss come back until you have mastered them.
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