Question 1

When the directors or shareholders of a corporation initiate dissolution procedures,it is a(n) ________.

Accepted Answer

A)  consolidation
B)  voluntary dissolution
C)  involuntary dissolution
D)  hostile takeover
E)  leveraged buyoutF) B) and C)
G) A) and E)

Question 2

Discuss the rights of corporations under the United States Constitution's Bill of Rights.

Accepted Answer

Courts consider corporations to be legal...

Question 3

A director may be removed ________.

Accepted Answer

A)  at the discretion of the president
B)  in the discretion of the shareholders,upon a majority vote
C)  in the discretion of the shareholders,upon a two-thirds vote
D)  in the discretion of other directors,upon a majority vote
E)  for causeF) C) and D)
G) B) and E)

Question 4

Which of the following is a false statement regarding the liability of directors and officers for criminal behavior?

Accepted Answer

A)  Directors and officers can be held personally responsible for their own crimes.
B)  Directors and officers can be held personally responsible for the crimes of other employees within the organization when they have failed to adequately supervise the employee's behavior.
C)  An officer can be held criminally liable for the illegal conduct of an employee if the court determines that a responsible person would have known about and could have prevented the illegal activity.
D)  Directors and officers who use insider information to trade their corporation's stock for a profit can be held liable for breaching their fiduciary duty.
E)  According to the responsible person doctrine,a court may not find a corporate officer criminally liable for the illegal conduct of an employee unless the officer profited personally from the illegal activity.F) A) and B)
G) C) and E)

Question 5

State incorporation statutes typically grant the power ________ to corporations.

Accepted Answer

A)  of perpetual existence
B)  to sue and be sued in the corporation's name
C)  to make charitable donations
D)  of perpetual existence,the power to sue and be sued in the corporation's name,and the power to make charitable donations
E)  of perpetual existence and the power to sue and be sued in the corporation's name,but not the power to make charitable donations,F) C) and D)
G) B) and D)

Question 6

Which of the following is a correct statement regarding stock certificates?

Accepted Answer

A)  Each certificate includes the corporation's name.
B)  Each certificate includes the number of shares represented by the certificate.
C)  A shareholder's ownership in the corporation does not depend on her possession of the physical stock certificate.
D)  Each certificate includes the corporation's name and the number of shares represented by the certificate,but a shareholder's ownership in the corporation does not depend on her possession of the physical stock certificate.
E)  Each certificate includes the corporation's name and the number of shares represented by the certificate,and a shareholder's ownership in the corporation depends on her possession of the physical stock certificate.F) D) and E)
G) B) and E)

Question 7

If corporate directors fail to sue when the corporation has been harmed by an individual,another corporation,or a director,individual shareholders can file a ________ on behalf of the corporation.

Accepted Answer

A)  default judgment
B)  class action suit
C)  shareholder's direct suit
D)  shareholder's derivative suit
E)  shareholder's distributive suitF) A) and B)
G) All of the above

Question 8

Shareholders are directly responsible for the daily management of a corporation.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following references the right of a corporation or its shareholder to purchase any shares of stock offered for resale by a shareholder within a specified period of time?

Accepted Answer

A)  Anticipatory repudiation
B)  The right of first refusal
C)  The right to demand adequate assurance of performance
D)  Sale-or-return
E)  Sale-on-approvalF) All of the above
G) A) and B)

Question 10

________ directors are also officers or employees of the corporation.

Accepted Answer

A)  Certified
B)  Seasoned
C)  Inside
D)  Affiliated
E)  UnaffiliatedF) All of the above
G) A) and C)

Question 11

If a corporation has fewer than fifty shareholders,the Revised Model Business Corporation Act allows companies to ________.

Accepted Answer

A)  choose not to file articles of incorporation
B)  eliminate the board of directors altogether
C)  have as few as seven corporate directors
D)  have as few as five corporate directors
E)  have as few as three corporate directorsF) C) and E)
G) A) and B)

Question 12

When a corporation is incorporated,the secretary of state usually issues a(n) ________,a document certifying that the corporation is incorporated in the state and is authorized to conduct business.

Accepted Answer

A)  corporate prospectus
B)  certificate of incorporation
C)  warranty of corporate status
D)  certificate of organization
E)  general business licenseF) A) and E)
G) A) and C)

Question 13

Promoters raise capital for an infant corporation by making subscription agreements with subscribers.

Accepted Answer

A) True 
 B)False

Question 14

Nails.Mona and her friends Jack and Bobby,all United States citizens,want to open a nail salon in Tennessee.They would all like to avoid personal liability for debts of the business and for wrongful acts of each other.They would also like to avoid taxation as much as possible.Mona is in favor of a corporation and asks if there is any problem with that form of business.Jack and Bobby say that they want to receive profit distributions and that they are concerned about excessive taxation with a corporation.Jack and Bobby urged the formation of a partnership even in the face of personal liability.Mona did some research and suggested an S corporation to Jack and Bobby.Would an S corporation provide the favorable tax treatment that the parties desire in a corporate form of business?

Accepted Answer

A)  No,because an S corporation is taxed in the same way as a regular corporation.
B)  Yes,but the S corporation is not needed because either a partnership or a regular corporation in their situation would provide the same benefits as an S corporation.
C)  Yes,with the only tax benefit being the avoidance of double taxation.
D)  Yes,because the S corporation would avoid the double taxation problem involved with a regular corporation and provide other tax benefits as well.
E)  No,because while the parties could form an S corporation,the tax benefits of an S corporation are only available to corporations with at least 100 shareholders.F) A) and E)
G) A) and D)

Question 15

________ directors are not officers or employees of the corporation.

Accepted Answer

A)  Free-agent
B)  Outside
C)  Presumptive
D)  Affiliated
E)  UnaffiliatedF) C) and D)
G) B) and E)

Question 16

Mary is a director of a company that develops expensive residential subdivisions.The company is considering attempting to purchase a large section of land on which to put a development.Mary happens to own some of the land.What duty,if any,does she have regarding disclosure of the fact that she owns some of the land? What steps,if any should be taken by the board when considering the matter,and may the board take action that benefits Mary personally?

Accepted Answer

Mary has a duty to disclose her self-int...

Question 17

How are directors chosen during incorporation?

Accepted Answer

A)  Either the incorporators appoint them or the corporate articles name them.
B)  Either the incorporators appoint them or by a majority vote of the shareholders.
C)  Only by the incorporators appointing them.
D)  Only by the corporate articles naming them.
E)  Only by the president appointing them.F) C) and E)
G) A) and E)

Question 18

________ directors are outside directors who have business contacts with the corporation.

Accepted Answer

A)  Approved
B)  Presumptive
C)  Inside
D)  Affiliated
E)  SeasonedF) C) and E)
G) A) and D)

Question 19

Which of the following are rules and regulations that govern a corporation's internal management?

Accepted Answer

A)  Bylaws
B)  Corporate minutes
C)  Articles of organization
D)  Articles of incorporation
E)  Corporate decreesF) None of the above
G) A) and E)

Question 20

Typically,how are corporate directors chosen?

Accepted Answer

A)  By a majority vote of the shareholders.
B)  By a majority vote of the officers.
C)  By a two-thirds vote of the shareholders.
D)  The president appoints them,subject to the advice and consent of the shareholders.
E)  By a unanimous vote of the shareholders.F) B) and C)
G) A) and C)

Exam 22: Corporations: Formation and Organization

________ directors are not officers or employees of the corporation.

Correct Answer
verified

If corporate directors fail to sue when the corporation has been harmed by an individual,another corporation,or a director,individual shareholders can file a ________ on behalf of the corporation.

Correct Answer
verified

A director may be removed ________.

Correct Answer
verified

Typically,how are corporate directors chosen?

Correct Answer
verified

If a corporation has fewer than fifty shareholders,the Revised Model Business Corporation Act allows companies to ________.

Correct Answer
verified

How are directors chosen during incorporation?

Correct Answer
verified

Promoters raise capital for an infant corporation by making subscription agreements with subscribers.

Correct Answer
verified

When the directors or shareholders of a corporation initiate dissolution procedures,it is a(n) ________.

Correct Answer
verified

When a corporation is incorporated,the secretary of state usually issues a(n) ________,a document certifying that the corporation is incorporated in the state and is authorized to conduct business.

Correct Answer
verified

State incorporation statutes typically grant the power ________ to corporations.

Correct Answer
verified

Which of the following references the right of a corporation or its shareholder to purchase any shares of stock offered for resale by a shareholder within a specified period of time?

Correct Answer
verified

Which of the following is a correct statement regarding stock certificates?

Correct Answer
verified

Correct Answer
verified
Mary has a duty to disclose her self-int...
View Answer

Which of the following is a false statement regarding the liability of directors and officers for criminal behavior?

Correct Answer
verified

________ directors are also officers or employees of the corporation.

Correct Answer
verified

Which of the following are rules and regulations that govern a corporation's internal management?

Correct Answer
verified

Discuss the rights of corporations under the United States Constitution's Bill of Rights.

Correct Answer
verified
Courts consider corporations to be legal...
View Answer

________ directors are outside directors who have business contacts with the corporation.

Correct Answer
verified

Shareholders are directly responsible for the daily management of a corporation.

Correct Answer
verified

Correct Answer
verified

Exam 22: Corporations: Formation and Organization

________ directors are not officers or employees of the corporation.

Correct AnswerverifiedShow Answer

If corporate directors fail to sue when the corporation has been harmed by an individual,another corporation,or a director,individual shareholders can file a ________ on behalf of the corporation.

Correct AnswerverifiedShow Answer

A director may be removed ________.

Correct AnswerverifiedShow Answer

Typically,how are corporate directors chosen?

Correct AnswerverifiedShow Answer

If a corporation has fewer than fifty shareholders,the Revised Model Business Corporation Act allows companies to ________.

Correct AnswerverifiedShow Answer

How are directors chosen during incorporation?

Correct AnswerverifiedShow Answer

Promoters raise capital for an infant corporation by making subscription agreements with subscribers.

Correct AnswerverifiedShow Answer

When the directors or shareholders of a corporation initiate dissolution procedures,it is a(n) ________.

Correct AnswerverifiedShow Answer

When a corporation is incorporated,the secretary of state usually issues a(n) ________,a document certifying that the corporation is incorporated in the state and is authorized to conduct business.

Correct AnswerverifiedShow Answer

State incorporation statutes typically grant the power ________ to corporations.

Correct AnswerverifiedShow Answer

Which of the following references the right of a corporation or its shareholder to purchase any shares of stock offered for resale by a shareholder within a specified period of time?

Correct AnswerverifiedShow Answer

Which of the following is a correct statement regarding stock certificates?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedMary has a duty to disclose her self-int...View AnswerShow Answer

Which of the following is a false statement regarding the liability of directors and officers for criminal behavior?

Correct AnswerverifiedShow Answer

________ directors are also officers or employees of the corporation.

Correct AnswerverifiedShow Answer

Which of the following are rules and regulations that govern a corporation's internal management?

Correct AnswerverifiedShow Answer

Discuss the rights of corporations under the United States Constitution's Bill of Rights.

Correct AnswerverifiedCourts consider corporations to be legal...View AnswerShow Answer

________ directors are outside directors who have business contacts with the corporation.

Correct AnswerverifiedShow Answer

Shareholders are directly responsible for the daily management of a corporation.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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Mary has a duty to disclose her self-int...
View Answer

Correct Answer
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Correct Answer
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Courts consider corporations to be legal...
View Answer

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Correct Answer
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