Question 1

The shareholders of a corporation elect the corporate officers.

Accepted Answer

A) True 
 B)False

Question 2

Corporations can be created only pursuant to the laws of the state of incorporation.

Accepted Answer

A) True 
 B)False

Question 3

Corporations are treated,in effect,as artificial persons created by the state.

Accepted Answer

A) True 
 B)False

Question 4

Regarding the name of a corporation:

Accepted Answer

A)  it may be the same as a federally-trademarked name, so long as the two corporations operate exclusively in different states. 
B)  it can be similar to another corporation's name, so long as the existing corporation has not trademarked the name. 
C)  it must contain a word or abbreviation that indicates corporate status. 
D)  it may contain a word or phrase that implicitly reserves the right of the corporate owner to operate the business as a sole proprietorship or partnership. 
E)  The Revised Model Business Corporation Act removed all general restrictions concerning corporate names; therefore, such names are not restricted, except that they cannot constitute a "fraud on the public." 
A)  it may be the same as a federally-trademarked name, so long as the two corporations operate exclusively in different states. 
B)  it can be similar to another corporation's name, so long as the existing corporation has not trademarked the name. 
C)  it must contain a word or abbreviation that indicates corporate status. 
D)  it may contain a word or phrase that implicitly reserves the right of the corporate owner to operate the business as a sole proprietorship or partnership. 
E)  The Revised Model Business Corporation Act removed all general restrictions concerning corporate names; therefore, such names are not restricted, except that they cannot constitute a "fraud on the public."

Question 5

Amy is the promoter of Wild Toad Corporation.Before the corporation comes into existence,Amy leases office space for its headquarters.Amy signs the contract,"Amy,for Wild Toad Corporation." The corporation is formed,and all necessary filings are completed.Despite the corporation's formation,the board of directors never meets,and the corporation never conducts any business.Further,it does not move into the office space,and it makes no payments under the lease.The landlord demands that Amy pay for the office space.Amy refuses,and the landlord sues.What is the most likely outcome?

Accepted Answer

A)  The landlord wins, because Amy is personally liable on the contract. 
B)  Amy wins, because the corporation is liable on the contract. 
C)  Amy wins because the contract is void, since the corporation never agreed to be bound by the terms of the contract. 
D)  Amy wins, because the office space was never occupied. 
E)  Amy wins, because promoters of corporations enjoy limited liability. 
A)  The landlord wins, because Amy is personally liable on the contract. 
B)  Amy wins, because the corporation is liable on the contract. 
C)  Amy wins because the contract is void, since the corporation never agreed to be bound by the terms of the contract. 
D)  Amy wins, because the office space was never occupied. 
E)  Amy wins, because promoters of corporations enjoy limited liability.

Question 6

MAK Corp.is incorporated in the state of Delaware,and does business only in Kansas and Illinois.MAK Corp.would be considered:

Accepted Answer

A)  a domestic corporation in all fifty states. 
B)  a domestic corporation in Delaware, Kansas and Illinois, and a foreign corporation in the other forty-seven states. 
C)  a domestic corporation in Delaware, a foreign corporation in Kansas and Illinois, and an alien corporation in the other forty-seven states. 
D)  a domestic corporation in Delaware, and a foreign corporation in Kansas and Illinois. 
E)  a foreign corporation in Delaware, because they do no business there, and a domestic corporation in Kansas and Illinois, where they do conduct business. 
A)  a domestic corporation in all fifty states. 
B)  a domestic corporation in Delaware, Kansas and Illinois, and a foreign corporation in the other forty-seven states. 
C)  a domestic corporation in Delaware, a foreign corporation in Kansas and Illinois, and an alien corporation in the other forty-seven states. 
D)  a domestic corporation in Delaware, and a foreign corporation in Kansas and Illinois. 
E)  a foreign corporation in Delaware, because they do no business there, and a domestic corporation in Kansas and Illinois, where they do conduct business.

Question 7

All states have enacted the Model Nonprofit Corporation Act,which governs the formation,operation,and termination of not-for-profit corporations.

Accepted Answer

A) True 
 B)False

Question 8

A note is a long-term debt security with a maturity of thirty (30)years or less.

Accepted Answer

A) True 
 B)False

Question 9

A corporation can hold title to and transfer property.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is true about corporations?

Accepted Answer

A)  Corporate law is federal law. 
B)  Corporate law is statutory; thus, there is no common law applicable to corporations. 
C)  Changes to state corporate law can require the amendment of a corporation's articles of incorporation, even though the corporation is already in existence. 
D)  One requirement of corporate status is that a corporation's stock must be owned by a large number of shareholders. 
E)  There are no closely-held corporations. 
A)  Corporate law is federal law. 
B)  Corporate law is statutory; thus, there is no common law applicable to corporations. 
C)  Changes to state corporate law can require the amendment of a corporation's articles of incorporation, even though the corporation is already in existence. 
D)  One requirement of corporate status is that a corporation's stock must be owned by a large number of shareholders. 
E)  There are no closely-held corporations.

Question 11

The board of directors makes policy decisions concerning the operation of a corporation.

Accepted Answer

A) True 
 B)False

Question 12

A bond is a long-term,unsecured debt.

Accepted Answer

A) True 
 B)False

Question 13

The Secretary of State has no power to obtain an administrative dissolution of a corporation.

Accepted Answer

A) True 
 B)False

Question 14

An act by a corporation that is beyond its express or implied powers is called a sua sponte act.

Accepted Answer

A) True 
 B)False

Question 15

Private corporations can be classified as either for profit or not-for-profit corporations.

Accepted Answer

A) True 
 B)False

Question 16

Professional corporations are prohibited in most states.

Accepted Answer

A) True 
 B)False

Question 17

One major characteristic of corporations is that they have perpetual existence unless a specific duration is stated in the articles of incorporation.

Accepted Answer

A) True 
 B)False

Question 18

A corporation may be involuntarily terminated by the corporations' creditors if an involuntary petition for bankruptcy against the corporation is granted.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements is true?

Accepted Answer

A)  The number of shares the corporation is authorized to issue is indicated in the articles of incorporation. 
B)  A corporation may not repurchase its own shares after they have been issued. 
C)  A corporation may vote its treasury stock. 
D)  A corporation must sell all of its authorized stock. 
E)  Any treasury stock shares acquired by a corporation cannot be reissued. 
A)  The number of shares the corporation is authorized to issue is indicated in the articles of incorporation. 
B)  A corporation may not repurchase its own shares after they have been issued. 
C)  A corporation may vote its treasury stock. 
D)  A corporation must sell all of its authorized stock. 
E)  Any treasury stock shares acquired by a corporation cannot be reissued.

Question 20

Corporations formed under general incorporation laws cannot engage in banking or insurance.

Accepted Answer

A) True 
 B)False

Exam 27: Corporate Formation and Financing

The shareholders of a corporation elect the corporate officers.

Corporations can be created only pursuant to the laws of the state of incorporation.

Corporations are treated,in effect,as artificial persons created by the state.

Regarding the name of a corporation:

MAK Corp.is incorporated in the state of Delaware,and does business only in Kansas and Illinois.MAK Corp.would be considered:

All states have enacted the Model Nonprofit Corporation Act,which governs the formation,operation,and termination of not-for-profit corporations.

A note is a long-term debt security with a maturity of thirty (30)years or less.

A corporation can hold title to and transfer property.

Which of the following is true about corporations?

The board of directors makes policy decisions concerning the operation of a corporation.

A bond is a long-term,unsecured debt.

The Secretary of State has no power to obtain an administrative dissolution of a corporation.

An act by a corporation that is beyond its express or implied powers is called a sua sponte act.

Private corporations can be classified as either for profit or not-for-profit corporations.

Professional corporations are prohibited in most states.

One major characteristic of corporations is that they have perpetual existence unless a specific duration is stated in the articles of incorporation.

A corporation may be involuntarily terminated by the corporations' creditors if an involuntary petition for bankruptcy against the corporation is granted.

Which of the following statements is true?

Corporations formed under general incorporation laws cannot engage in banking or insurance.

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