Question 1

A corporation can sue or be sued in its own name.

Accepted Answer

A) True 
 B)False

Question 2

A corporation is automatically bound to its promoters' contracts as soon as the corporation is formed.

Accepted Answer

A) True 
 B)False

Question 3

A corporation can be involuntarily dissolved by a judicial proceeding.

Accepted Answer

A) True 
 B)False

Question 4

All amendments to a corporation's bylaws must be approved by the shareholders.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is true?

Accepted Answer

A)  Bonds and debentures are two different terms to describe the same instrument. 
B)  A bond is a debt security, and a debenture is the agreement between the bondholder and the corporation. 
C)  A bond is an instrument that has a maturity of more than five years, and a debenture has a maturity of less than five years. 
D)  A bond is a secured instrument, and a debenture is an unsecured instrument. 
E)  A debenture is a secured instrument, and a bond is an unsecured instrument. 
A)  Bonds and debentures are two different terms to describe the same instrument. 
B)  A bond is a debt security, and a debenture is the agreement between the bondholder and the corporation. 
C)  A bond is an instrument that has a maturity of more than five years, and a debenture has a maturity of less than five years. 
D)  A bond is a secured instrument, and a debenture is an unsecured instrument. 
E)  A debenture is a secured instrument, and a bond is an unsecured instrument.

Question 6

"Common" stock is an equity security that represents the residual value of the corporation.

Accepted Answer

A) True 
 B)False

Question 7

The shareholders of a corporation are not personally liable for the debts of that corporation.

Accepted Answer

A) True 
 B)False

Question 8

Government-owned corporations are also known as "quasi-private" corporations.

Accepted Answer

A) True 
 B)False

Question 9

"Cumulative preferred" stock permits stockholders to convert their shares into common stock.

Accepted Answer

A) True 
 B)False

Question 10

An alien corporation is a corporation that is incorporated in another country.

Accepted Answer

A) True 
 B)False

Question 11

Corporations generate over eighty-five percent of the country's gross business receipts.

Accepted Answer

A) True 
 B)False

Question 12

A corporation is a domestic corporation in the state in which it is incorporated,and it is an alien corporation in all other states and jurisdictions.

Accepted Answer

A) True 
 B)False

Question 13

A private corporation is one that:

Accepted Answer

A)  has a small number of owners who are often members of the same family. 
B)  does not prepare financial statements. 
C)  is owned by private entities. 
D)  does not make public disclosure of information. 
E)  has only one shareholder. 
A)  has a small number of owners who are often members of the same family. 
B)  does not prepare financial statements. 
C)  is owned by private entities. 
D)  does not make public disclosure of information. 
E)  has only one shareholder.

Question 14

A government-owned corporation is also known as a(n)________ corporation.

Accepted Answer

A)  private 
B)  equitable 
C)  formal 
D)  public 
E)  quasi- 
A)  private 
B)  equitable 
C)  formal 
D)  public 
E)  quasi-

Question 15

The articles of incorporation must be approved by the state before the corporation can officially come into existence.

Accepted Answer

A) True 
 B)False

Question 16

An act by a corporation that is beyond its express or implied powers is called a(n) ________ act.

Accepted Answer

A)  unconstitutional 
B)  sua sponte 
C)  ultra vires 
D)  Ultramares 
E)  corporate veil 
A)  unconstitutional 
B)  sua sponte 
C)  ultra vires 
D)  Ultramares 
E)  corporate veil

Question 17

Corporations were first formed in ________.

Accepted Answer

A)  Europe 
B)  the United States 
C)  Russia 
D)  Asia 
E)  Canada 
A)  Europe 
B)  the United States 
C)  Russia 
D)  Asia 
E)  Canada

Question 18

Ultronics Corporation is incorporated in New Mexico.The articles of incorporation state that the purpose of Ultronics is to "manufacture consumer electronic products." One of the executives has recently read an article stating that most young electronics enthusiasts also engage in the sport of snowboarding; as a result,he convinces the company to begin manufacturing snowboards.Which of the following best describes Ultronics' manufacture of snowboards?

Accepted Answer

A)  This is an exercise of express powers. 
B)  This is an exercise of implied powers. 
C)  This is an ultra vires act. 
D)  This is an exercise of inherent powers. 
E)  Until the articles of incorporation are amended, the manufacture of snowboards is considered to be a promoter's activity. 
A)  This is an exercise of express powers. 
B)  This is an exercise of implied powers. 
C)  This is an ultra vires act. 
D)  This is an exercise of inherent powers. 
E)  Until the articles of incorporation are amended, the manufacture of snowboards is considered to be a promoter's activity.

Question 19

Which of the following is an appropriate abbreviation for a professional corporation?

Accepted Answer

A)  P.C. 
B)  P.A. 
C)  S.C. 
D)  D.A. 
E)  P.C., P.A. or S.C. 
A)  P.C. 
B)  P.A. 
C)  S.C. 
D)  D.A. 
E)  P.C., P.A. or S.C.

Question 20

A corporation cannot enter into or enforce contracts.

Accepted Answer

A) True 
 B)False

Exam 27: Corporate Formation and Financing

A corporation can sue or be sued in its own name.

A corporation is automatically bound to its promoters' contracts as soon as the corporation is formed.

A corporation can be involuntarily dissolved by a judicial proceeding.

All amendments to a corporation's bylaws must be approved by the shareholders.

Which of the following is true?

"Common" stock is an equity security that represents the residual value of the corporation.

The shareholders of a corporation are not personally liable for the debts of that corporation.

Government-owned corporations are also known as "quasi-private" corporations.

"Cumulative preferred" stock permits stockholders to convert their shares into common stock.

An alien corporation is a corporation that is incorporated in another country.

Corporations generate over eighty-five percent of the country's gross business receipts.

A corporation is a domestic corporation in the state in which it is incorporated,and it is an alien corporation in all other states and jurisdictions.

A private corporation is one that:

A government-owned corporation is also known as a(n)________ corporation.

The articles of incorporation must be approved by the state before the corporation can officially come into existence.

An act by a corporation that is beyond its express or implied powers is called a(n) ________ act.

Corporations were first formed in ________.

Which of the following is an appropriate abbreviation for a professional corporation?

A corporation cannot enter into or enforce contracts.

Legal Heritage and the Information Age

Constitutional Law for Business and E-Commerce

Courts and Jurisdiction

Judicial, Alternative, Administrative, and E-Dispute Resolution

Torts and Strict Liability

Criminal Law and Cyber Crimes

Intellectual Property and Cyber Piracy

Ethics and Social Responsibility of Business

Nature of Traditional and E-Contracts

Agreement and Consideration

Capacity and Legality

Genuineness of Assent and Statute of Frauds

Third-Party Rights and Discharge

Breach of Contract and Remedies

Digital Law and E-Commerce

Formation of Sales, Lease, and E-Contracts

Performance of Sales, Leases and E-Contracts

Remedies for Breach of Sales and Lease Contracts

Warranties and Product Liability

Creation and Transfer of Negotiable Instruments

Holder in Due Course and Liability of Parties

Banking System, E-Money, and Financial Reform

Credit and Secured Transactions

Bankruptcy and Reorganization

Agency Law

Small Business, Entrepreneurship, and Partnerships

Corporate Governance and Sarbanes-Oxley Act

Corporate Acquisitions and Multinational Corporations

Limited Liability Company and Limited Liability Partnership

Franchise and Special Forms of Business

Investor Protection,E-Securities Transactions,and Wall Street Reform

Antitrust Law

Consumer Safety, Consumer Financial Protection, and Environmental Protection

Labor, Worker Protection, Employment, and Immigration Law

Equal Opportunity in Employment

Personal Property, Bailment, and Insurance

Real Property, Landlord-Tenant Law, and Land Use Regulation

Family Law, Wills, and Trusts

Accountants' Liability

International and World Trade Law

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