Question 1

A breach of fiduciary duties by those who own a close corporation normally constitutes what is known as oppressive conduct.

Accepted Answer

A) True 
 B)False

Question 2

Blue Sky Drones Inc.has three directors,a president,two vice presidents,a secretary,and a treasurer.Carol is a Blue Sky director.In most states,Carol can also hold a corporate office

Accepted Answer

A)  if she was one of the firm's incorporators. 
B)  under any circumstances. 
C)  if she resigns as director. 
D)  if the shareholders consent. 
A)  if she was one of the firm's incorporators. 
B)  under any circumstances. 
C)  if she resigns as director. 
D)  if the shareholders consent.

Question 3

If a board attempts to manipulate the shareholders' election of a director to reduce the shareholders' influence,they can challenge the election in court.

Accepted Answer

A) True 
 B)False

Question 4

Huan is a shareholder of Insulation Inc.When the directors fail to undertake an action to redress a wrong suffered by the firm,Huan files a suit on its behalf.Any damages recovered by the suit will go to the firm's

Accepted Answer

A)  shareholders,excluding Huan. 
B)  treasury. 
C)  directors. 
D)  shareholders,including Huan. 
A)  shareholders,excluding Huan. 
B)  treasury. 
C)  directors. 
D)  shareholders,including Huan.

Question 5

Because corporate officers have the implied power to bind the firm in matters directly connected to its business,there is no limit to what the officer can do.

Accepted Answer

A) True 
 B)False

Question 6

EZ Hauling holds itself out to customers as being a corporation but makes no attempt to incorporate.In this circumstance,EZ Hauling is most likely

Accepted Answer

A)  a corporation by estoppel. 
B)  a de facto corporation. 
C)  a de jure corporation. 
D)  ultra vires. 
A)  a corporation by estoppel. 
B)  a de facto corporation. 
C)  a de jure corporation. 
D)  ultra vires.

Question 7

The primary document needed to incorporate a business is the articles of incorporation because the articles serve as a primary source of authority for the firm's organization and functions.

Accepted Answer

A) True 
 B)False

Question 8

Oil Industries Inc.is a private,for-profit corporation that is owned by five shareholders who are members of the same family.Po,the majority shareholder,misappropriates company funds.The shareholders whose interests are injured by Po's misconduct should

Accepted Answer

A)  have their shares appraised and be paid the fair market value for them. 
B)  promote the transferability of the company's shares to outside persons. 
C)  reorganize the firm into a sole proprietorship or partnership. 
D)  hold a special shareholders' meeting to elect new directors. 
A)  have their shares appraised and be paid the fair market value for them. 
B)  promote the transferability of the company's shares to outside persons. 
C)  reorganize the firm into a sole proprietorship or partnership. 
D)  hold a special shareholders' meeting to elect new directors.

Question 9

Pipe Inc.'s stated purpose is to install plumbing.Pipe contracts with Quality Contracting to pour a new building's foundation despite lacking the skill and license to do such work.This is most likely

Accepted Answer

A)  an ultra vires act. 
B)  within the corporation's express powers. 
C)  within the corporation's implied powers. 
D)  allowable and proper as an act to profit corporate shareholders. 
A)  an ultra vires act. 
B)  within the corporation's express powers. 
C)  within the corporation's implied powers. 
D)  allowable and proper as an act to profit corporate shareholders.

Question 10

Integrated Devices,Inc. ,is a private,for-profit corporation that is owned by seven shareholders who are members of the same family.Integrated is

Accepted Answer

A)  an S corporation. 
B)  a close corporation. 
C)  a benefit corporation. 
D)  a public corporation and a private corporation. 
A)  an S corporation. 
B)  a close corporation. 
C)  a benefit corporation. 
D)  a public corporation and a private corporation.

Question 11

If a shareholder's derivative suit is successful,any damages recovered normally go into the corporation's treasury.

Accepted Answer

A) True 
 B)False

Question 12

Roz,a director of Soy Inc. ,is specially trained in petroleum trading.Soy's board approves several deals in which the company pays too much for soybeans.Roz approves all the deals without first reviewing them.Roz is most likely liable for breach of

Accepted Answer

A)  the duty of care. 
B)  the business judgment rule. 
C)  the duty of loyalty. 
D)  none of the choices. 
A)  the duty of care. 
B)  the business judgment rule. 
C)  the duty of loyalty. 
D)  none of the choices.

Question 13

Burgers & Brew Inc.prepares its articles of incorporation.The articles are likely to include

Accepted Answer

A)  the corporation's name. 
B)  the number of shares the corporation is authorized to issue. 
C)  all of the choices. 
D)  the corporation's registered agent. 
A)  the corporation's name. 
B)  the number of shares the corporation is authorized to issue. 
C)  all of the choices. 
D)  the corporation's registered agent.

Question 14

Oversight Inc.'s board of directors votes to empower corporate officers to make decisions regarding ordinary,daily corporate affairs within well-defined guidelines.With respect to these affairs,Oversight's board

Accepted Answer

A)  is relieved of its responsibility. 
B)  retains its responsibility. 
C)  shares the responsibility. 
D)  was never responsible. 
A)  is relieved of its responsibility. 
B)  retains its responsibility. 
C)  shares the responsibility. 
D)  was never responsible.

Question 15

Shareholders' assumption of personal liability,as guarantors,for the obligations of a corporation can enable the firm to obtain credit.

Accepted Answer

A) True 
 B)False

Question 16

A corporation is an artificial being-intangible,invisible,and existing only in the contemplation of the law.

Accepted Answer

A) True 
 B)False

Question 17

If a director commits a breach of fiduciary duty,the shareholders have the inherent power to remove the director from office by a majority vote.

Accepted Answer

A) True 
 B)False

Question 18

A benefit corporation is designed to make a profit and thereby provide long-term shareholder benefit.

Accepted Answer

A) True 
 B)False

Question 19

Because the management of a close corporation can resemble that of a sole proprietorship,the firm need not meet all of the specific requirements set forth in state statutes for corporations.

Accepted Answer

A) True 
 B)False

Question 20

Owen is a director of Packaging Company.As a director,Owen's rights include a right to

Accepted Answer

A)  access the corporation's books,records,facilities,and other property. 
B)  subordinate the corporation's welfare to his personal interest. 
C)  use confidential corporate information for personal advantage. 
D)  self-dealing. 
A)  access the corporation's books,records,facilities,and other property. 
B)  subordinate the corporation's welfare to his personal interest. 
C)  use confidential corporate information for personal advantage. 
D)  self-dealing.

Exam 18: Corporations

A breach of fiduciary duties by those who own a close corporation normally constitutes what is known as oppressive conduct.

Blue Sky Drones Inc.has three directors,a president,two vice presidents,a secretary,and a treasurer.Carol is a Blue Sky director.In most states,Carol can also hold a corporate office

If a board attempts to manipulate the shareholders' election of a director to reduce the shareholders' influence,they can challenge the election in court.

Huan is a shareholder of Insulation Inc.When the directors fail to undertake an action to redress a wrong suffered by the firm,Huan files a suit on its behalf.Any damages recovered by the suit will go to the firm's

Because corporate officers have the implied power to bind the firm in matters directly connected to its business,there is no limit to what the officer can do.

EZ Hauling holds itself out to customers as being a corporation but makes no attempt to incorporate.In this circumstance,EZ Hauling is most likely

The primary document needed to incorporate a business is the articles of incorporation because the articles serve as a primary source of authority for the firm's organization and functions.

Oil Industries Inc.is a private,for-profit corporation that is owned by five shareholders who are members of the same family.Po,the majority shareholder,misappropriates company funds.The shareholders whose interests are injured by Po's misconduct should

Pipe Inc.'s stated purpose is to install plumbing.Pipe contracts with Quality Contracting to pour a new building's foundation despite lacking the skill and license to do such work.This is most likely

Integrated Devices,Inc. ,is a private,for-profit corporation that is owned by seven shareholders who are members of the same family.Integrated is

If a shareholder's derivative suit is successful,any damages recovered normally go into the corporation's treasury.

Roz,a director of Soy Inc. ,is specially trained in petroleum trading.Soy's board approves several deals in which the company pays too much for soybeans.Roz approves all the deals without first reviewing them.Roz is most likely liable for breach of

Burgers & Brew Inc.prepares its articles of incorporation.The articles are likely to include

Oversight Inc.'s board of directors votes to empower corporate officers to make decisions regarding ordinary,daily corporate affairs within well-defined guidelines.With respect to these affairs,Oversight's board

Shareholders' assumption of personal liability,as guarantors,for the obligations of a corporation can enable the firm to obtain credit.

A corporation is an artificial being-intangible,invisible,and existing only in the contemplation of the law.

If a director commits a breach of fiduciary duty,the shareholders have the inherent power to remove the director from office by a majority vote.

A benefit corporation is designed to make a profit and thereby provide long-term shareholder benefit.

Because the management of a close corporation can resemble that of a sole proprietorship,the firm need not meet all of the specific requirements set forth in state statutes for corporations.

Owen is a director of Packaging Company.As a director,Owen's rights include a right to

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